SCOTUS Dismisses ACA Case for Lack of Standing

On June 17, the Supreme Court of the United States (SCOTUS) issued an opinion [PDF] in California v. Texas dismissing the case because the Texas-led states and individual plaintiffs lack standing to challenge the Affordable Care Act (ACA). As a result, the ACA remains in effect with no changes.

The litigation challenged the ACA’s individual mandate, which provided that most people must maintain a minimum level of health insurance coverage; those who did not do so previously had to pay a financial penalty to the IRS. In the 2017 Tax Cuts and Jobs Act, Congress reduced the penalty to zero dollars as of January 1, 2019, leading to the current litigation. SCOTUS ruled the plaintiffs lack standing because they, “failed to show a concrete, particularized injury fairly traceable to the defendants’ conduct in enforcing the specific statutory provision they attack as unconstitutional. They have failed to show that they have standing to attack as unconstitutional the Act's minimum essential coverage provision.” The ruling on standing means the justices did not rule on the merits of the lawsuit, including whether the individual mandate is constitutional. With the dismissal, SCOTUS vacates the previous court’s judgment and remands the case with instructions to dismiss.

The case was not unanimous, with a vote of 7-2. The opinion was written by Justice Breyer. Justice Alito filed a dissenting opinion, in which Justice Gorsuch joined. This is the third time SCOTUS has upheld the ACA in major challenges to the law.

How the case made its way to SCOTUS

In 2018, a trial court issued a ruling finding that the ACA was unconstitutional because the Tax Cuts and Jobs Act reduced the individual mandate penalty to zero. On appeal, the U.S. Court of Appeals for the 5th Circuit affirmed the trial court’s decision that the individual mandate should no longer be considered constitutional because the associated financial penalty no longer “produced at least some revenue” for the federal government. Instead of deciding whether the rest of the ACA should be struck down, the 5th Circuit sent the case back to the trial court for additional analysis. Soon after, the Supreme Court agreed to review the case and held oral arguments in November 2020.

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