Supreme Court lets health care law stand

By Alistair M. Nevius, J.D.

The U.S. Supreme Court held on Thursday that several states and other plaintiffs that sued, asking the federal courts to declare unconstitutional the so-called individual mandate in the Patient Protection and Affordable Care Act (PPACA), P.L. 111-148, did not have standing to sue because they could not show that they had suffered or would suffer an injury (California v. Texas, No. 19-840 (U.S. 6/17/21)). The decision avoids the question of the constitutionality of the individual mandate and leaves the health care law in place.

Under Sec. 5000A, enacted by PPACA, individuals are required to obtain minimum essential health coverage or pay a penalty. However, the law known as the Tax Cuts and Jobs Act, P.L. 115-97, reduced that penalty to zero. Texas, along with more than a dozen other states and two individuals, sued federal officials, claiming that without a monetary penalty, Sec. 5000A is unconstitutional. The Supreme Court in National Federation of Independent Business v. Sebelius, 567 U.S. 519 (2012), held the mandate was constitutional because the penalty is a tax and a justified exercise of Congress’s taxing power; without the penalty, the plaintiffs argued, the mandate is no longer tied to Congress’s taxing power and therefore is unconstitutional.

The plaintiffs asked the court to declare Sec. 5000A unconstitutional, to hold that Sec. 5000A is not severable from the rest of PPACA, and to issue an injunction against enforcement of all provisions of the act.

A district court found that the plaintiffs had standing to sue and agreed that Sec. 5000A is unconstitutional and not severable from the rest of PPACA (Texas, 340 F. Supp. 3d 579 (N.D. Tex. 2018)). The Fifth Circuit agreed with the district court on the issue of standing and the unconstitutionality of Sec. 5000A but not on the severability issue (Texas, 945 F.3d 355 (5th Cir. 2019)). The state of California and other states then intervened in the case, and it came before the Supreme Court for review.

The Court, in a 7–2 decision, held that the plaintiffs did not have standing to challenge the constitutionality of Sec. 5000A because they could not show they had suffered a past or future injury from enforcement of Sec. 5000A’s minimum essential coverage mandate.

To have standing to sue in federal court, a plaintiff must “allege personal injury fairly traceable to the defendant’s allegedly unlawful conduct and likely to be redressed by the requested relief” (DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 (2006)). The Court noted that with a penalty of zero, Sec. 5000A is unenforceable and therefore the individual plaintiffs cannot suffer an injury under it.

Likewise, the Court said, the state plaintiffs could not show any “pocketbook injuries” traceable to the government’s allegedly unlawful conduct. The states alleged injury in the form of increased costs because of PPACA’s requirement that they run medical insurance programs, but the Court said they failed to show how that harm could be traced to the government’s enforcement of the Sec. 5000A mandate. Similarly, the Court found, other increased costs that the states are claiming cause them injury are not a result of the Sec. 5000A mandate, and the states are not alleging that the other PPACA provisions are unconstitutional.

Finding that the plaintiffs lack standing, the Court did not address the constitutionality or severability questions but reversed and remanded the case with instructions to dismiss.

Alistair M. Nevius, J.D., ( is The Tax Adviser’s editor-in-chief.

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