Obamacare’ Survived Supreme Court Challenge New Mexico Prevails Over Texas
The Supreme Court on Thursday tossed out a closely watched legal battle targeting the Affordable Care Act, rescuing the landmark health care law from the latest efforts by Republican-led states to dismantle it.
The court ruled 7-2 that the red states and two individuals who brought the dispute do not have the legal standing to challenge the constitutionality of the law's individual mandate to buy health insurance and ordered the case to be dismissed.
Justices Samuel Alito and Neil Gorsuch dissented. Justice Stephen Breyer delivered the majority opinion for the court.
As originally enacted in 2010, the Patient Protection and Affordable Care Act required most Americans to obtain minimum essential health insurance coverage. The Act also imposed a monetary penalty, scaled according to in- come, upon individuals who failed to do so. In 2017, Con- gress effectively nullified the penalty by setting its amount at $0. See Tax Cuts and Jobs Act of 2017, Pub. L. 115–97, §11081, 131 Stat. 2092 (codified in 26 U. S. C. §5000A(c)).
Texas and 17 other States brought this lawsuit against the United States and federal officials. They were later joined by two individuals (Neill Hurley and John Nantz). The plaintiffs claim that without the penalty the Act’s min- imum essential coverage requirement is unconstitutional. The court concluded they had no standing.
To read detail of the ruling visit
Thursday’s 7-2 ruling was the third time the court has rebuffed major GOP challenges to former President Barack Obama’s prized health care overhaul. Stingingly for Republicans, the decision emerged from a bench dominated 6-3 by conservative-leaning justices, including three appointed by President Donald Trump.
“The Affordable Care Act remains the law of the land,” President Joe Biden said, using the statute’s more formal name, after the court ruled that Texas and other GOP-led states had no right to bring their lawsuit to federal court.
At the time of printing no statement has been released by the New Mexico Republican Party concerning the ruling.
The lawsuit, initially fashioned as Texas v. United States, was filed in February 2018 by 20 Republican state attorneys general and Republican governors. The plaintiffs wanted to revisit National Federation of Independent Businesses v. Sebelius (NFIB), where the Supreme Court, in a 5-4 vote, upheld the mandate as constitutional. In that decision from 2012, Chief Justice Roberts construed the mandate as a tax, concluding that it was valid under Congress’s authority to tax and spend.
The challenge in Texas is related. The plaintiffs argued that the individual mandate is unconstitutional after the Tax Cuts and Jobs Act of 2017, in which Congress set the penalty for not purchasing “minimum essential coverage” coverage to $0. That bill was adopted in December 2017 using the budget reconciliation process after Congress repeatedly tried and failed to repeal the ACA throughout 2017. Without the penalty, the plaintiffs argued, the mandate is unconstitutional. They further argued that the mandate is so essential to the ACA that it cannot be severed from the rest of the law, meaning the entire ACA should be struck down. At a minimum, they asked the court to strike down the law’s guaranteed issue and community rating provisions alongside the mandate.
The state plaintiffs were later joined by two individual plaintiffs who live in Texas and purchased unsubsidized marketplace coverage. These individuals objected to having to comply with the mandate but intended to purchase ACA-compliant coverage in 2019, even after the penalty was set to $0, because they wanted to follow the law. The individual plaintiffs were likely added to the lawsuit to bolster the states’ weak standing argument in the lawsuit—which we now know was to no avail.
Democratic state attorneys general from (initially) 16 states and the District of Columbia—led by then-California Attorney General (and now Department of Health and Human Services Secretary) Xavier Becerra—were allowed to intervene in the case to defend the ACA. These states sought to protect their interests in billions of dollars in federal funding under the ACA, to ensure that their residents have access to health care, and to prevent chaos in their health care systems if the ACA was found to be unconstitutional.
The Department of Justice (DOJ) partially agreed with the plaintiffs and declined to defend the constitutionality of the mandate and other key ACA provisions. This was a highly unusual position: historically, the DOJ has defended federal statutes where a reasonable argument could be made in their defense. Then-Attorney General Jeff Sessions informed Congress of the DOJ’s position that the mandate was unconstitutional and that the ACA’s provisions on guaranteed issue, community rating, preexisting condition exclusions, and discrimination based on health status were inseverable and should also be invalidated. At that point, the DOJ had drawn the line there, arguing that the rest of the ACA was severable and should remain in effect.
In December 2018, Judge O’Connor, a federal judge in the Northern District of Texas, agreed with the plaintiffs and declared the entire ACA to be invalid. He reaffirmed this decision in late December when issuing a stay and partial final judgment. Many of district court’s legal conclusions, from standing to severability, were criticized by conservative legal scholars, the Wall Street Journal editorial board, and the National Review editorial board, among others.
The Fifth Circuit
The DOJ and Democratic attorneys general appealed Judge O’Connor’s decision to the Fifth Circuit Court of Appeals. Democratic attorneys general from an additional four states and the U.S. House of Representatives were allowed to intervene to defend the ACA while two plaintiff states withdrew from the case. On appeal, the DOJ under then-Attorney General William Barr took the new position that the entire ACA should be declared invalid. From there, the DOJ changed its position twice more, suggesting first that the district court’s decision applied only to the plaintiff states and two individuals, and second that the court’s remedy should be limited only to the provisions that injured the individual plaintiffs.
