Supreme Court Dismisses Obamacare Challenge, Leaving Existing Health Care Insurance System in Place

By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.

The United States Supreme Court ruled 7-2 today in California v. Texas that Texas, several Republican- leaning states, and two individuals  lacked standing to bring a constitutional challenge to the Affordable Care Act (ACA) as none could show the sufferering of a particularized injury.

This is the third time the Court has upheld the ACA. In 2012, Chief Justice John Roberts, a George W. Bush appointee, penned the 5-4 majority opinion In the first challenge, National Federation of Business v. Sebelius,  which upheld the ACA’s individual mandate – the requirement that an individual purchase health insurance or pay a tax penalty – as a valid exercise of the power of Congress to levy taxes. In 2015, in King v. Burwell,  Justice Roberts, writing again, then for a 6-3 majority, upheld the ACA’s subsidies for poor and middle-income individuals to purchase health insurance.

Before today’s decision was handed down, court observers were concerned that the now more right-leaning Court might be open to revisiting the individual mandate.  Apparently, overturning the health care apple cart in the midst of a pandemic was not something that two of the Court’s new right-wing Justices, Brett Kavanaugh and Amy Coney Barrett, were willing to do.

Justice Stephen Breyer wrote the opinion; Justices Samuel Alito and Neil Gorsuch dissented. Justices Elena Kagan, Sonia Sotomayor, Clarence Thomas, and Chief Justice John Roberts also joined in the majority opinion. (Roberts had penned the previous two majority Obamacare opinions, from which Thomas dissented.)

On to the case. Recall that in 2017,  after Trump became president, Congress set the  tax penalty for failing to comply with the individual mandate at zero dollars. Texas, along with several Republican-leaning states and two individuals, backed by the Trump administration, brought the latest challenge, claiming the individual mandate was now unconstitutional because it could no longer be justified as a valid exercise of Congress’s power to tax. The plaintiffs argued this provision wasn’t severable and therefore the entire ACA must be struck down.  When the Trump Department of Justice abandoned defending the ACA, California and other Democrat-leaning states stepped in.

Breyer wrote:

 …we conclude that the plaintiffs in this suit failed to show a concrete, particularized injury fairly traceable to the defendants’ conduct in enforcing the specific statutory provision they attack as unconstitutional. They have failed to show that they have standing to attack as unconstitutional the Act’s minimum essential coverage provision. Therefore, we reverse the Fifth Circuit’s judgment in respect to standing, vacate the judgment, and remand the case with instructions to dismiss.

No kidding. Currently, the status of the individual mandate is that an individual must either buy insurance, or pay nothing. SA public service announcement. So, if an individual opts for paying nothing, where’s the injury?

As indeed Justice Thomas, who switched his position in this case, having dissented from the earlier two judgements, also recognizes. Today he spelled out his reasoning in a concurrence:

But, whatever the Act’s dubious history in this Court, we must assess the current suit on its own terms. And, here, there is a fundamental problem with the arguments advanced by the plaintiffs in attacking the Act—they have not identified any unlawful action that has injured them. …Today’s result is thus not the consequence of the Court once again rescuing the Act, but rather of us adjudicating the particular claims the plaintiffs chose to bring.

As Vox notes in The Supreme Court shut down an attack on Obamacare in the most dismissive way possible:

Really, there’s no need to say much more about this lawsuit. It was an absurd case brought under a risible legal theory that was widely mocked even by many outspoken opponents of Obamacare. The Wall Street Journal’s editorial board labeled this lawsuit the “Texas Obamacare Blunder.” Yuval Levin, a prominent conservative policy wonk, wrote in the National Review that the Texas lawsuit “doesn’t even merit being called silly. It’s ridiculous.”
And now the lawsuit is dead. As it turns out, even in a 6-3 conservative Supreme Court, there are some arguments that are too laughable to be taken seriously.

Yet taken seriously these wereindeed – by at least one federal district court judge in Texas and at a circuit court. As the New York Times reported in Affordable Care Act Survives Latest Supreme Court Challenge:

 A federal judge in Texas ruled that the entire law was invalid, but he postponed the effects of his ruling until the case could be appealed. In 2019, the United States Court of Appeals for the Fifth Circuit, in New Orleans, agreed that the mandate was unconstitutional but declined to rule on the fate of the remainder of the health law, asking the lower court to reconsider the question in more detail.

Now, lawyers know that standing is a malleable concept. The justices too might have found it in this case if they looked harder, as Justice Samuel Alito’s writing in dissent noted (in which Justice Neil Gorsuch joined):

Today’s decision is the third installment in our epic Affordable Care Act trilogy, and it follows the same pattern as installments one and two. In all three episodes, with the Affordable Care Act facing a serious threat, the Court has pulled off an improbable rescue.

….

In prior cases, the Court has been selectively generous in allowing States to sue. Just recently, New York and certain other States were permitted to challenge the inclusion of a citizenship question in the 2020 census even though any effect on them depended on a speculative chain of events. [citations omitted]

As to whether individuals had standing to sue, Alito wrote there were “novel questions.” As to whether the state plaintiffs could do so, he had no doubt, and wrote at length. Once standing was established, he then considered the merits of the constitutionality of the individual mandate:

Texas and the other state plaintiffs have standing, and now that the “tax” imposed by the individual mandate is set at $0, the mandate cannot be sustained under the taxing power. As a result, it is clearly unconstitutional, and to the extent that the provisions of the ACA that burden the States are inextricably linked to the individual mandate, they too are unenforceable.

The majority of Court was not willing to be so generous with respect to standing here. And as a result, the health care insurance marketplace won’t be thrown into disarray, nor will many Americans suddenly find themselves uninsured during the midst of a by no means over pandemic. The ACA created a terrible system. A Supreme Court decision overturning Obamacare overnight would have made that terrible system worse.