All FSI News Q&As June 21, 2021

Stanford’s Michelle Mello and David Studdert on SCOTUS ACA Decision

In its third major decision about the Affordable Care Act, the U.S. Supreme Court rejects efforts to undo the popular health care law.
The columns at the U.S.Supreme Court
Jesse Collins/Unsplash

In its third major decision about the Affordable Care Act, the U.S. Supreme Court on June 17 rejected efforts to undo the now popular health care law. Passed in 2010, the ACA is today a cornerstone of American health care—enabling millions of people who could not qualify for or afford private health insurance to receive it. Here, Stanford Law School health law experts Michelle Mello and David Studdert discuss California v. Texas, the role of the ACA during the COVID-19 pandemic, and how the law might be strengthened during the Biden administration.

What was the nature of the dispute the Supreme Court ruled on today?

Like so much else with the Affordable Care Act (ACA) reforms, it’s complicated.

Opponents of the ACA always detested one feature above all others: the so-called “individual mandate”.  This rule required people who were not poor or covered by Medicaid to buy at least a basic health insurance plan or else pay a penalty. The penalty was administered by the IRS as part of the income tax system.

When the Supreme Court first heard a challenge to the ACA back in 2012, it ruled that requiring people to buy insurance exceeded the scope of Congress’s constitutional power to regulate interstate commerce; however, it could be upheld as a valid exercise of its power to levy taxes.

A Republican-led effort in Congress subsequently removed the financial penalty for not buying insurance. That created a conundrum: was the individual “mandate” at this point still a tax, and if not, did that mean the entire ACA was now unconstitutional because the previous basis for upholding the mandate had evaporated? That was the issue in California v Texas.  The original suit was brought by 18 Republican-led states and two individuals.

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