The Fate Of The Affordable Care Act

On October 26th, Judge, now Justice, Amy Coney Barrett of the 7th Circuit Court was confirmed by the U.S. Senate, filling the vacancy left by Justice Ruth Bader Ginsburg. This has primed the highest judicial body in the land for a potential ideological shift, the impact of which has been heavily debated. At the forefront of much debate is the future of the Affordable Care Act (ACA), with arguments regarding the constitutionality of it scheduled for November 10th in the newest challenge, California v. Texas[1].

But before diving into that, here is some background on the ACA and its legal history. On March 23, 2010, President Barack Obama signed the ACA into law with three primary goals: increase access to affordable coverage, expand Medicaid, and support delivery methods that decrease cost[2].

Highlighted below are the key provisions:[3]

• The expansion of Medicaid to individuals under age 65 whose income is up to 138% of the federal poverty level;
• The elimination of a Medicaid restriction that prohibited most adults without dependent children from enrolling in the program;
• The formation of American Health Benefits Exchanges that provide individuals without access to public insurance or affordable employer programs the opportunity to purchase coverage with premium and cost-sharing credits available to increase affordability;
• The introduction of regulations on insurance providers preventing them from denying coverage for any reason, including health status, and from raising premiums based on health status and gender;
• The introduction of monetary penalties for employers who don’t offer affordable coverage to their employees, with exceptions for small employers (<50 employees); and
• The requirement that most individuals have health insurance beginning in 2014.

Legal action has almost entirely focused on the last provision, known as the individual mandate. The intention of the individual mandate was to avoid the exploitation of regulations preventing insurance providers from charging individuals’ higher premiums based on health status. Without an individual mandate, people could forego insurance coverage until they became ill – knowing that insurance companies would be required to provide coverage at a reasonable price. To prevent this, the ACA requires most Americans to carry insurance coverage under threat of monetary penalty. Yet, many have argued that this individual mandate is unconstitutional, prompting numerous legislative and legal attempts to repeal the ACA in part and in whole. 

The ACA’s constitutionality was first challenged in the Supreme Court in 2012, NFIB v. Sebelius. A vote of 5–4 rejected the challenge. A majority did agree that based on the Constitution’s commerce clause Congress does not have the authority to mandate Americans to obtain health insurance. However, the voting majority upheld the individual mandate as a constitutional exercise of Congress’ taxing power as a tax is placed on those who do not obtain insurance coverage[1].

Soon after House Republicans refused to fund the federal government unless language was included that would delay the implementation of the ACA. With the Democrat controlled Senate refusing to pass funding bills with such language the government was shut down for the first time in 17 years[4]. Fast forward to February 2015, House Republicans added their 67th attempt at repeal of the ACA[5].

This brings us to the beginning of the chain-of-events that has led to California v. Texas reaching the Supreme Court. In 2017, Congress passed the Tax Cuts and Jobs Act (TCJA). This reduced the penalty for not obtaining health insurance, known as “shared-responsibility payment”, from $695 to zero beginning January 1, 2019. Consequently, in February 2018, 20 states led by Texas filed a lawsuit against the federal government. The states challenged the constitutionality of the ACA arguing that because Congress reduced the penalty for failing to obtain insurance to zero, the individual mandate could no longer be justified as a tax and was now simply a command. They further argued that if the individual mandate is unconstitutional then the ACA as whole must be struck down. The federal government has not defended the constitutionality of the ACA’s individual mandate, which is quite unusual. Instead, the federal government agreed with Texas on the unconstitutionality of the individual mandate. The federal government further argued that protections for people with pre-existing conditions, including guaranteed issue and community rating, should  also be struck down with the remainder of the ACA to remain intact[6]. Due to this there are no true defendants in the lawsuit as far as position. However, there are “intervenor-defendants” which include 21 states led by California and the U.S. House of Representatives[7].  In its ruling the District Court for the Northern District of Texas found the individual mandate to be unconstitutional, representing a “standalone command” as a result of the TCJA. Further, the court ruled that the individual mandate is not mutually exclusive meaning the entire ACA must be struck down [8].

