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Breaking Down the Constitutionality of the ACA in California v. Texas

By Olga Zasztowt

The Affordable Care Act (ACA), also known as Obamacare, is under fire once again as the U.S. Supreme Court heard arguments in California v. Texas on November 10, 2020. This case was brought by a group of 20 Republican state officials led by Texas, backed by the Trump administration, who are once again questioning the constitutionality of the law.i Defending the ACA is a group of 17 Democratic states led by California.

The ACA is responsible for giving millions of Americans insurance coverage by making insurance more affordable, expanding Medicaid programs to cover more individuals, and supporting innovative medical care delivery in order to lower costs of health care for consumers.ii This law was previously upheld by the U.S. Supreme Court in 2012, in NFIB v. Sebelius, when among other arguments, it was decided that the ACA’s minimum essential coverage provision was constitutional if imposed as a tax and not as a part of Congress’s commerce power.iii,iv This provision, also known as the “individual mandate”, states that most people (not including low-income or Native American citizens) must maintain a minimum level of health insurance coverage, and failure to do so results in a financial penalty payable to the IRS.

In the current lawsuit, Republican state officials are again arguing that the minimum essential coverage provision is unconstitutional and, therefore, the entire law should be dismantled. This is in response to the 2017 Tax Cuts and Jobs Act, in which the Republican-led Congress set the penalty to zero dollars beginning in January of 2019.v This means that the ACA’s individual mandate now states one must either purchase insurance or pay a fee of zero dollars, which Republicans argue means the mandate is no longer a tax, becomes an “overreach of Congress’s commerce clause powers”, and therefore is unconstitutional.vi In 2019, lower courts affirmed that the mandate is unconstitutional because the penalty “no longer produces at least some revenue for the federal government,” and is consequently not a tax, so the case is now being heard before the U.S. Supreme Court.vii

Michael J. Mongan, California’s Solicitor General, and Donald Verrilli, who served as the U.S. Solicitor General under Obama’s administration, defended the ACA on behalf of California. while Kyle Hawkins, the Texas Solicitor General, and Jeffrey Wall, the current acting U.S. Solicitor General, argued against on behalf of Texas. The arguments at the heart of this case revolved around the premise of standing (the ability to bring a case against a defendant) based on the enforceability of the mandate and “injuries” claimed by the states, and the idea of severability (whether the individual mandate can be removed from the ACA without dismantling it entirely).viii

Texas argues that the individual mandate is a command to the American people to purchase health insurance or face a penalty. They state that “it’s reasonably likely…that people will sign up for Medicaid who otherwise would not have done so because of the command to do so,” simply to comply with the law. Texas argues that this command by Congress is unconstitutional, because it is an overstep of their powers which are outlined in Article I of the Constitution and ruled on in NFIB. In combination with other mandates in the ACA that increase the number of

residents who qualify for Medicaid and require states to monitor the health insurance status of its residents, this creates a “pocketbook injury” to states like Texas who say that they are facing increased costs due to an influx of new Medicaid qualifiers who otherwise would not have signed up, in addition to some administrative costs associated with this act. If this is taken as a given (and standing is established), Texas then argues that some findings that were included in the original ACA legislation from 2008 stating that the individual mandate is essential to “creating effective health insurance markets” constitutes an inseverability clause. They take this to mean that when the act was created, it was the legislators’ intent that the entire act is contingent on the individual mandate, and without it the ACA would be moot. So if this inseverability clause is taken as true, in addition to the individual mandate being judged as unconstitutional, the entire ACA must fall with it.

Defending the ACA, California argued that the individual mandate is an “inoperative provision” and does not signify a command from Congress. They state that this provision is not harmful to states, has no threat of enforcement for citizens, and therefore does not violate the constitution and standing cannot be established. They state that Congress essentially acted to repeal this previously contested mandate in good faith with the U.S. Supreme Court’s previous ruling, which was shown by both the President’s and Congress’s statements that Americans were free to choose whether or not to purchase insurance without penalty. Additionally, California argued that the “injury” Texas is claiming in this suit is not caused by the individual mandate as they are actually claiming injury from an entirely separate portion of the law. California states these injuries could not be addressed in the suit that Texas brought forward currently because even if the court ruled against the individual mandate, their injuries would persist as they have no foundations in the provision that is being debated in this case.

Further, California stated that the findings included in the original ACA which stated that the individual mandate was essential to creating the market were included and applicable in 2008. However, reports from 2017 found that the removal of this mandate would have no effect on the market or citizen’s enrollment in health insurance plans. Additionally, the Court and California noted that inseverability clauses include very technical legal language that specifically state they are inseverability clauses, and these findings would not represent that language.

