U.S. Supreme Court Affirms Constitutionality of the Affordable Care Act (a Third Time)

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Soon after the Affordable Care Act (“ACA” or the “Act”) was passed in 2010, its critics initiated the first major legal effort to strike down the entire law as unconstitutional. That case, National Federation of Independent Business v. Sibelius, led to a 2012 U.S. Supreme Court decision authored by Chief Justice John Roberts which held that the Act’s “individual mandate” (a monetary penalty directed at certain individuals who failed to obtain health coverage) was constitutional – but limited the Act’s expansion of Medicare. Four of the Supreme Court’s nine justices dissented from the decision, leading many to believe that a slight shift in the Court’s composition might yield a different result.

Fast forward to 2015, in King v. Burwell, the Supreme Court was called upon to determine whether the ACA was unconstitutional because a provision in the law suggested that the tax credits available under the law to eligible individuals who purchase coverage on an insurance exchange were only available to residents of states that ran their own exchanges – and not residents of any state that opted to have the federal government run their exchange (most Republican-led states). In a 6-3 majority opinion, Chief Justice Roberts reasoned that the verbiage in the challenged provision was flawed, but the provision had to be interpreted in the broader context of the ACA and, when viewed in this manner, the challenged provision did not render the Act unconstitutional.

In Texas v. California, the Supreme Court was called upon a third time to determine whether the Act is constitutional. Once again, the Act’s individual mandate was the focus of the challenge. After legislative efforts to repeal the Act in 2017 failed, a Republican-led Congress passed the Tax Cuts and Jobs Act later that year, amending the ACA to reset the individual mandate penalty at $0. The State of Texas thereafter undertook a new effort to strike down the Act, arguing that the $0 penalty was an improper exercise of Congress’s taxing authority – and that, since the individual mandate is a central part of the law, the entire Act should be deemed unconstitutional. Although the Court’s conservative bloc had expanded since the King decision, this time, a stronger majority of 7-2 ruled that the Act was constitutional in a decision issued on June 17, 2021. Writing for the Court, Justice Breyer reasoned that the states challenging the law could not demonstrate that they were subject to any past or future injury due to the $0 penalty and, therefore, there was no “controversy” ripe for the Court’s consideration.

Many commentators believe that “third time’s a charm” for the ACA – meaning that the era of legal challenges to the very existence of the law may now be coming to an end. However, hundreds of lawsuits are ongoing in courts around the country that challenge “bits and pieces” of the law. Like religious challenges to the “contraception mandate” that succeeded before the Supreme Court in the 2014 case of Hobby Lobby v. Burwell, some of the ongoing “limited scope” challenges may also hit their mark. For example, in Kelley v. Azar, the plaintiffs claim that the ACA’s requirement that certain preventive services be offered by plans on a non-fee basis is unconstitutional since the government bodies charged with identifying which services are on the no-fee list are not appropriately appointed – and that the requirement infringes on religious freedoms. Some believe that this case has a good chance of succeeding if it reaches the Supreme Court. Of course, with Democrats currently controlling the White House and both houses of Congress, a legislative fix to defects in the law before the Kelley case reaches the Supreme Court is possible. We will keep you advised of significant developments via this blog.

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