June 17, 2021

Supreme Court Decides California v. Texas

On June 17, 2021, the U.S. Supreme Court decided California v. Texas, holding that States and individuals challenging the Affordable Care Act lack standing to claim that the “individual mandate” is unconstitutional after Congress repealed the penalty associated with it.

The original Affordable Care Act, enacted in 2010, “required most Americans to obtain minimum essential health insurance coverage,” and “imposed a monetary penalty” on those who did not. In 2012, the Supreme Court held that this was a permissible exercise of Congress’ power to tax. “In 2017,” however, “Congress amended the Act by setting the amount of the penalty … to ‘$0.’” Thus, although the individual mandate remained in the statute, failure to comply with it no longer carried any legal consequence, and the IRS eliminated all requirements that individuals report about their health coverage.

Two individuals and several States, led by Texas, filed suit claiming that after this amendment, the individual mandate was no longer a tax and therefore was unconstitutional. The plaintiffs further claimed that the individual mandate was inseverable from the Affordable Care Act as a whole, and so the entire statute had to be struck down. Although the United States was a defendant, it filed briefs agreeing with the plaintiffs’ position, and several other States led by California therefore intervened to defend the ACA.

The district court agreed with the plaintiffs, ruling that the individual mandate was unconstitutional and inseverable from the ACA as a whole. The Fifth Circuit vacated the severability ruling and directed more proceedings in the district court, but before that could happen, the Supreme Court granted review.

Today, the Supreme Court reversed by a 7–2 vote, holding that the plaintiffs lacked standing because they had not “shown that the injury they will suffer or have suffered is fairly traceable to the allegedly unlawful conduct of which they complain.” Although the individual plaintiffs purchased health insurance to comply with the individual mandate, and the state plaintiffs alleged that the individual mandate drove people into their public insurance programs, the Court noted that these injuries arose solely from the existence of the challenged statute, not from “any kind of Government action or conduct” enforcing the statute. The Court stated that judicial “remedies … operate with respect to specific parties,” and “do not simply operate on legal rules in the abstract.” Since the plaintiffs had not sought any remedy against Congress itself, and since there is no executive official who takes any action to enforce the amended individual mandate, the Court concluded that the plaintiffs’ injuries were not caused by any conduct that the courts can remedy. The Court added that the state plaintiffs lacked standing for the additional reason that they “have not demonstrated that an unenforceable mandate will cause their residents to enroll in valuable benefits programs that they would otherwise forgo.”

The Court also concluded that the state plaintiffs could not establish standing to challenge the individual mandate by pointing to costs they incurred in complying with other provisions of the ACA, not related to the individual mandate. The Court noted that invalidating the individual mandate “would not show that enforcement of any of these other provisions violates the Constitution,” and so held that the government’s enforcement of the other provisions “is therefore not fairly traceable to enforcement of the” individual mandate.

Justice Breyer delivered the opinion of the Court, joined by Chief Justice Roberts and Justices Thomas, Sotomayor, Kagan, Kavanaugh, and Barrett. Justice Thomas also filed a concurring opinion. Justice Alito filed a dissenting opinion, joined by Justice Gorsuch.

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