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In a 7-2 decision written by Justice Breyer, the Supreme Court found that the plaintiffs challenging the constitutionality of the Affordable Care Act (“ACA”) did not have standing, and therefore, the Court directed dismissal of the case without addressing the constitutional arguments. This is the second time that the ACA has survived a challenge before the Supreme Court.

In the previous Supreme Court case upholding the ACA, Nat’l Fed’n of Indep. Bus. v. Selelius (NFIB), 567 U.S. 519 (2012), the Court found that the ACA was “a legitimate exercise of Congress’ taxing power.” After Congress reduced the penalty for not obtaining health insurance to zero, 18 Republican-led states and two individuals challenged the ACA, arguing that the ACA’s individual mandate was no longer constitutional, and that, as a result, the entire ACA was unconstitutional.

The Fifth Circuit Court of Appeals agreed with the plaintiffs, holding that “the individual mandate is unconstitutional because it can no longer be read as a tax, and there is no other constitutional provision that justifies this exercise of congressional power.” The Fifth Circuit did, however, remand the case to the district court for a more thorough analysis to determine whether the individual mandate could be severed form the remaining provisions of the law. Because the Trump Administration sided with the Republican states, several Democratic states appealed the Fifth Circuit decision directly to the Supreme Court.

The Supreme Court did not reach the constitutional question. Rather, it found that neither the states nor the individuals challenging the law had standing. With respect to the individual plaintiffs, the Court found that “[w]ith 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.” Therefore, the individuals had not suffered the injury in fact required to show standing.

Likewise, with respect to the Republican states, the Court found that “without any prospect of penalty,” the states had failed to show how the individual mandate would harm them by causing more individuals to enroll in Medicaid and other state programs:

We have said that, where a causal relation between injury and challenged action depends upon the decision of an independent thirty party (here an individual’s decision to enroll in, way, Medicaid), ‘standing is not precluded, but is ordinarily substantially more difficult to establish.’ To satisfy that burden plaintiffs must show at the least that ‘third parties will likely react in predicable ways.’…The state plaintiffs have not done so.

(internal citations omitted.)    

Therefore, the Court reversed the Fifth Circuit’s judgment with respect to standing, and remanded the case with instructions to dismiss.

Justices Alito and Gorsuch dissented.

The Supreme Court decision is linked here. To read our earlier article on the Fifth Circuit decision, click here.