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Why 'California v. Texas' Is The Harbinger of Supreme Court Healthcare Decisions To Come

California v. Texas Asks if the Affordable Care Act is Constitutional. Just How Will the Upcoming Supreme Court Ruling Affect Healthcare As We Know It?

As President Joe Biden approaches his first hundred days in office, the U.S. Supreme Court quietly faces a decision that will define American healthcare for decades to come.

The Affordable Care Act, a landmark piece of legislation enacted under the Obama administration, is once again at the center of national attention.

More commonly known as Obamacare, the ACA requires private health insurance companies to cover pre-existing conditions, and allows individuals without insurance to obtain healthcare through state and federal means. Perhaps the most controversial section of the law is the individual mandate, which institutes a financial penalty for individuals who do not purchase health insurance.

In essence, the core question of California v. Texas is whether the individual mandate is unconstitutional and, if it is, can it be it be severed from the rest of the ACA?

In 2012, the Supreme Court ruled in a 5-4 decision that the individual mandate is a tax, and is therefore acceptable under the Constitution’s Taxing and Spending Clause. According to the majority opinion in National Federation of Independent Businesses v. Seblius, because the individual mandate is "not so severe as to be coercive" and is collected by the Internal Revenue Service, it is a tax.

Chief Justice John Roberts authored the majority opinion, stating:

“Put simply, Congress may tax and spend. This grant gives the federal government considerable influence even in areas where it cannot directly regulate. The Federal Government may enact a tax on an activity that it cannot authorize, forbid, or otherwise control”, he wrote.

Chief Justice Roberts was joined by Justices Stephen Breyer, Ruth Bader Ginsburg, Elena Kagan, and Sonia Sotomayor. Meanwhile, Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas, and Samuel Alito dissented, arguing that Congress characterized the payment as a penalty. Equating the payment to a tax, they reasoned, would require a complete rewriting of the ACA.

Chief Justice John Roberts

More importantly, they argued that the individual mandate is inseverable from the rest of the ACA. In sum, because the individual mandate is such an integral component of the law, the ACA—in its entirety—is unconstitutional.

“The Act before us here exceeds federal power both in mandating the purchase of health insurance and in denying consenting states all Medicaid funding. These parts of the Act are central to its design and operation, and all the Act’s other provisions would not have been enacted without them," Justice Antonin Scalia wrote in his dissenting opinion. “In our view, it must follow that the entire statute is inoperative.”

Five years later, the Republican-controlled Congress passed the Tax Cuts and Jobs Act of 2017. Among other things, the law cancelled the financial penalty enforcing the individual mandate, lowering it down to zero. While Congress de facto repealed the individual mandate, it left the rest of the ACA in place.

Consequently, Texas and several other states—as well as a few individuals—filed a lawsuit in federal court challenging the constitutionality of the individual mandate. In sum, the plaintiffs argue that since the penalty is now zero, it can no longer be categorized as a tax. Because the Supreme Court ruled in NFIB that the individual mandate is not a valid exercise of Congress’ power to regulate commerce, the entire provision is now unconstitutional.

In response, California, et al., joined the lawsuit to defend the individual mandate. Their most prominent argument is that the mandate can still be upheld as a lawful tax—even if temporarily suspended—so long as the statute remains in place.

The federal district court sided with Texas, ruling that the individual mandate is unconstitutional, and therefore the entire ACA is invalidated because the mandate cannot be severed from the rest of the law. The U.S. Court of Appeals for the Fifth Circuit upheld the district court’s ruling, but remanded the case regarding the severability question.

The Supreme Court granted California’s petition for review on March 2, 2020. Oral arguments were heard on November 10, 2020.

Considering that the composition of the Supreme Court has drastically changed since 2012, with Justices Neil Gorsuch, Brett Kavanaugh, and Amy Cony Barret being confirmed over the past four years, it will be very interesting to see how the court rules in this significant case.

As reported by the New York Times on February 10, 2021, the Biden administration sent a letter to the Supreme Court informing them that the federal government was switching sides in a challenge to the Affordable Care Act. More specifically, a Justice Department official urged the court to uphold the law and ignore the position of the previous administration.

Either way, the individual mandate is an interesting aspect of the law. This will be a Supreme Court case that will define the legal boundaries of government-legislated healthcare to come.

Article Written by Jett James Pruitt

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