Supreme Court Boots Challenge to the Affordable Care Act

By Russell Johnson and Kirsten Stewart

On June 17, 2021, the U.S. Supreme Court ruled that the plaintiffs in California v. Texas et. al lacked standing to challenge the validity of the Patient Protection and Affordable Care Act (the “ACA”).  The highly anticipated opinion reaffirms the ACA as the law of the land, but it does not necessarily protect it from future legal challenges.

As a reminder, the controversial case arose from the Tax Cuts and Jobs Act of 2017, which effectively repealed the ACA’s individual mandate by setting the penalty for non-compliance to $0.  A coalition of states and individuals subsequently challenged the validity of the entire ACA by suing the United States and federal officials, arguing that the individual mandate is now unconstitutional and that it is inseparable from the rest of the ACA.  The Fifth Circuit agreed that the individual mandate was unconstitutional, though it did not rule on the severability of the remainder of the ACA. The defendants appealed to the U.S. Supreme Court.

In a 7-2 opinion, the U.S. Supreme Court ruled that the plaintiffs did not have standing to proceed with the challenge because they “failed to show a concrete, particularized injury fairly traceable to the defendants’ conduct.”  While the decision provides reassurance to many that the ACA will stand, it does not necessarily protect the ACA from future legal challenges. The Supreme Court did not address the issues of the constitutionality of the ACA or the severability of the individual mandate.  For the time being, however, health plans and employers must continue to comply with the ACA.