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June 17, 2021

Affordable Care Act survives Supreme Court challenge in California v. Texas

In a 7-2 ruling, the majority held plaintiffs did not have standing to sue

On June 17, the Supreme Court ruled 7-2 to reject a challenge to the Affordable Care Act (ACA), holding that the plaintiffs had not suffered the sort of direct injury that gave them standing to sue. Justice Thomas filed a concurring opinion and Justices Samuel Alito and Neil Gorsuch dissented. The case, California v. Texas, was brought by Republican attorneys general who said the mandate requiring health insurance coverage became unconstitutional after Congress eliminated the penalty for failing to obtain coverage in the 2017 Tax Cuts and Jobs Act, arguing that the mandate could no longer be justified as a tax. The argument was based on the Court's 2012 ruling finding that the mandate was constitutional due to Congress's power to assess taxes. The challenge was largely successful in the lower courts, with a federal judge in Texas ruling in late 2018 that the entire law was invalid, and the United States Court of Appeals for the Fifth Circuit agreeing in 2019 that the mandate was unconstitutional but declining to rule on its severability from the rest of the law.

The Supreme Court did not rule on the other merits of the case or on which provisions may or may not be severable from the mandate, as they decided the case on procedural grounds. The 7-2 majority opinion, written by Justice Stephen Breyer, stated that, "with the penalty zeroed out, the IRS can no longer seek a penalty from those who fail to comply … Because of this, there is no possible Government action that is causally connected to the plaintiffs' injury — the costs of purchasing health insurance. Or to put the matter conversely, that injury is not 'fairly traceable' to any 'allegedly unlawful conduct' of which the plaintiffs complain." In the dissent, Justice Alito wrote that other provisions of the ACA "are inextricably linked to the individual mandate and that the states have therefore demonstrated on the merits that those other provisions cannot be enforced against them." "Accordingly," he continued, "the states are entitled to a judgment providing that they are not obligated to comply with the ACA provisions that burden them."


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For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
   • Heather Meade (
   • Laura Dillon (