The case then went to the 5th Circuit U.S. Court of Appeals. Here, the federal government changed its position, now agreeing with the district court ruling that the individual mandate is inseparable from the rest of the ACA[9]. The federal government further argued that it should be barred from enforcing only the ACA provisions that injure the plaintiffs. As an example, the federal government identified “several criminal statutes used to prosecute individuals who defraud our healthcare system” that are part of the ACA and should survive. Essentially, it is arguing that the entire ACA should be found unconstitutional, but the federal government should still be able to enforce parts of the law. The federal government also argued for the first time in the 5th Circuit that any injunction prohibiting enforcement of the ACA should apply only in the states that sued[9,10].

In December 2019, the 5th Circuit issued a 2–1 decision finding the individual mandate unconstitutional and sending the case back to the district court for additional analysis as to the validity of the rest of the ACA as a result. Thus, for now, the ACA remains in effect. To note, other questions of legality were also raised.

After the 5th Circuit’s decision, California and the House of Representatives asked the Supreme Court to weigh in immediately, telling the justices that the lower court’s ruling had created “paralyzing uncertainty” that “likely will persist for years if the Court does not grant review now.” The justices declined to fast-track the petitions. Instead, they set the case to begin with oral arguments in the Supreme Court on November 10, 2020[11].

The highest court in the land, which includes newly confirmed Justice Barrett, will consider four legal questions in the case: 

1. Does Texas have standing to bring the lawsuit to challenge the individual mandate;
2. If they do, does the TCJA make the individual mandate unconstitutional;
3. If it does, does this deem the ACA unconstitutional in its entirety;
4. If the entire ACA is invalid, should the ACA be unenforceable nationwide or only be barred to the degree that provisions injure each plaintiff?

Some possible outcomes following a Supreme Court decision include:

• Individual mandate is unconstitutional; the remainder of ACA stands
• Individual mandate and protections for people with pre-existing conditions is unconstitutional; remainder of ACA stands and decides whether to reinstate the insurance protections
• Texas and plaintiffs do not have standing to bring the lawsuit; ACA stands
• Texas and plaintiff’s argument upheld; some or all of the ACA overturned

As previously mentioned, the confirmation of Justice Barrett, seemingly establishing a 6–3 majority for Conservatives, has raised serious concerns as to the future of the ACA. At her confirmation hearings last month Justice Barrett declined to comment on her views regarding the current challenge to the ACA but suggested that the heart of the case centered on separation of the individual mandate from the rest of the ACA. Though, her previous writings on the ACA suggest a likely vote against the individual mandate[12].  

Legal experts of various political leanings and stakeholders from across the healthcare industry have raised doubts about the ACA challengers’ argument against severability of the issues[13-15]. Former U.S. Solicitor General Paul Clement, who was on President Donald Trump’s list of potential Supreme Court nominees, has indicated that the challengers face a “real uphill battle” in arguing that the entire ACA should be struck down[16]. Meanwhile, “friend of the court” briefs supporting the House and California warned the court of serious consequences if the challengers are successful[17]. A group of health insurance plans told the justices that invalidating the ACA would “cause significant uncertainty and instability in the best of circumstances,” and doing so “in the midst of a global health pandemic and economic turmoil … would be reckless and dangerous.” This is expanded on by the Center for American Progress which predicts more than 20 million would lose their health coverage with more than 135 million losing protections for their preexisting conditions; including millions of COVID-19 survivors[18].

Another potential consequence is the exacerbation of racial disparities. Uninsured rates for Black and Hispanic Americans have historically been much higher compared to White Americans, demonstrating economic gaps, barriers to obtaining insurance coverage, and other health system inequities. The ACA hasn’t solved these issues, but it has narrowed disparities in coverage and access to care significantly – making it likely that these gaps widen if the ACA is struck down[19].

10 years after its ratification, the only certainty for the Affordable Care Act is the continuation of uncertainty surrounding its permanence. The Supreme Court’s decision in the case is expected as late as the third quarter of 2021.

Spencer Bayless

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Spencer Bayless is a member of The University of Arizona College of Medicine-Phoenix Class of 2023. He graduated from Arizona State University with a degree in Biological Sciences and an emphasis in Neurobiology. Spencer has special interests in health care economics, policy, and quality improvement. He enjoys traveling, ping-pong, and seeking new experiences.

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