The NCSL Blog

17

By Lisa Soronen

In a 7-2 opinion in California v. Texas, the Supreme Court held that neither the individual nor the state plaintiffs had standing to challenge as unconstitutional the Affordable Care Act’s (ACA) requirement to obtain health insurance following Congress setting the penalty at $0 in 2017. 

A seven-justice majority ruled that the plaintiffs had not suffered the sort of direct injury that gave them standing to sue.Credit...Stefani Reynolds for The New York TimesAs originally enacted in 2010, the ACA required most Americans to obtain “minimum essential health insurance coverage” or pay a penalty. In NFIB v. Sebelius (2012) the Supreme Court held this requirement was a constitutional tax. In this case the individual and state plaintiffs argued that becaus the ACA’s requirement to obtain health insurance is no longer a tax,the penalty is eliminated, making the entire ACA unconstitutional.

The Supreme Court didn’t rule on or even discuss either of these arguments. The ACA remains the law of the land.

In an opinion written by Justice Stephen Breyer, the court held the challengers in this case lacked standing to bring their case. According to the court, a plaintiff has standing if he or she can “allege personal injury fairly traceable to the defendant’s allegedly unlawful conduct and likely to be redressed by the requested relief.” Based on this prerequisite, the plaintiffs couldn’t meet the “fairly traceable” element of the test for standing.

The individual plaintiffs in this case claimed they had standing because they were harmed by having to buy health insurance. The court disagreed and reasoned this alleged injury wasn’t traceable to the ACA, because while the ACA tells them to buy insurance there is no penalty for failing to do so.

The state plaintiffs, Texas and over a dozen other states, claimed they had standing because of two pocketbook injuries: people increasing their use of state-operated health insurance and “administrative and related expenses required . . . by the minimum essential coverage provision.”

According to the court, regarding increased use of state health insurance, the state plaintiffs failed to show that the minimum coverage provision, “without any prospect of penalty,” will in fact lead to more individuals using state insurance. So, this alleged injury wasn’t fairly traceable to the ACA’s health insurance coverage requirement. Specifically, the court noted that the “programs to which the state plaintiffs point offer their recipients many benefits that have nothing to do with the [ACA’s] minimum essential coverage provision.”

Likewise, states pointed to costs related to “providing beneficiaries of state health plans with information about their health insurance coverage, as well as the cost of furnishing the IRS with that related information.” According to the Court these costs weren’t fairly traceable to the ACA’s minimum coverage provision because they are required by other provisions of the ACA.  

In his dissenting opinion, which Justice Neil Gorsuch joined, Justice Samuel Alito concluded the states have standing in this case. He noted that the ACA “imposes many burdensome obligations on states in their capacity as employers, and the 18 states in question collectively have more than a million employees. Even $1 in harm is enough to support standing.” The dissenting justices would have held the essential coverage requirement is unconstitutional and that states should not have to comply with “the ACA provisions that burden them.”

Lisa Soronen is executive director of the State and Local Legal Center and a regular contributor to the NCSL Blog on judicial issues.

 

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This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.