Understanding the latest Affordable Care Act challenge in the Supreme Court

The latest case focuses on the individual mandate, but the entire ACA could be affected by the court’s decision.

Updated on Wed, November 11, 2020 by the USAFacts Team

On November 10, the Supreme Court heard arguments in California v. Texas, a case that challenges the constitutionality of the Affordable Care Act (ACA).

What is the basis of the challenge?

The individual mandate is a provision of the ACA that requires people to have health insurance or else pay a penalty when filing federal taxes. California v. Texas raises two questions for the court: Is the individual mandate constitutional? If not, is it severable from the rest of the Affordable Care Act?

The Supreme Court first heard a challenge to the mandate in National Federation of Independent Business (NFIB) v. Sebelius. In the 2012 case, challengers argued that the individual mandate was unconstitutional based on the claim that Congress does not have authority to require Americans to participate in commerce and, therefore, to buy health insurance.

A majority of the court agreed with that claim, so the final decision in the case hinged on whether the individual mandate could reasonably be viewed as a tax, rather than a command to buy insurance. Since the individual mandate had the essential features of a tax — namely, it raised money for the government — the court ruled that the individual mandate was constitutional in a 5-4 decision.

The most recent challenge to the individual mandate emerged in response to changes to the tax code that took place after the 2012 ruling. Specifically, the 2017 Tax Cuts and Jobs Act reduced the tax penalty associated with the individual to $0, meaning that Americans without health insurance no longer face a penalty for being uninsured, though the individual mandate provision remains written in federal law.

This time, the challengers argue that the individual mandate is unconstitutional since it no longer has the essential features of a tax, like the ability to generate government revenue.

The concept of severability is why the new case is a challenge to the entire ACA, and not just the individual mandate provision. If the individual mandate is found unconstitutional and not severable from the rest of the law, the entire ACA could be overturned. If the mandate is found to be severable from the law, then the rest of the ACA’s provisions may stand even if the individual mandate is found unconstitutional.

How has health insurance coverage changed since the Affordable Care Act became law?

According to a report from the Congressional Research Service, the aim of the ACA is to increase access to affordable health insurance for uninsured Americans and to make it more affordable for those already insured. The law passed in 2010, but many of the ACA’s major provisions went into effect in 2014, including the establishment of state and federal health insurance exchanges, Medicaid expansion in participating states, and the implementation of the individual mandate.