Supreme Court Ruling Leaves Affordable Care Act in Place

The U.S. Supreme Court rejected a challenge to the Affordable Care Act's (ACA's) individual mandate, holding that Texas and other states did not have a legal right to sue.  The ruling leaves the ACA intact.

The ACA requires that most Americans either maintain a minimum level of health care coverage or pay a specified amount to the Internal Revenue Service. In 2012, the Supreme Court upheld this mandate (https://www.shrm.org/ResourcesAndTools/legal-and-compliance/employment-law/pages/supreme-court-will-not-expedite-aca-challenge.aspx) as a legitimate exercise of Congress' taxing power. In 2017, and effective in 2019, Congress amended the ACA to set the penalty to zero, making the individual mandate provision unenforceable.

In two consolidated cases, California v. Texas (http://www.ca5.uscourts.gov/opinions/pub/19/19-10011-CV0.pdf) and Texas v. United States (http://www.ca5.uscourts.gov/opinions/pub/19/19-10011-CV0.pdf), the Supreme Court was asked to decide whether reducing the penalty to zero rendered the minimum-coverage provision unconstitutional—and, if so, whether the rest of the ACA can remain enforceable without it.

The 5th U.S. Circuit Court of Appeals had sided with Texas, holding that the mandate is unconstitutional since there is no longer a penalty for people who fail to buy health insurance. But the Supreme Court reversed the ruling . (https://www.supremecourt.gov/opinions/20pdf/19-840_6jfm.pdf)

The Supreme Court had to first consider whether the plaintiffs had standing to challenge the ACA before it could move to the merits of the case. The high court held that that Texas and the other plaintiffs did not have the legal right to sue. "Neither the individual nor the state plaintiffs have shown that the injury they will suffer or have suffered is 'fairly traceable' to the 'allegedly unlawful conduct' of which they complain," wrote Justice Stephen Breyer for the court in a 7-2 opinion on June 17.

"We proceed no further than standing," he said.

Employers should note that the health care law remains fully in effect, including all coverage obligations and reporting requirements.

Visit SHRM's resource page on the Affordable Care Act. (https://www.shrm.org/ResourcesAndTools/Pages/Affordable-Care-Act.aspx)