Affordable Care Act Survives Third Supreme Court Challenge

McGuireWoods Consulting

The Affordable Care Act (ACA) survived another challenge to its constitutionality today. In a 7-2 decision, the court threw out the challenge to the law, citing lack of standing by the plaintiffs. The plaintiffs, a group of Republican-controlled states and two Texas residents, argued that the entire ACA became unconstitutional when Congress eliminated the penalty for individuals who fail to obtain health insurance, known as the individual mandate. In Oct. 2020, a divided three-judge panel of the 5th U.S. Circuit Court of Appeals issued a ruling stating the individual mandate was unconstitutional because it can no longer be justified as a tax since Congress set the penalty at zero. However, the panel also remanded the case to the lower court to determine what portions of the ACA are or are not severable from the individual mandate. A coalition of Democratic attorneys general who had asked to intervene in the case then asked the U.S. Supreme Court to take up the case and not wait for the Texas court to rule on whether some or all of the ACA provisions are unconstitutional. Oral arguments were held just prior to the 2020 election.   

The Ruling: What It Means  

Nothing will change for providers and consumers within the current structure of the Affordable Care Act. The ACA has expanded Medicaid, created the federal exchange and permitted states to develop exchanges to provide insurance that met standards in the ACA. The law also made changes in Medicare to assist in developing value-based healthcare and other changes to provide better quality care.   

Today’s ruling does not prevent another novel legal challenge to its constitutionality. It also does not change the zero penalty for the individual mandate.

The Biden administration has undone some of the Trump administration's policy changes that affected the ACA, while other policy changes have been challenged in court. With today's Supreme Court ruling, the Biden Administration can move forward in its quest to gain coverage for more individuals, address healthcare costs and improve how the ACA operates.     

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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