In Texas v. Azar, a Texas district court has recently struck down the ACA as unconstitutional due to the law requiring every individual to be enrolled in health insurance. This requirement is often referred to as the individual mandate. This is especially surprising because the 2012 Supreme Court case NFIB v. Sebelius already held that the individual mandate was constitutional under Congress’s authority to tax.
In order to differentiate their argument from the previous Supreme Court decision, the 20 Republican state attorneys general and governors who filed the lawsuit relied on a recent change to the ACA. Under tax reform legislation lead by congressional Republicans, the tax penalty for failing to be enrolled in health insurance has changed to $0 beginning in 2019. Without this tax, the individual mandate is still a “requirement,” but there are no penalties for noncompliance.
The court held that because there is no longer a tax penalty for failing to comply with the individual mandate, the requirement is no longer a legitimate use of authority under Congress’s taxing power. The court further held that because the individual mandate is so entwined with the other provisions of the ACA, the entire law is invalid.
The district court does not enjoin the law, which means the ACA will still be in effect throughout the country and health plans do not need to take any immediate action. The decision will certainly be appealed, where the Court of Appeals will weigh in on the staying power of the ACA.