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November 10, 2020

Today's Supreme Court hearings could end the ACA. Here's what you need to know.

Daily Briefing

    The Supreme Court on Tuesday is hearing oral arguments in a lawsuit seeking to strike down the Affordable Care Act (ACA) as unconstitutional. Here's what you need to know about the lawsuit, the main questions facing the Supreme Court, and the lawsuit's potential outcomes.

    About the lawsuit

    In February 2018, attorneys general (AGs) from more than a dozen Republican-led states filed the lawsuit. In the suit, the AGs argue that a 2017 tax reform law rendered the ACA's individual mandate unconstitutional by zeroing out the mandate's tax penalty for remaining uninsured. That's because the Supreme Court in 2012 ruled that the mandate would be unconstitutional without a tax penalty.

    The GOP AGs also argue that the rest of ACA cannot be separated from the individual mandate, because the law does not include a severability clause stating that some parts of the law may stand if other parts are struck down. Therefore, the entire law must be invalidated if the individual mandate is struck down as unconstitutional, the Republican AGs claim. The Department of Justice (DOJ), which is supporting the lawsuit under the Trump administration, has similarly argued that the Supreme Court must strike down the entire ACA if the Court finds that individual mandate is now unconstitutional.

    In December 2018, U.S. District Judge Reed O'Connor issued a ruling in which O'Connor agreed with the Republican AGs. However, Democratic AGs who are defending the ACA in the case appealed O'Connor's ruling to the U.S. Court of Appeals for the Fifth Circuit. House lawmakers also have joined in the lawsuit to defend the ACA.

    In December 2019, a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit in a 2-1 ruling also struck down the ACA's individual mandate as unconstitutional. However, the panel did not address the question of severability, and instead sent that question back to the lower court.

    Democratic AGs and the House appealed that ruling to the Supreme Court.

    The main questions facing SCOTUS

    The Supreme Court justices face two main questions when considering how to rule in the lawsuit:

    1. Is the individual mandate unconstitutional?

    The first question the Supreme Court will have to decide is whether the individual mandate is constitutional without its associated tax penalty, which was zeroed out under the 2017 tax reform law.

    On one hand, the Republican AGs involved in the lawsuit and DOJ argue that, based on the Supreme Court's 2012 ruling (which stated that the individual mandate was constitutional because it was a tax), the mandate is now unconstitutional, because it no longer functions as a tax.

    On the other hand, the Democratic AGs and the House argued that the mandate still functions as a tax, just a tax with a value of $0. As Axios reports, those defending the lawsuit claim that the individual mandate "still functions as a choice between buying insurance or paying a $0 penalty, and that no one is actually injured by the fact that the coverage requirement is technically still on the books with no penalty to enforce it." They add that, since none of the parties challenging the ACA in the case have been harmed by zeroing out the individual mandate penalty, they lack the standing to sue, and the Supreme Court therefore should dismiss the case, according to the Wall Street Journal.

    Axios reports that if the Supreme Court decides to uphold the individual mandate, "this case will be easier than almost anyone expects," and effectively will end with this first questions. However, because of the precedent set in the Supreme Court's 2012 ruling, legal experts largely believe that the Court will rule that the individual mandate is no longer constitutional. That means they'll have additional questions to consider in the case.

    2. What was Congress' intent—and which Congress' intent takes precedent?

    If the Supreme Court decides to strike down the individual mandate as unconstitutional, the justices next will have to consider whether that means other parts of the law, or even the entire law, must be struck down along with it—and that question largely depends on Congress' intent. As Axios reports, "Severability is always a question of congressional intent. The courts try to figure out whether Congress still would have passed other provisions without the one the courts are striking down."

    In this case, the Republican AGs involved in the suit and DOJ argue that both Congress and former President Barack Obama's administration did not intend for the individual mandate to be severable from the rest of the ACA. As evidence, they point to the fact that Congress did not include a severability clause in the ACA as it was passed in 2010. In fact, they argue in the suit, "[s]ix different times the ACA's text says the individual mandate must work 'together with the other provisions of this Act' as an integrated whole to accomplish Congress's goals," the Journal reports.

    In addition, the Republican AGs and DOJ note that when the Obama administration was defending the ACA in the 2012 lawsuit before the Supreme Court, officials had argued that the individual mandate couldn't be severed from the ACA's protections for people with pre-existing medical conditions.

    In contrast, the House and Democratic AGs defending the ACA in the current case argue that the Supreme Court must consider the intent of Congress when it passed the 2017 tax reform law—not when it approved the ACA in 2010. They argue that keeping "the rest of the ACA intact without the individual mandate [is] exactly what Congress did in 2017," when lawmakers approved legislation that zeroed out the mandate but left the rest of the law standing, Axios reports.

    How SCOTUS could rule

    There are several ways the Supreme Court could rule in the case. The justices could:

    • Dismiss the case without ruling on any of the lawsuit's merits by deciding that the parties who filed the lawsuit do not have the legal standing to sue;
    • Strike down the individual mandate and, along with it, the entire ACA;
    • Strike down the individual mandate but allow the rest of the ACA to stand;
    • Strike down the individual mandate and certain other parts of the law that appear to be inseverable from the mandate, such as the law's protections for pre-existing conditions, but leave other portions of the law in place; or
    • Strike down the individual mandate and not rule on the question of severability at all, instead sending that question back to lower courts.

    Currently, the Supreme Court consists of six justices appointed by Republican presidents and three appointed by Democratic presidents, meaning the Court could lean conservative. While some observers have said the Court's current make up may not bode well for the ACA, others have said that may not be the case. For instance, Axios reports that the Democratic AG's and House's severability arguments defending the ACA are "based on the kind of textualist, congressionally focused principles that often work with conservative justices."

    But for the Supreme Court to issue a ruling upholding the rest of the ACA without the individual mandate, all of the Court's Democrat-appointed justices and at least two Republican-appointed justices would have to vote to uphold the law, Axios reports.

    Many legal experts and observers believe Republican-appointed Chief Justice John Roberts could provide one of those votes, as Roberts went along with Democrat-appointed justices to provide the swing vote that ultimately saved the ACA from being struck down in 2012. In addition, according to Axios, recent decisions from the Republican-appointed Justices Samuel Alito, Neil Gorsuch, and Brett Kavanaugh have led some to believe they may rule to uphold the rest of the ACA while striking down the individual mandate, as well. Further, newly appointed Justice Amy Coney Barrett during a moot-court exercise focused on the case ruled that the individual mandate was unconstitutional, but the rest of the law could stand without the mandate.

    Broadly, legal experts believe that the Supreme Court will rule to strike down the ACA's individual mandate as unconstitutional but leave the rest of the law standing. However, as Axios reports, "that conventional wisdom is based on a lot of guesswork," and true indications of how the justices' might rule should become clearer during Tuesday's oral arguments (Baker, Axios, 11/9; Bravin/Armour, Wall Street Journal, 11/8; Rovner, Kaiser Health News, 11/9; Liptak/Goodnough, New York Times, 11/9).

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