On June 17, the U.S. Supreme Court finally decided California v. Texas, the case challenging the constitutionality of the Affordable Care Act (ACA) after the penalty for not complying with the individual health insurance mandate was reduced to zero in the 2017 Tax Act.  Many believed the case would center around whether the rest of the ACA could be severed from the individual mandate if the Court found the mandate unconstitutional.  See, Could Severalbility Be The Treat That Foils Senate Republican’s ACA Supreme Court Trick? However, the Justices did not even reach that issue because they found in a 7-2 decision that the challengers lacked standing to bring the lawsuit in the first place.

The challengers’ (two individuals, Texas, and 17 other Republican states) argument was fairly straight forward.  In 2012 the Supreme Court upheld the constitutionality of the individual mandate under the taxing power of Congress.  In the 2017 Tax Act, Congress reduced the penalty for not complying with the individual mandate to zero.  Therefore, there was no longer a tax and the individual mandate is now unconstitutional.  A Texas District Court agreed in 2018 and also held the individual mandate was so integral to the ACA that the entire Act was also unconstitutional.  On appeal, the United States Court of Appeals for the Fifth Circuit agreed on the individual mandate but ordered the lower court to revisit whether any of the rest of the ACA could be saved.

California, the U.S. House of Representatives, and other Democratic states asked the high court to overturn the lower courts and again uphold the individual mandate.  Alternatively, they argued that if the mandate were unconstitutional, the rest of the ACA was severable and should be upheld.  Finally, they argued that neither the individuals nor the state challengers were injured enough by the ACA to have standing to bring the suit challenging it.

Writing for the majority, Justice Breyer said that the two individuals challenging the law lacked standing because their past and future insurance payments necessary to meet the individual mandate was not fairly traceable to any allegedly unlawful conduct of which they complained.  Since there is no penalty for not complying with the mandate, it is unenforceable and the individuals have not shown any government action or conduct has caused or will cause the injury they attribute to the mandate.  Unenforceable statutory language alone is not sufficient to establish standing and standing requires identification of a remedy to redress the plaintiff’s injuries.  The only remedy requested was declaratory judgment that an unenforceable provision is unconstitutional which would amount to an advisory opinion.

Texas and the other states also failed to show the injuries they allege are traceable to the government’s alleged unlawful conduct.  Breyer rejected, the alleged indirect injury of increased cost to run state-operated medical insurance programs that provide the mandated minimum essential coverage and increase in enrollment in such programs due to the mandate.  He stated that without a penalty, the states failed to show how the mandate leads more individuals to enroll, “Neither logic nor intuition suggests that the presence of the minimum essential coverage requirement would lead and individual to enroll in one of those programs that its absence would lead them to ignore. . . without a penalty what incentive could the provision provide?”

Breyer further rejected the states’ argument they suffered direct injury from increased administrative and related expenses required by the mandate’s minimum essential coverage requirements, finding that it was other provisions of the ACA that impose those requirements not the individual mandate.  Further, those provisions are enforced without reference to the mandate.  Holding the mandate unconstitutional would not show that enforcement of these provisions was unconstitutional.  Therefore, the government’s conduct in question is not fairly traceable to the allegedly unlawful provision.

Justice Alito was joined by Justice Gorsuch in dissenting.  Interestingly, Justice Barrett, whose appointment to the high court was thought by many to doom the ACA,  joined the majority opinion.

The decision on procedural grounds means that the merits as to whether the individual mandate is constitutional was not reached.  This leaves open the possibility of it being challenged again, if a plaintiff with actual injury, and thus standing can be found by opponents of the ACA.  Of course, should the issue wind up at the Supreme Court again, it could still save the rest of the ACA by holding the unconstitutional mandate is severable.