Supreme Court preserves ACA in 7-2 ruling that latest challenge doesn't have standing

Supreme Court
The Supreme Court ruled 7-2 to uphold the ACA. (Getty/BrianPIrwin)

The Supreme Court ruled that a collection of red states do not have standing to challenge the legality of the Affordable Care Act, choosing to preserve the law once again.

The court ruled 7-2 that the red states don’t have standing to challenge the law’s individual mandate. The opinion delivered Thursday said that the states did not show a “past or future injury” related to the enforcement of the mandate.

Justices Neil Gorsuch and Samuel Alito voted against the decision.

The lawsuit was led by a collection of red states that argued the ACA became unconstitutional when the 2017 tax law rendered the individual mandate penalty to zero. The states argued that the law left the mandate unconstitutional because it is a tax with no penalty.

They also argued that the rest of the law should be struck down alongside the mandate as the rest of the law cannot stand alone.

A collection of blue states led by California countered that the rest of the law should be left intact. They argued that if Congress intended to get rid of the law then it would have done so in the 2017 tax reform law, but it did not.

The oral arguments held in November highlighted several major problems that some conservative justices had over the lawsuit’s arguments, including whether the states even had the standing to bring the lawsuit in the first place.

The lawsuit claimed that without the mandate’s penalty then the entire essential coverage requirement is unconstitutional. It included two individual plaintiffs in addition to the states. But federal law requires that a plaintiff has to have standing and can point to a personal injury traceable to the defendant’s unlawful conduct.

“Neither the individual nor the state plaintiffs have shown that the injury they will suffer or have suffered is ‘fairly traceable' to the ‘allegedly unlawful conduct’ of which they complain,” the ruling opinion said.

The two individual plaintiffs didn’t prove that they would be harmed by the individual mandate and thus it must be struck down as the penalty for not following the mandate was zeroed out, the opinion said.

“There is no possible government action that is causally connected to the plaintiff’s injury — the costs of purchasing health insurance,” the opinion said.

The lawsuit did not prove how the federal government would enforce the mandate.

The states also did not show how they would be injured by the mandate. The lawsuit had claimed that the individual mandate led state residents to enroll in state programs such as Medicaid.

However, the states also failed to show how the mandate will harm them since there isn’t any prospect of a penalty

The opinion does not rule on the question of severability, only the standing issue.

Justice Alito penned a dissenting opinion that was joined by Gorsuch. They argued that the states do have standing since the ACA “imposes many burdensome obligations on states in their capacity as employers.”

They also found that the mandate was “clearly unconstitutional” and the rest of the law should also be struck down.

Payers and providers have pressed the Supreme Court to uphold the law, worried about the impact on coverage if the law were to be struck down.

The latest challenge to the ACA

The decision is the culmination of a three-year effort by 17 red states to bring down the law.

The lawsuit was originally filed in 2018 after the passage of the tax reform law that zeroed out the individual mandate. The Trump administration’s Department of Justice decided against defending the law and sided with the lawsuit, leading California and a collection of 15 blue states to take up the mantle.

A district court judge ruled in 2018 that the individual mandate was unconstitutional and the rest of the law should go down with it. An appellate court agreed that the mandate was unconstitutional but punted on a decision on severability, asking the lower court judge to revisit the issue.

But the blue states defending the law decided to send the case to the Supreme Court, which only ruled on standing and not severability. The Supreme Court reverses the lower court’s ruling on the individual mandate.

This is the third time the Supreme Court saved the ACA.

The court ruled 6-3 to strike down a challenge in 2015 in the case King v. Burwell that could have gotten rid of the law’s income-based subsidies to lower the cost of insurance.

In another case in 2012, NFIB vs. Sebelius, the court narrowly upheld the law by a 5-4 margin and found that the individual mandate was a tax and that states could not forcibly be required to expand Medicaid.