On June 17, 2021, the U.S. Supreme Court issued its ruling in California v. Texas on a challenge to the constitutionality of the Affordable Care Act (“ACA”). This was the third major challenge to the ACA since it was enacted in 2010.
In this case several states and two individual plaintiffs alleged that the individual mandate penalty, which was reduced to zero dollars under the Tax Cuts and Jobs Act of 2017, was unconstitutional, and, as a result, the entire ACA should fall. By a vote of 7-2, the justices held that the plaintiffs did not have legal standing to challenge the individual mandate because they did not show a past or future injury that would be traceable to any allegedly unlawful Government conduct in enforcing the individual mandate.
Because the case was dismissed for a lack of standing, the U.S. Supreme Court did not review or decide whether the penalty-less individual mandate or the rest of the ACA is constitutional. Accordingly, the ACA remains in full effect, and this decision has no practical impact on individuals, plan sponsors, insurers, the health care system and beyond.