On November 10, 2020, the U.S. Supreme Court held oral arguments in California, et. al. v. Texas, et. al., the most recent challenge to the Patient Protection and Affordable Care Act (ACA).
By way of brief background, the Supreme Court addressed the constitutionality of the ACA in 2012 in National Federation of Independent Business v. Sebelius. In the Sebelius case, the ACA provision that required most Americans to maintain “minimum essential coverage” (i.e., the individual mandate) was at issue. The Court held in Sebelius that the individual mandate was constitutional under Congress’s authority to lay and collect taxes. In 2017, Congress amended the ACA through the Tax Cuts and Jobs Act, which as of January 1, 2019, reduced to zero an individual’s tax penalty for failing to maintain minimum essential coverage. Once the tax penalty was removed, litigation arose regarding whether the ACA was still constitutional.
In 2018 in Texas v. United States, the U.S. District Court for the Northern District of Texas declared the individual mandate unconstitutional. The court also held that the remaining provisions of the ACA were invalid because they were inseverable from the individual mandate. The U.S. Court of Appeals for the Fifth Circuit affirmed the district court’s decision regarding the individual mandate, but it remanded on the issue of severability. The Supreme Court granted certiorari to the case, consolidated as California v. Texas, and heard oral arguments on November 10, 2020.
More than half of the oral arguments related to a legal theory called standing. In layman’s terms, a person or legal entity must have an actual injury from a law to contest the law, and this is typically called standing. All nine justices asked at least one question regarding the states’ standing and the individual citizens’ standing, as there is no longer a tax penalty under the individual mandate for failing to purchase minimum essential coverage. The states had seven grounds to argue states were injured, but the clear focus at the hearing was injury to a state’s pocketbook due to numerous obligations under the ACA that cost states money. The individual citizens had several arguments, but the primary argument was the mandate to purchase insurance they did not desire to purchase.
Justices Breyer, Sotomayor, and Kagan made clear that they do not believe the petitioners have standing. Once the individual mandate was removed, no individual has been forced to purchase anything. Justice Breyer in particular argued the individual mandate is now really just a suggestion. Further, the states are required to meet obligations under the ACA that the states claimed caused injury, including paperwork, by provisions other than the individual mandate. Thus, the states are not injured by the individual mandate. The newest member of the court, Justice Amy Coney Barrett, gave indications that she agreed, at least partially, with the more liberal justices on standing. She had difficulty understanding how the individual mandate required any paperwork from the states. She used the word “traceable” and argued that the injury alleged by the states was not related to the individual mandate. Moreover, based on the questioning from Chief Justice Roberts and Justice Alito, it can be suggested that Justices Roberts and Alito may agree with Justice Barrett.
If five justices find that the parties have standing, then the court must address whether the individual mandate is unconstitutional, and, if the court holds it to be unconstitutional, whether it may be severed from the ACA. It seemed rather apparent that at least five justices believe the individual mandate is severable. Of course, oral arguments can be misleading. However, at face value, Justices Roberts, Breyer, Sotomayor, Kagan, and Kavanaugh indicated they are leaning toward finding the individual mandate severable from the rest of the ACA. Chief Justice Roberts went so far as to say it is not the court’s job to do that which Congress did not. He raised the fact that Congress had the chance to repeal the law, and it did not do so. Instead, Congress reduced the tax penalty related to the individual mandate to zero, with many members of Congress openly stating that they repealed the individual mandate. Justice Kavanaugh asked the attorney representing the respondents, “Isn’t it clear that the proper remedy is to sever the mandate?”
Justice Thomas indicated that he might not want to reach the question of severability at this time. The opinions of Justices Gorsuch, Alito, and Barrett on the severability question were difficult to interpret. The attorney for Texas and the other respondents and the attorney for the petitioners focused heavily on a clause or clauses in the original ACA, which they argued indicated the individual mandate could not be severed. There was tremendous discussion between the justices and the attorneys for the parties on whether Congress actually drafted a severability clause in the original ACA. Even if Congress did, some of the justices argued it was no longer relevant after the ACA was amended in 2017.
Finally, it must be noted, the last question asked at oral argument was whether the 2012 Sebelius case definitively resolved the issue of whether Congress had authority to enact the individual mandate under the Commerce Clause. This is important because there are three new justices to the Court since Sebelius was decided. Justices Breyer, Sotomayor, and Kagan clearly stated in Sebelius that they believed the individual mandate was a valid exercise of the Commerce Clause. If Justice Barrett and either Justice Gorsuch or Justice Kavanaugh agree, then the Commerce Clause may be an entirely new basis for upholding the individual mandate and the ACA.
 Four justices found the ACA to be constitutional under the Commerce Clause, but five disagreed.