After oral argument, the Fifth Circuit, in a 2-1 decision, partially affirmed the district court, agreeing that the mandate is now unconstitutional. However, instead of determining what this meant for the rest of the ACA’s provisions, the court remanded the case for additional analysis on the question of severability. One judge disagreed with these conclusions and filed a lengthy dissent arguing that the plaintiffs lacked standing and that, in any event, the mandate remains constitutional and severable from the rest of the ACA. She opined that there was no need to remand, especially on severability.
At The Supreme Court New Mexico Joined The Argument the ACÁ Should Stay Intact
The Democratic attorneys general and the House appealed the Fifth Circuit’s decision to the Supreme Court. They initially asked for expedited review, which was denied. However, the Court agreed to hear the appeal on a non-expedited basis and also granted a conditional cross-petition filed by Texas, which asked the Court to uphold the district court’s decision. By granting both petitions, the Court considered the full scope of legal issues in Texas—from whether the plaintiffs have standing to whether the rest of the law could be severed from the individual mandate.
During the briefing and oral argument, 18 Republican attorneys general and governors, two individuals, and the Trump administration argued against the validity of the ACA, which was defended by 21 Democratic attorneys general and the House. The 18 challenger states were Texas, Alabama, Arkansas, Arizona, Florida, Georgia, Indiana, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Tennessee, Utah, and West Virginia. The 21 intervenor states were California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Nevada, North Carolina, New Jersey, New York, Oregon, Rhode Island, Virginia, Vermont, and Washington. Republican attorneys general in Montana and Ohio were not parties to the case but filed an amicus brief arguing that the mandate is unconstitutional but severable from the rest of the ACA. And a bipartisan group of governors from Maryland, Maine, New Hampshire, New Mexico, Pennsylvania, and Wisconsin filed a separate brief arguing that the ACA should be upheld. All but four states took a formal position in the lawsuit.
Briefing was completed in mid-August, and all filings are available here. Prior posts analyzed opening briefs from California and the House; amicus briefs from nearly 40 health care and other stakeholders; opening briefs from Texas, two individuals, and the Trump administration; amicus briefs from six organizations; reply briefs from California and the House; and reply briefs from Texas and the two individuals.
Oral argument was held on November 10, 2020 by the full panel of judges, including then-newly seated Justice Amy Coney Barrett whom President Trump nominated after the death of Justice Ruth Bader Ginsburg. (The Texas litigation and oral argument loomed large over Justice Barrett’s confirmation process in the Senate.) All three core issues of the litigation were discussed during oral argument: whether the plaintiffs had standing to sue, the continued constitutionality (or not) of the individual mandate, and whether the rest of the ACA could be severed if the mandate is unconstitutional.
As discussed here, much of the oral argument focused on standing. Many Justices seemed troubled that the penalty-less mandate could not be enforced against the plaintiffs and that invalidation of the mandate alone would not address their alleged injuries. Many also raised concerns about the “standing through inseverability” theory advanced by the plaintiffs and DOJ. These topics were key in the Court’s ultimate decision, discussed below.
Following the 2020 election, the Biden administration formally changed its position in the litigation. In early February, DOJ submitted a letter to inform the Court that it had reconsidered its position and no longer adhered to the conclusions in previously filed briefs. Upon reconsideration, DOJ’s new position was that the individual mandate, even with a $0 penalty, remained constitutional: The 2017 amendment to the ACA to reduce the penalty to zero “did not convert [the mandate] from a provision affording a constitutional choice into an unconstitutional mandate to maintain insurance.” DOJ’s argument echoed the briefs filed by California and the House but did not address standing at all.
It is worth noting that Congress enacted the American Rescue Plan Act in March 2021. This new law expanded upon the ACA by temporarily enhancing marketplace subsidies for lower- and middle-income people through 2022. To the extent that the Court looked to subsequent congressional action, this would have showed that the current Congress believed the ACA remained sound and constitutional.
New Mexico Health and Human Services Department estimated that over $1.7 billion in federal funding was at risk because if the Medicaid expansion went away, then that would have away too, and so underpinning all of the ACÁ is not just the coverage that people have. It's also the money that comes into New Mexico from the Federal system.
There was also concern about people with preexisting conditions, which is a protection under the Affordable Care Act that prevents insurers from discriminating against those who have them. If it had been overturned those protections would have also gone away.
Yet serious problems remain.
Nearly 29 million Americans remained uninsured in 2019, and millions more likely lost coverage at least temporarily when the COVID-19 pandemic hit according to the Kaiser Foundation. In addition, medical costs continue to rise and even many covered by the law find their premiums and deductibles difficult to afford as inflation rises.
In response, Biden’s $1.9 trillion COVID-19 relief package enacted in March expanded federal subsidies for health insurance premiums for those buying coverage. His infrastructure and jobs proposal being negotiated in Congress includes $200 billion toward making that permanent, instead of expiring in two years.
But his plan includes none of his more controversial campaign trail proposals to expand health care access, like creating a federally funded public health care option or letting Medicare directly negotiate drug prices with pharmaceutical companies. While those proposals are popular with Democratic voters, they face tough odds in a closely divided Congress.