Supreme Court Cases Challenging the ACA
Since 2010, various states, private entities and individuals have challenged parts or all of the ACA nearly 2,000 times in state and federal courts. The following are brief summaries of one active (California v. Texas) and five settled court cases opposing the ACA.
California v. Texas
Eighteen states—along with two individuals—are arguing before the U.S. Supreme Court that, because federal lawmakers reduced the mandate’s shared responsibility payment to $0 through the 2017 Tax Cuts and Jobs Act, the individual mandate is unconstitutional. This argument is based on the Supreme Court’s 2012 ruling that the individual mandate was a tax. If the shared responsibility payment is $0, the individual mandate generates no money and therefore cannot be a tax, the challengers argue. The challengers also argue the rest of the health law cannot be “severed” from the individual mandate and therefore the entire ACA is unconstitutional.
The federal government is not defending the ACA before the Supreme Court. The Department of Justice filed an amicus brief arguing the individual mandate is unconstitutional and the rest of the ACA cannot be severed and is therefore unconstitutional.
Twenty-one states, along with the House of Representatives, are defending the federal law, arguing that the individual mandate is constitutional and severable from the rest of the ACA. These states are also challenging whether the states and individuals filing the lawsuit have standing to challenge the health law.
A federal district court ruled that the individual mandate along with the entire ACA was unconstitutional. The U.S. Court of Appeals for the 5th Circuit held that the individual mandate was unconstitutional but instructed the lower court to redo its severability analysis. In the meantime, the Supreme Court has agreed to decide whether the individual mandate is unconstitutional and, if it is unconstitutional, whether the rest of the act (or parts of the act) are severable. The Supreme Court heard oral arguments for the case on Nov. 10, 2020, and a decision is expected by June 2021.
King v. Burwell
The ACA provides that individuals can purchase health insurance on health insurance marketplaces, or exchanges, run by either the states or the federal government. It also authorizes a federal tax credit for low- and middle-income individuals who purchase insurance on the exchange. The plaintiffs in King v. Burwell argued that individuals who live in states using the federally facilitated exchange (or HealthCare.gov) are not eligible for health insurance subsidies because the ACA states subsidies are available for health plans purchased through, “an Exchange established by the state.” Thus, the legal question was whether states opting to use HealthCare.gov rather than operating their own exchange were considered “an Exchange established by the state.” In 2015, the Supreme Court ruled that consumers purchasing health insurance through HealthCare.gov are eligible for health insurance subsidies, and that ruling otherwise would destabilize the health insurance marketplaces—the opposite intent of the federal health law.
National Federation of Independent Business v. Sebelius
In 2012, 26 states, several individuals and the National Federation of Independent Business challenged the constitutionality of the individual mandate and provisions in the ACA requiring states to expand Medicaid coverage or risk losing all federal Medicaid funding. The Supreme Court ruled that the individual mandate was constitutional under Congress’ taxing power. However, the Supreme Court ruled that Medicaid expansion established through the ACA is constitutional if it is optional, thus prohibiting the federal government from penalizing states choosing not to expand Medicaid eligibility.
Contraception Cases
The Supreme Court has heard three separate cases—Burwell v. Hobby Lobby, Zubik v. Burwell and Little Sisters of the Poor v. Pennsylvania—relating to the ACA’s mandate that health insurance plans cover contraception without cost-sharing. Regulations long exempted churches from the contraceptive mandate, and 2013 regulations allowed religious non-profits to participate in a “self-certification accommodation” process where employees could still receive contraceptive coverage from their health plan.
Burwell v. Hobby Lobby (2014) held that privately and closely held companies with religious objections are exempt from the ACA’s requirement to provide employees with no-cost contraceptives and extended the self-certification accommodation process to these entities.
In Zubik v. Burwell (2016), religious nonprofits claimed that submitting a form to their insurer or the federal government saying they object to providing contraception coverage on religious grounds violates the Religious Freedom Restoration Act. The Supreme Court did not decide this issue when the parties agreed contraceptive coverage could be provided to the nonprofits’ employees, through the nonprofits’ insurance companies, without any notice from the nonprofits.
New rules in 2017 exempted all objecting religious employers (not just churches) and morally objecting non-profits and private for-profits from the contraceptive mandate. These new rules made the self-certification accommodation process optional for these employers. In Little Sisters of the Poor v. Pennsylvania (2020), the Supreme Court upheld the 2017 rules expanding exemptions from the coverage mandate.
State Legislative Actions Safeguarding the ACA
Several states have incorporated parts of the ACA into state law, such as codifying the federal law’s consumer protection provisions or establishing a state-level individual mandate.
Consumer Protections
Although some states had existing state laws establishing various consumer protections prior to and during the implementation of the ACA, at least 19 states have codified some or all of the ACA’s consumer protection provisions into state statute since 2018. These protections include guaranteeing health coverage for individuals with preexisting conditions, prohibiting insurers from varying premium rates based on an enrollee’s health-status, requiring coverage for the 10 essential health benefits, establishing cost-sharing protections and various other provisions.
State laws codifying ACA consumer protections apply to state-regulated health plans and do not affect self-insured employer-sponsored plans.
State-Level Individual Mandate Requirements
Five states and the District of Columbia have established state-level individual mandates, which require individuals to maintain “minimum essential coverage” or otherwise face a tax or shared-responsibility payment. Massachusetts created its state-level mandate in 2007 (prior to the passage of the ACA). California, the District of Columbia, New Jersey, Rhode Island and Vermont established requirements after federal lawmakers reduced the federal individual mandate to $0 in December 2017.
State Legislative Actions Challenging the ACA
Several states have enacted measures opting out of certain reforms or provisions established through the ACA, such as non-expansion of Medicaid, non-participation in the operation of the health exchanges or marketplaces, blocking individual health benefits such as contraception, or restrictions on navigators. Beyond these measures, states have taken various legislative actions to challenge or opt out of broad health reform, especially during the initial implementation stages of the ACA.
- Requiring Legislative Approval. At least eight states—Arizona, Arkansas, Georgia, Missouri, Montana, New Hampshire, North Carolina and Wyoming—require legislative approval prior to implementing certain parts of the ACA, such as operating a state-based insurance exchange.
- Opposing the Individual and Employer Coverage Mandate. At least 18 states currently have statutory or state constitutional language providing that state government will not implement or enforce mandates requiring the purchase of insurance by individuals or payments by employers.
- Pursuing Interstate Health Compacts. Interstate health compacts allow a group of states to collectively establish broad health care programs that operate outside of the ACA or other federal laws. However, these compacts do not block ACA implementation and are not yet binding. They require congressional approval because they seek to substitute state control where federal law and regulations exist.
- Limiting Use of Navigators. At least 19 states enacted laws regulating or restricting the functions of navigators and others who assist consumers in selecting health insurance in exchanges or marketplaces.
Additionally, many states have expanded access to coverage options outside of ACA-compliant health plans. For more information, visit NCSL’s Alternative Coverage Options webpage.