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The ACA Survives Another Legal Challenge

Posted on June 17th, 2021

Earlier this morning, the U.S. Supreme Court dismissed a case challenging the constitutionality of the Affordable Care Act (ACA), often referred to as Obamacare. The entire ACA continues to remain as the law of the land.

Previously, a federal judge in a lower court ruled the entire ACA was unconstitutional because the Individual Mandate penalty had been reduced to $0. The Individual Mandate required most Americans to have health insurance or pay a penalty. Technically, the Individual Mandate still exists, but there is no federal penalty for failing to have health insurance coverage.

Several Republican-led states argued that since there is no more penalty, the ACA cannot legally exist. They argued that the Individual Mandate is so critical to several other components of the law, the law simply cannot exist without a penalty in place. They believe an unsustainable health insurance is created if healthy people are not encouraged (penalized) to obtain health insurance, and provisions like covering pre-existing conditions cannot exist without an Individual Mandate penalty.

The states challenging the ACA also cited a previous Supreme Court ruling. Several years ago, the Individual Mandate was challenged in a different way. There was an argument that the Individual Mandate made the entire ACA unconstitutional. The argument was that Congress exceeded their power under the Commerce Clause, and Congress could not force individuals to purchase something (i.e., health insurance).

A previous lawsuit found its way to the U.S. Supreme Court where the ACA was ultimately upheld because the Individual Mandate was viewed as a tax, and Congress has the authority to implement taxes. Now that the penalty is $0 (in essence no more tax), challengers also claimed this made the ACA unconstitutional.

Today, the U.S. Supreme Court dismissed the pending case. They indicated the challengers had no right to bring their lawsuit to federal court. The top court ruled 7-2 in its decision. Justice Stephen Breyer authored the opinion of the court, and he said Texas and other states who challenged the law failed to show they were harmed by the Individual Mandate penalty being zeroed out.

For now, the ACA or Obamacare continues to operate and exist as we know it; however, it is possible that someone else may try to challenge its constitutionality if they can demonstrate they have been harmed by the elimination of the Individual Mandate penalty. The U.S. Supreme Court dismissed this case, but they did not rule on the merit of the lawsuit.


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