Fate of the ACA hangs in the balance as Supreme Court confirmation hearings are set to begin

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By John Terhune
BU News Service

Amy Coney Barrett, President Trump’s nominee to replace the late Justice Ruth Bader Ginsberg on the Supreme Court, will face the Senate Judiciary Committee Monday for the start of her confirmation hearings. If confirmed, the new justice won’t have to wait long to weigh in on a divisive and high-profile issue, as the court is scheduled to hear arguments on California v. Texas, the latest challenge to the Affordable Care Act, on Nov. 10.

Joining 18 plaintiff states, the federal government has taken the unusual stance that its own law is unconstitutional, a position that Democrats have criticized repeatedly as the nation confronts a deadly pandemic. Twenty-one states are defending the ACA, while six more have filed an amicus brief in support of the statute.

In December 2019, the 5th Circuit affirmed a trial court’s ruling that the ACA’s individual mandate is unconstitutional and left open the possibility that the rest of the law, including its protections for those with pre-existing conditions, could be struck down. If the Supreme Court does rule the ACA unconstitutional, the American health care landscape would dramatically shift, and 20 million Americans would lose their health insurance.

Yet legal experts believe it’s unlikely California v. Texas will spell the end of the ACA, even if Barrett’s confirmation cements a powerful conservative majority on the court.

“That will not happen,” said Jonathan Adler, a law professor at Case Western Reserve University and the architect of a previous legal challenge to the ACA. Adler believes the court will uphold the statute and that the decision is “likely to be 6 to 3, 7 to 2, maybe even unanimous.” That’s because, said Adler, the plaintiffs are on the losing end of two of the three central questions of California v. Texas.

To understand those questions, one must examine two events that shaped the ACA as it exists today: the Supreme Court’s 2012 decision in NFIB v. Sebelius and the passage of the Tax Cuts and Jobs Act in 2017.

The battle over the individual mandate

After President Obama signed the ACA into law in 2010, states, businesses, and individuals sued the government, arguing that both the statute’s individual mandate and Medicaid expansion were unconstitutional.

In a dramatic turn, Chief Justice John Roberts joined the court’s liberal wing; the 5 to 4 decision meant that the mandate survived even as the court struck down parts of the law’s Medicaid expansion.

Though dissenting justices dismissed the move as “a vast judicial overreaching,” the majority justified their ruling by arguing that the financial penalty for failing to obtain health insurance was essentially a tax, which the federal government has broad powers to implement. The payment could be defined as a tax that Roberts wrote for the majority because it would generate revenue for the government.

Though the court didn’t strike down the individual mandate, Trump and Congressional Republicans could effectively kill it in 2017, as the Tax Cuts and Jobs Act reduced the shared responsibility payment to $0. While the mandate still technically existed, it became unenforceable.

California v. Texas: The issues

The first question the court will address in California v. Texas is whether the plaintiffs have the standing to sue in federal court. In order to bring suit, a plaintiff must show that they’ve been injured by the law that they’re challenging.

Adler believes the plaintiffs’ argument on this point is weak because the Tax Cuts and Jobs Act rendered the individual mandate impotent and thus unable to injure any party.

Nevertheless, Nicole Huberfeld, a professor at the Boston University Schools of Law and Public Health, does not believe this issue will be a sticking point, as the lower courts have accepted the plaintiffs’ argument that they have “an economic interest in whether the ACA exists or not.”

If the court rules that the plaintiffs have the standing to sue, it will turn to the individual mandate’s constitutionality. Because the ACA’s financial penalty no longer generates revenue, the plaintiffs argue, it cannot qualify as a tax. Thus, the court’s argument from NFIB v. Sebelius no longer applies, and the individual mandate should be ruled unconstitutional.

Huberfeld suggested the court is likely to side with the plaintiffs. 

“You’re hard pressed to think of a situation where the IRS has a $0 penalty,” said Huberfeld.

While the court’s 2012 decision to uphold the individual mandate was described as “the most significant federalism decision since the New Deal,” the mandate’s constitutionality is perhaps the least significant question in Texas v. California, according to Adler.

“By itself, nothing turns on that conclusion,” said Adler.

More important, he said, is how the court rules on the third and final question in the case: whether the individual mandate is severable from the rest of the ACA.

If the court finds that part of the ACA is unconstitutional, Adler explained, the question becomes, “What do you do with the rest of it?” The plaintiffs, who argue that the mandate is inseverable, are essentially targeting an already toothless provision in the hopes that the court will strike down the rest of the law with it.

“This is an effort by red states to find a clever way of taking down the law,” said Adler.

Yet Adler and Huberfeld agree that the plaintiffs don’t make a convincing case.

The trial court’s decision in favor of the plaintiffs was “simply wrong,” said Huberfeld, because it relied on the dissent from NFIB v. Sebelius, which had no power to set a legal precedent. Instead, the court should have looked to the majority’s ruling. Their decision showed that the ACA provisions were severable, as the court struck down the Medicaid expansion while upholding the individual mandate. 

Most importantly, Congress itself treated the individual mandate as severable when it reduced the shared responsibility payment to $0 but left the rest of the ACA intact, said Huberfeld.  

Though the four dissenting justices in the 2012 case would have struck down the entire law along with the individual mandate, the facts in California v. Texas don’t support the plaintiff’s severability argument, said Adler.

“It’s not clear that there’s any justice that believes severability works that way in this case.”

Outlook for the ACA

If the court rules that the individual mandate is severable from the rest of the ACA or that the plaintiffs don’t have standing, Americans won’t see their healthcare change.

But even if a newly confirmed Justice Barrett does join a conservative majority in striking down the ACA based on the individual mandate, Adler and Huberfeld believe that Democrats could quickly revive the law if they are successful in the upcoming elections. If they reinstate the financial penalty associated with the mandate, the ACA would once again be functional. 

“Assuming Biden is elected and has congressional majorities, that would be easy to fix,” said Adler.

And though progressives may fear that future sweeping reform will be impossible with a conservative majority on the court, Huberfeld says that something like a single-payer system could actually be easier than the ACA to defend from legal attacks.     

A stronger national health care system could be “pretty constitutionally straightforward,” said Huberfeld. “It doesn’t have to be that complicated.”

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