On June 17, the Supreme Court issued its highly-anticipated decision in California vs Texas upholding the Affordable Care Act. In a 7-2 decision, the Court declined to address the merits of the case, instead holding that the plaintiffs that brought the case do not have standing to challenge the law’s individual mandate.
The lawsuit was initially brought by Texas and other Republican-led states along with two individuals who did not want to purchase health insurance as required by the individual mandate. They argued that the individual mandate—which was previously found to be a constitutional exercise of Congress’s taxing power—was no longer a valid use of the taxing power because the tax penalty for failing to maintain individual health coverage had been reduced by Congress to zero dollars. They further argued that if the individual mandate was struck down, the entirety of the Affordable Care Act would be invalid as well because the individual mandate is an integral part of the law.
In its decision, the Court did not address the arguments regarding Congress’s taxing power. Instead, the Court held that the plaintiffs did not have the standing required to bring the case. In order to have standing, a plaintiff must allege a personal injury or harm that can be traced to the alleged unlawful conduct. First, the opinion addressed the individual plaintiffs who brought the case on the basis that they are harmed by the requirement to enroll in health insurance. The Court reasoned that because there was no penalty—financial or otherwise—for failing to maintain health insurance, the individuals suffered no harm. Texas and the other plaintiff states argued that they are harmed by the mandate because it encourages their residents enroll in state-sponsored programs like Medicaid in order to comply with the law, which ultimately costs the state money. The Court rejected that argument because the states could not prove that the mandate caused an increase in enrollment. Lastly, the court rejected the states’ argument that the mandate causes the state to pay extra administrative and compliance expenses, as the Court found that other provisions of the Affordable Care Act required the same administrative obligations and therefore the increased costs could not be traced back solely to the individual mandate provision.