Obamacare Upheld by Supreme Court
When the federal government declined to defend the ACA in court, a group of state attorneys general led by California stepped in to do so. They argued that the 2017 change to the mandate’s penalty transformed it into a naked command to purchase health insurance and thus exceeded Congress’s enumerated powers.
SCOTUS RULES IN FAVOR OF OBAMACARE
The Supreme Court on Thursday upheld Obamacare in a major victory for President Barack Obama and millions of Americans who rely on the Affordable Care Act, or ACA. In a 7-2 decision, the justices rejected a challenge brought by a group of red states led by Texas and 19 other Republican-led states. The challengers argued that a change in the law made its individual mandate unconstitutional, which would then invalidate the entire ACA. Justice Stephen Breyer wrote the majority opinion. Justices Samuel Alito and Neil Gorsuch dissented.
The legal battle began in 2018 when a district court in Texas ruled that the ACA’s requirement that individuals buy health insurance or pay a tax penalty is unconstitutional, a ruling that the U.S. Court of Appeals partially affirmed in 2019. The challengers then asked the Supreme Court to consider the case.
In their appeal, the state attorneys general and two plaintiffs argued that the court had already ruled in 2012 that Congress has the power to require individuals to purchase health insurance or face a tax penalty. But in 2017 lawmakers reduced the penalty to zero, which the plaintiffs argued rendered the entire ACA unconstitutional.
But the justices disagreed, with two of Trump’s appointees to the court, Brett Kavanaugh and Amy Coney Barrett, joining the opinion. The two justices have not been on the court long and had not previously voted to strike down the ACA. But their inclusion on the bench suggests that it would be unlikely for a majority of justices to vote to overturn the law, even without the individual mandate, which is critical to ensuring stable and reliable health insurance markets.
A key element of the court’s reasoning was that the individual mandate isn’t a proper exercise of Congress’ powers under its Commerce Clause or Necessary and Proper Clause authority. The court also found that the plaintiffs did not have standing to sue over the ACA, arguing that the states were unable to demonstrate that they had suffered actual injury in order to show that the law should be struck down.
The justices’ broader reasoning in the case may have implications for employers who offer employees coverage under the ACA. Employers with more than 50 full-time employees must provide them with ACA-compliant coverage or risk losing a government subsidy, known as the employer shared responsibility payment. If the ACA is struck down, employers will have to find new ways to comply with federal law and keep their employees covered, says Kathy Bakich, national health compliance practice leader at Segal, an employee benefits consulting firm.
RECOMMENDED BY THE COURT
In their dissent, Alito and Gorsuch pointed to the previous cases in which the justices have ruled on the ACA and found ways to save it from elimination by the courts or Congress. The Supreme Court has now ruled three times in favor of the ACA, “pulling off improbable rescues at every turn,” he writes. But the court still faces a legal threat from another group of Republican-led states, and its next decision will be crucial.