Key takeaways and next steps in ACA court case
Q: What is this case about, anyway?
A: The Affordable Care Act requires most Americans to have qualifying health coverage, a provision known as the "individual mandate." Americans who refused to obtain coverage had to pay a penalty as part of their individual federal income tax. The Tax Cuts and Jobs Act passed in 2017 kept the individual mandate but reduced the penalty for refusing to obtain coverage to $0.
In a previous case, NFIB v. Sebelius, the U.S. Supreme Court held that the individual mandate was constitutional because it essentially functioned as a tax. But with the penalty zeroed out, a group of states led by the Texas attorney general sued. The plaintiffs argued that, in light of the zeroing out of the penalty, the mandate can no longer be upheld as a tax and, therefore, the entire ACA must fall. A Texas trial court agreed, and a group of states led by California appealed to the Fifth Circuit to defend the ACA.
Q: What did the Fifth Circuit hold?
A: The Fifth Circuit agreed with Texas that the individual mandate was unconstitutional. But it held that the trial court's ruling striking down the entire law might not be appropriate. When a provision of a law is determined unconstitutional, not all of the law is necessarily invalid and courts must assess whether the remaining provisions can be separated, or "severed." The Fifth Circuit held that the district court's analysis of whether the other provisions need to be severed was insufficient and that a "careful, granular approach" was required.
The Fifth Circuit also directed the trial court to consider the federal government's argument — raised for the first time on appeal — that any remedy should apply only to the plaintiffs that brought the case or only to the ACA provisions that harmed those plaintiffs.
Q: So what does the decision mean for the future of the ACA?
A: Nothing at all now. The trial court's decision is stayed and the case goes back to the trial court for further consideration. The ACA remains fully in effect.
Q: What did the dissenting opinion say?
A: The dissenting judge would have held that the plaintiffs did not have a legal right to bring their case — known as "standing" — because no one is harmed by a $0 penalty. The dissenting judge also believed the individual mandate without a penalty was still constitutional because it "does nothing more than require individuals to pay zero dollars to the IRS if they do not purchase health insurance." Lastly, the judge would have held that the entire ACA could be severed from the no-penalty individual mandate.
Q: What happens next? Will the U.S. Supreme Court get involved?
A: The California Attorney General has announced that the states supporting the law will seek Supreme Court review, urging that uncertainty surrounding the ACA be resolved as soon as possible. It is most likely that the earliest the Supreme Court will hear the case is October 2020.
Q: What will the trial court do in the meantime?
A: As directed by the Fifth Circuit, the trial court is expected to conduct a detailed analysis of the various provisions of the ACA. The court will presumably ask the parties to submit new filings addressing the issues raised by Fifth Circuit. But given that the trial court struck down the ACA in its entirety previously and has ruled against the ACA in other cases, many worry that the court will again strike down the ACA in full.
Q: What are the AHA's next steps?
A: The AHA will be filing an amicus brief in support of the Supreme Court taking the case as soon as possible and upholding the ACA. The AHA has actively supported the ACA in court since its enactment.
Sean Marotta, a partner at Hogan Lovells who authored AHA's amicus briefs in the case, answers questions about the decision.