Subscribe to The COBRA Advisor newsletter for fresh HR insights, law updates, and more.
On Tuesday, November 10th the US Supreme Court heard oral arguments on the legality of the Affordable Care Act (ACA) in the case California v. Texas.
If that sounds familiar, its because it is the third time since the law was in enacted that the constitutionality of the Act has been brought to the attention of the US’ highest court. The first time the ACA, also know as Obamacare, was attempted to be dismantled in court was in 2012, in the case of National Federation of Independent Business v. Sebelius. The court, led by Chief Justice John Roberts, along with the court’s four more liberal justices upheld the mandate, reasoning that it imposed a tax on individuals who do not obtain health insurance. But in December 2017, Congress reduced the penalty for failing to obtain health insurance from $695 to $0. That decision prompted Texas and other states with Republican leaders to file a new lawsuit against the ACA. They argued that without a penalty for noncompliance, the mandate is merely a command to buy health insurance and is therefore unconstitutional. Their suit claims that without the mandate tax, the rest of the law needs to fall too. U.S. District Judge Reed O’Connor, a federal district judge in Texas agreed with the plaintiff’s suit that the entire law was unconstitutional back in December of 2018, which is how it has made its way back to the US Supreme Court once again.
What are the possibilities of how the court could rule on this case?
First and foremost, the Court will need to determine whether or not the plaintiffs have what is known as a “standing” - which essentially means a legal right to sue. The court could avoid deciding the case altogether on its merits entirely if they feel that the plaintiffs do not have a “standing” to sue. Although the question of standing is often a formality, reports from the oral arguments that took place on Tuesday suggest that it was front and center for the majority of the proceedings, and the justices appeared to be divided upon the argument’s conclusion.
If the plaintiffs do have a standing, the core of the case will likely be whether the individual mandate is still constitutional now that Congress has reduced the penalty for failure to obtain insurance to zero, and since the 2017 amendment it no longer raises revenue. One possibility of how the court could rule would be that, without the tax, the requirement to have health insurance is unconstitutional, but the rest of the law is not. In that case, the justices might strike the mandate only, which would have basically no impact.
Where things could get dicey, in legal terms, is the question of severability - whether the mandate can be separated from the rest of the ACA. If not, the court may concur that the individual mandate language without the penalty is unconstitutional and it is also closely tied to other parts of the law. If that is ultimately the decision the court falls upon, there’s a couple different outcomes that could stem from that conclusion. The first and most obviously impactful result from that determination would be if the court upheld the ruling of the Texas judge and dismantle the entire law as unconstitutional altogether. Although most legal analyst believe that is not the most likely outcome. The other route the court could go if they believe the individual mandate without penalty is unconstitutional, is to strike down the mandate along with some of the provisions of the law that are most closely related to it. One of those accompanying provisions would almost likely be in jeopardy would be the insurance protections for people with preexisting conditions - a tremendously popular provision of the law. The individual mandate and the preexisting condition clauses are connected because the original purpose of the mandate was to make sure enough healthy people sign up for insurance to offset the added costs to insurers of the unhealthier citizens.
What is the most significant difference this time around, as opposed to when the court previously voted to uphold the law?
The biggest concern for the advocates of the ACA this time in court is the newly appointed Justice, Amy Coney Barrett, who recently replaced Justice Ruth Bader Ginsburg following her passing in September of this year. Whereas Ginsburg leaned left and voted with Chief Justice Roberts to uphold the law in 2012, and again when it was less divisively challenged in 2015, the newly appointed Justice Barrett was nominated by the President Trump administration and back by the Republican Party. The newly appointed Justice Barrett had previously disagreed with decision of the court to uphold the ACA back in 2012. With Barrett replacing Ginsburg, even if moderate Chief Justice Roberts sides again with remaining three liberals, they could be outvoted by the conservatives, who now a have commanding majority with the five other Justices. That being said, on the bright side for the defenders of the ACA, according to the reports of the oral arguments that took place on November 10, there were statements made by republican Justice Kavanaugh that suggested that if the individual mandate was stuck down, he would be inclined to leave the rest of the law in place.
When will a decision be made and what is the mostly likely outcome?
After the court hears the arguments from both sides, it typically takes months for the court to issue a decision, so most legal analysts aren’t expecting a verdict until probably the spring of 2021. The popular opinion on the temperature of this case following the oral arguments is that the most likely outcome is that the ACA, with or without the mandate, will ultimately be upheld once again. However, if the court does invalidate the entire ACA, Congress could try and step in and make changes to save the law, but with a Republican controlled Senate, it’s unclear that they would be able to do so, and the future of healthcare in America could revert back to how things were in 2010 before the ACA was enacted into law.