Blog: Affordable Care Act Survives Third Supreme Court Suit Unscathed

Individuals and states have tried — three times — to wipe the Affordable Care Act off the books. The Supreme Court today — for the third time — rejected those efforts. In a lopsided 7-2 opinion, the Court held that individual plaintiffs and states seeking to strike down the Act lacked “standing,” or the legal right, to bring their suit. 

Although the Court’s opinion turned on the nuances of standing doctrine, the bottom line for hospitals is clear: The ACA is here to stay, without change, a result AHA advocated in a Supreme Court friend-of-the-court brief joined by three other national hospital associations. Justice Breyer authored the Court’s opinion, joined by Chief Justice Roberts and Justices Thomas, Sotomayor, Kagan, Kavanaugh, and Barrett. Only Justices Alito and Gorsuch dissented.

In 2017, Congress amended the ACA to zero out its penalty for those who did not comply with its individual mandate requiring Americans to obtain health insurance coverage. This amendment effectively neutered the mandate; it would technically remain on the books, but nothing would happen to those who did not buy insurance.

But the plaintiffs in this lawsuit saw the amendment as an opening to attack the ACA. In 2012, the Supreme Court had upheld the individual mandate as an exercise of Congress’s taxing power. As the Court saw it, the individual mandate was actually a choice: Buy insurance or pay tax. With the penalty gone, the plaintiffs argued, the mandate could no longer be upheld as a tax. And the unconstitutional mandate, they claimed, could not be severed, or separated, from the rest of the ACA. 

The Court today held that it did not need to wade into the merits of the plaintiffs’ challenge. Under the Constitution, a plaintiff must have “standing” to bring a federal-court lawsuit. Standing requires both that the plaintiff be injured in a tangible way and that the injury be traceable to the legal provision that the plaintiff claims is unlawful. The individual and state plaintiffs here argued that they satisfied this requirement in different ways, but the Court disagreed with them both.

The individual plaintiffs argued the mandate without a penalty harmed them because they felt compelled by the mandate’s existence to purchase insurance they would otherwise forego. But the Court explained that without a penalty, the mandate does not coerce anyone to do anything; it is just unenforceable statutory text. The alleged harm of paying for insurance therefore was not traceable to the allegedly unconstitutional individual mandate.

The state plaintiffs’ standing arguments also went nowhere. The state plaintiffs argued that the individual mandate cost them money because state employees would sign up for state-sponsored insurance plans and state residents would sign up for state-funded Medicaid to comply with the mandate.  

But the Court again explained that the mandate without a penalty was not responsible for these harms; without a penalty, state employees and citizens would sign up for health insurance and Medicaid because of the benefits to their health, not to comply with a no-consequences mandate. 

The state plaintiffs also argued that they were harmed by having to report compliance with various ACA provisions, but the Court held yet again that the harm was not traceable to the individual mandate. Those reporting requirements existed separately from the allegedly unconstitutional mandate and therefore the mandate was not the source of the states’ claimed reporting-cost harms.  

The Court also declined to pass upon the plaintiffs’ argument, advanced for the first time in the Supreme Court and embraced by Justice Alito’s dissent, that a plaintiff can prove standing by arguing he is harmed by a constitutional provision of law that cannot be severed from an unconstitutional provision of law that does not harm him. And with no plaintiff having standing, the Court held that the entire lawsuit must be dismissed.  

Beyond the legal details, the message from the Court’s overwhelming majority opinion is clear: The Court is tired of being asked time and again to overturn the law, on increasingly tenuous legal arguments. 

And the message for hospitals is equally clear: They can continue the important work of implementing the ACA and building and expanding on its coverage and innovation gains.

Sean Marotta is a partner at Hogan Lovells and AHA outside counsel.