Affordable Care Act survives Texas’ Supreme Court challenge

June 17, 2021

JESSIE HELLMANN 

MICHAEL BRADY 

NONA TEPPER 

The Supreme Court on Thursday upheld the Affordable Care Act for the third time after Texas and several Republican-led states sought to overturn the law, saying they do not have standing to challenge the 2010 healthcare statute.

The plaintiffs had argued the law is unconstitutional after Congress repealed the individual mandate penalty in 2017. But the court, in a 7-2 opinion written by Justice Stephen Breyer, said the states didn’t show past or future injury.

“With the penalty zeroed out, the IRS can no longer seek a penalty from those who fail to comply,” Breyer wrote for the court. “Because of this, there is no possible government action that is causally connected to the plaintiffs’ injury—the costs of purchasing health insurance.”

During oral arguments in November, every justice questioned the plaintiffs’ standing. The states and individual plaintiffs claimed that the individual mandate imposes a significant cost burden, even after Congress zeroed out the penalty for not carrying minimum required coverage. That argument didn’t hold water with the majority.

“But setting aside that pure issue of law, we need only examine the initial factual premise of their claim to uncover another fatal weakness: that state plaintiffs have failed to show that the challenged minimum essential coverage provision, without any prospect of penalty, will harm them by leading more individuals to enroll in these programs,” Breyer wrote.

Legal experts thought it was unlikely the court would overturn the ACA in its entirety, partly due to the weak arguments made by the plaintiffs and the disruption that would cause for millions of people who gained coverage under the law. But the Department of Justice under President Donald Trump broke with precedent of defending federal laws and sided with the Republican-led states, giving the lawsuit more legitimacy.

Several Democratic-run states, led by former California Attorney General Xavier Becerra, who is now HHS secretary, won the right to step in and defend the law. After President Joe Biden was inaugurated, the DOJ changed course to defend the ACA.

“As a Member of Congress, I helped draft and pass the ACA. As the Attorney General of California, I took this case all the way to the Supreme Court. And now, as (HHS) secretary, I will continue to stand up and stand with you to protect access to affordable healthcare,” Becerra said in a statement. “The COVID-19 public health emergency has underscored the importance of safeguarding this life-saving law and it is only fitting that the Supreme Court recognized its lawfulness.”

By striking down the lawsuit based on plaintiffs standing, the justices didn’t have to consider the merits of the case or whether they should sever the individual mandate from the rest of the law. The 5th U.S. Circuit Court of Appeals ruled that Congress’ 2017 decision to zero out the individual mandate made it unconstitutional, but the court remanded severability questions.

Justices Samuel Alito and Neil Gorsuch dissented from the majority,

“I conclude that those provisions are inextricably linked to the individual mandate and that the states have therefore demonstrated on the merits that those other provisions cannot be enforced against them,” Alito wrote in his dissent. “Accordingly, the states are entitled to a judgment providing that they are not obligated to comply with the ACA provisions that burden them.”

He also took aim the court’s majority opinion, questioning its rationale.

“Instead of defending the constitutionality of the individual mandate, the court simply ducks the issue and holds that none of the act’s challengers, including the 18 states that think the act saddles them with huge financial costs, is entitled to sue. Can this be correct? Even $1 in harm is enough to support standing. Yet no state has standing,” Alito wrote.

But Justice Clarence Thomas, who has sided with Alito in earlier ACA cases, said in a concurring opinion that the standing-through-inseverability argument fell flat because the states never advanced that argument and the lower courts hadn’t addressed it in detail.

“To the extent the parties seek inseverability as a remedy, the court is powerless to grant that relief,” he wrote.

The decision Thursday marks the third time the Supreme Court has upheld the ACA.

The outcome was cheered by congressional Democrats who used the lawsuit as a campaign issue against Republicans and Trump, arguing they wanted to see the law’s protections for people with pre-existing conditions struck down. The law established several popular protections for consumers including a ban on charging sick people more for coverage or denying them coverage, allowing people to stay on their parents’ health insurance until they’re 26 and essential health benefits that plans must cover.

“For more than a decade, the assault on our health care law was relentless, from Republicans in Congress, from the executive branch itself, and from Republican attorneys general in the courts,” Senate Majority Leader Chuck Schumer (D-N.Y.) said on the Senate floor Thursday. “Each time, in each arena, the Affordable Care Act has prevailed…So let me say definitively: the Affordable Care Act has won. The Supreme Court has just ruled: the ACA is here to stay.”

Providers and insurers were also thrilled by the decision but insisted that there’s more work to be done.

“We urge Congress and the administration to act to close gaps in coverage, promote health equity, and invest in hospitals that care for people who face social and financial hardships,” America’s Essential Hospitals CEO Dr. Bruce Siegel said in a statement.

The ruling comes as interest in the exchange has grown for commercial and not-for-profit insurers.

Cigna plans to double its geographic coverage on the individual market to 20 states by 2025. Aetna announced it plans to re-enter the exchange in 2022, after joining other prominent insurers in 2018 to say they couldn’t manage the rising costs associated with sicker patients signing up for coverage. A federal judge alleged Aetna exited the exchanges in the hopes it could finalize its ultimately failed merger with Humana. UnitedHealthcare is expanding its footprint too.

In a statement, AHIP CEO Matt Eyles applauded the decision, saying the health insurance lobbying group believes the Supreme Court made the right decision, as challengers did not suffer any injury.

“The ACA remains the law of the land and a foundational component of healthcare and coverage for more than 300 million Americans,” Eyles said in a statement. “After a year filled with unprecedented loss when reliable comprehensive health coverage has never been more important, this decision protects the stability of health coverage for people with pre-existing conditions, hardworking families, seniors and other Americans who need it most.”

As evidence the exchanges are growing in popularity, Eyles pointed to the more than 1 million people who have enrolled in the exchange during the special enrollment period, and millions more receiving their care through the ACA’s Medicaid expansion.

Much of the new enrollment is thanks to the enhanced subsidies available, said Ceci Connelly, CEO of the Alliance for Community Health Plans.

“I’ve been talking with some of our CEOs and they are seeing continued steady enrollment as people get the word and understanding out about the subsidies,” Connelly said. “It is critical now for Congress to make those permanent. The evidence is there for why it’s needed. They should simply finish that job.”

Eliminating the ACA would disproportionately impact working Americans who do not receive coverage through their employer, cutting the number of insured by 19.7 million and increasing individual enrollees’ average, out-of-pocket costs by $4,000 to $7,400 annually, according to a RAND Corp. analysis. Because these individuals lacked coverage, Connelly said patients would avoid seeking preventative care, leaving them visiting emergency departments more frequently and providers on the hook for a larger share of unpaid medical bills. RAND found that repealing the ACA without a replacement would drive up the federal deficit by $33.1 billion annually because it would eliminate the law’s revenue-raising provisions.

In its early years, as insurers on the exchanges faced losses, legal challenges and a general feelings of uncertainty, regional payers were key in propping up the exchanges—often serving as some of the only available options for consumers, along with some of the Blue Cross and Blue Shield plans.

Now, just 10% of counties had just one insurer offering in 2021, down from 25% the year before, according to the Kaiser Family Foundation. Today, 90% of Americans have health coverage, according to the Blue Cross Blue Shield Association, a not-for-profit that represents 35 Blues plans across the U.S.

“It’s time to build on what we have to make our healthcare system more affordable and equitable to work better for everyone,” BCBSA said in a statement.

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