In summary California stated:

“[The ACA] provides health insurance and other life-saving benefits and protections to hundreds of millions of Americans. Now, there is no doubt that it has been controversial, and in 2017, Congress debated whether to keep it. But Congress ultimately chose to preserve every provision while zeroing out the tax in [the individual mandate]”. If that surgical amendment created a constitutional problem, there’s only one remedy that would respect congressional intent, and that’s an order declaring that provision, and only that provision, unenforceable.”

In response to these arguments, Justice Kavanaugh stated “it does seem fairly clear that the proper remedy would be to sever the mandate provision and leave the rest of the Act in place, the provisions regarding preexisting conditions and the rest.” Justice Kagan also explained that

Texas’s claims of the unconstitutionality of Congress’s command are also unfounded because they have actually made the mandate even less coercive. Further, Chief Justice Roberts and Mongan of California both made statements that allowing the arguments brought by Texas could have “enormous regulatory disruption” to the legal system in future cases by allowing plaintiffs “roam around through…thousands of pages” of any law, and find something injurious, and use that to take down entire legislative schemes rather than individual problematic provisions. Contrarily, Justice Barrett, who previously spoke out against the ruling made in 2014, seemed to favor Texas by asking how the individual mandate can still be interpreted as a tax and not a command from Congress, if the tax portion of the mandate was removed in 2017.ix Overall, this does offer us some hope that the U.S. Supreme Court would rule in favor of maintaining the ACA, and actually act to remove the individual mandate from the law (which is currently not in effect anyway) and leave the remainder.x

As it stands, the ACA is still intact, but its future is uncertain, and a ruling could come as late as June 2021. It is known that if this legislation falls nearly every American will be affected in some way. For Marylanders, one in five plans would be eliminated and millions of residents who have insurance provided by employers would lose benefits and face increased costs. Additionally, the state would lose about $4 billion in federal funding which is used for offsetting costs for consumers, subsidizing premiums for enrollees, and expanding Medicaid to increase coverage for low-income residents.xi While certain protections have been codified by the Maryland General Assembly, major parts of the ACA would fall through because of the staggering costs of providing services across the state. Removing this safety net, especially for those with pre-existing conditions who may otherwise become uninsurable, is unacceptable at any time, but especially during the throes of a global pandemic. i https://www.baltimoresun.com/news/nation-world/ct-nw-nyt-affordable-care-act-scotus-20201108-vv5dfyzfbfeoxl7m6bn4uaj7ay-story.html ii https://www.healthcare.gov/glossary/affordable-care-act/ iii https://www.kff.org/health-reform/issue-brief/a-guide-to-the-supreme-courts-decision/ iv https://journalofethics.ama-assn.org/article/constitutionality-affordable-care-act-update/2012-11#:~:text=While%20the%20court%20rejected%20the,as%20a%20tax%20%5B9%5D.&text=While%20Congress%20doesn’t%20have,those%20individuals%20who%20do%20not. v https://www.baltimoresun.com/health/bs-hs-supreme-court-decides-aca-in-maryland-20201109-d6ccw5u3bvdcxblgtlwxh3l54u-story.html?fbclid=IwAR3hGAEqGjeNE80ZAJ2Kz44DLsjKb0PuIZOPQZx7d-PdGQy_Q2tbdcwIHQY vi https://journalofethics.ama-assn.org/article/constitutionality-affordable-care-act-update/2012-11#:~:text=While%20the%20court%20rejected%20the,as%20a%20tax%20%5B9%5D.&text=While%20Congress%20doesn’t%20have,those%20individuals%20who%20do%20not. vii https://www.kff.org/health-reform/issue-brief/explaining-california-v-texas-a-guide-to-the-case-challenging-the-aca/ viii https://www.supremecourt.gov/oral_arguments/argument_transcripts/2020/19-840_i426.pdf ix https://www.washingtonpost.com/health/judge-barrett-aca-health-care-law/2020/09/28/429d165e-ff4c-11ea-b555-4d71a9254f4b_story.html x https://www.cnbc.com/2020/11/10/supreme-court-appears-willing-to-leave-obamacare-in-place-.html xi https://www.baltimoresun.com/health/bs-hs-supreme-court-decides-aca-in-maryland-20201109-d6ccw5u3bvdcxblgtlwxh3l54u-story.html?fbclid=IwAR3hGAEqGjeNE80ZAJ2Kz44DLsjKb0PuIZOPQZx7d-PdGQy_Q2tbdcwIHQY

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