In a 7-2 ruling on Thursday, June 17, 2021, the Supreme Court of the United States (SCOTUS) rejected the Texas v California legal challenge to the constitutionality of the Affordable Care Act (ACA) individual mandate, determining the parties did not have standing to sue. By rejecting the parties’ standing to even challenge the provision, the Court did not have to deliberate on the constitutionality or severability of the individual mandate.
Below is a recap of the history of this case:
- Back in 2012, the individual mandate was upheld 5-4 by SCOTUS as a constitutional exercise of Congress’s power to impose a tax
- “The Federal Government does not have the power to order people to buy health insurance. Section 5000A would therefore be unconstitutional if read as a command. The Federal Government does have the power to impose a tax on those without health insurance. Section 5000A is therefore constitutional, because it can reasonably be read as a tax.”
- In 2017, Congress reduced the individual mandate’s tax penalty to $0, so in 2018 a group of 2 individuals and 18 states brought forward a legal challenge to question whether the individual mandate was still constitutional now that it would no longer result in a “tax” on anyone and is therefore just a command to buy health insurance
- And if unconstitutional, they questioned how much of the ACA should stay intact since the individual mandate was not written with a clause to make that provision severable from the rest of the law
- In 2019, the Fifth Circuit found the parties had standing, the individual mandate was unconstitutional, and the district court needed to do further analysis on the severability aspect. However, to prevent disruption in the US market, that ruling was stayed while the case was appealed to the Supreme Court.
- SCOTUS heard oral arguments late last year, and we had pointed out that the parties might not have standing.
- Sure enough, the Court today has concluded that the parties “do not have standing to challenge” this provision “because they have not shown a past or future injury” related to “the specific statutory provision they attack as unconstitutional.” The case is therefore dismissed without making any determination on the constitutionality or severability arguments.
Thus, the ACA continues to be the law of the land, with all of its coverage, disclosure, and reporting requirements.
IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.
This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.