The US Supreme Court Hears ACA Case Today
California v. Texas is now before the Supreme Court of the United States (SCOTUS) for oral arguments. Back in 2012, the Affordable Care Act (ACA) individual mandate (which required Americans buy health insurance or pay a penalty on their tax return for being uninsured) was declared by SCOTUS to be a constitutional exercise of Congress’s taxing powers. So when Congress voted in 2017 to lower the individual mandate penalty to $0, several Republican state attorneys general (AGs) moved to invalidate the individual mandate as unconstitutional now that there is no penalty (tax), and to rule the entire ACA must fall with it. The ACA did not include language to make the individual mandate severable from the rest of the law, and a key defense in the 2012 case was the individual mandate was crucial to support the law’s other mandate that insurers must cover pre-existing conditions.
Whether the state AGs have standing to claim they have suffered a concrete injury from the change made by Congress in 2017 remains to be seen. The justices seem closely divided on that issue.
Chief Justice Roberts and Justice Kavanaugh have expressed in multiple cases this summer that severability should be presumed by courts unless there is a strong argument against it, and they held to that reasoning in over two hours of hearings today.
- Roberts conveyed to Texas Solicitor General Kyle Hawkins that “It’s hard for you to argue that Congress intended the entire act to fall when the same Congress that lowered the penalty to zero did not even try to repeal the rest of the act. I think they wanted the court to do that but it’s not our job…We ask whether Congress would want the rest of the law to survive. Here Congress left the rest of the law intact. That seems to be compelling evidence.”
- Kavanaugh likewise said “It does seem fairly clear the proper remedy would be to sever it. Inseverability clauses usually are very clear. Congress knows how to write them and that is not the language they chose here.”
However, Roberts also made a point to the defense that “Eight years ago, in defending the mandate, you emphasized it was key to the whole act. Now your representation is that everything is fine without it. Why the bait and switch? We spent all that time talking about broccoli for nothing.” Notwithstanding, it appears the justices may ultimately reason that if the individual mandate is indeed unconstitutional now, it should be severable from the rest of the ACA. Time will tell how they ultimately decide on the matter next year (assuming the parties to the case are ultimately determined to have standing).
Audio of today’s oral arguments can be listened to here (be aware audio begins playing automatically upon loading the page). It’s approximately 2 hours long and also provides a written transcript.
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.