How the Supreme Court Could Rule on ACA Case

The Supreme Court heard oral arguments in the latest legal challenge to the constitutionality of the Affordable Care Act today. There are a range of possible outcomes in the case, from the court not ruling on the merits to the court nullifying the entire ACA.

With Associate Justice Amy Coney Barrett’s confirmation in late October, the court now has six justices in its conservative majority. A ruling on the case isn’t expected until spring or summer 2021.

The California v. Texas case stems from a previous Supreme Court ruling in NFIB v. Sebelius in 2012. Then, the Supreme Court, with Chief Justice John Roberts siding with the more liberal justices, ruled the ACA’s individual mandate, or requirement to have insurance or pay a penalty, was constitutional under Congress’ power to tax. (Barrett has criticized that opinion, as we’ve explained.)

But in late 2017, the Republican tax law eliminated the fee associated with that mandate; it reduced the fee to $0. The plaintiffs in the Texas suit argue that without any monetary penalty, the mandate is unconstitutional, since there’s no longer a tax associated with it. They further argue that without the mandate, the entire law must fall.

In December 2018, a district court in Texas sided with the plaintiffs, which included Texas and 19 other states, finding the ACA was invalid. A year later, the Fifth Circuit Court of Appeals upheld the decision that the mandate was unconstitutional, but the appeals court sent the case back to the district court for “additional analysis” on whether the mandate provision was severable from the rest of the law. In other words, the district court was to examine whether the rest of the ACA could stand even if the mandate was unconstitutional.

Democratic attorneys general and governors, along with the Democratic-controlled House of Representatives, are defending the ACA in the case. Besides Texas and the Republican states, the plaintiffs include two individuals who say they suffered economic harm by being required to buy insurance. The Trump administration also has sided with the plaintiffs.

In January, the Democrats asked the Supreme Court to hear an appeal on an expedited basis, bypassing the reconsideration of the case by the district court. The high court declined to fast-track the case but later set the oral arguments for Nov. 10. 

Legal experts have outlined several potential outcomes for the case:

  • The court could rule on standing, finding that the states and the two people named as plantiffs haven’t been injured and don’t have a right to sue. That would avoid a ruling on the constitutionality of the ACA.
  • The court could uphold the ACA by finding the mandate is constitutional. Or the court could find the mandate is unconstitutional but severable from the rest of the law.
  • The court could uphold some of the ACA, finding the mandate along with other provisions, such as those pertaining to preexisting condition protections, must fall.
  • The court could nullify the entire the law by finding the mandate is unconstitutional and not severable from the rest of the legislation.

Katie Keith, a lawyer who provides analysis for the Health Affairs blog, has written that the most likely outcome is the court “maintains the status quo.”

“The Court could reach this conclusion by finding that the challengers do not have standing, that the mandate remains constitutional, or that the mandate is unconstitutional but fully severable from the rest of the law,” Keith wrote in a Nov. 9 post. “Indeed, the mandate penalty has been set to $0 since 2019 and the sky has not fallen. … The ACA is functioning just fine whether the mandate has a dollar penalty or not.”

Timothy S. Jost, an emeritus professor at the Washington and Lee University School of Law, wrote in a September post for the Commonwealth Fund: “There is a decent chance that at least two Republican appointees will join the three Democratic appointees in finding all of the ACA severable from the mandate, thus upholding the ACA. In two opinions this past spring, one written by Chief Justice Roberts and the other by Justice Kavanaugh, the Court found specific provisions of other statutes to be unconstitutional but severed them entirely from the rest of the statutes, which remained valid.”

Originally, President Donald Trump’s administration argued that only some provisions, pertaining to preexisting condition protections, should be eliminated if the mandate were found to be unconstitutional.

Then-Attorney General Jeff Sessions wrote in a June 2018 letter that the provisions guaranteeing that people can’t be denied coverage by insurers or charged more based on certain factors would have to be nullified.

Sabrina Corlette, research professor at the Center on Health Insurance Reforms at Georgetown University’s McCourt School of Public Policy, told us if the court strikes down the mandate as well as some of the provisions offering preexisting conditions protections, “it’s a mess.”

She noted how intertwined various elements of the law are with one another.

The insurance plan premiums on the ACA exchanges are based on a list of essential benefits, as well as requirements for insurers to accept all policyholders regardless of health status; to vary premiums only based on location, tobacco use and, to a limited extent, age; and to not limit annual or lifetime coverage for essential benefits. And the amount of premium tax credits are then based on benchmark premiums of those plans. 

“Or the Court could strike all of Title I of the ACA, which includes all of the insurance consumer protections, the health insurance marketplaces, premium tax credits, and risk adjustment, among many other provisions,” Keith wrote.

If the court were to find the entire ACA must fall, it would be “severely disruptive,” Keith said.

The Commonwealth Fund’s Sara R. Collins, vice president for health care coverage and access, and program assistant Gabriella N. Aboulafia wrote in a Nov. 9 post: “The health care industry represents nearly 20 percent of the nation’s economy; the ACA has touched every corner. The law restructured the individual and small-group health insurance markets, expanded and streamlined the Medicaid program, improved Medicare benefits, and reformed the way Medicare pays doctors, hospitals, and other providers. … States have rewritten laws to incorporate the ACA’s provisions. Insurers, hospitals, physicians, and state and local governments have invested billions of dollars adjusting to these changes.”

The Urban Institute estimated that overturning the law would cause 21.1 million more people to be uninsured in 2022.

“[M]ost scholars,” Keith said, agree striking down the entire ACA “is the least likely outcome,” but “it remains a possibility.”

Corlette said if the administration of President-elect Joe Biden wanted to stave off a Supreme Court ruling in the case, “I think you’d need an act from Congress.” The simplest thing would be for Congress to repeal the individual mandate provision and leave the rest of the ACA as is.

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