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The Future of the Affordable Care Act (ACA)

Ongoing Developments in the Constitutionality Challenge

On Thursday, June 26, the Justice Department filed a new brief in the Supreme Court case Texas v. United States. Earlier this year, the Supreme Court of the United States (SCOTUS) agreed to hear the case this fall on the heels of lower court decisions.

The district court found both the individual mandate and the entire ACA law to be unconstitutional. The court of appeals concurs with unconstitutionality of the individual mandate but remanded the status of the entire law back to the lower court requesting additional documentation as to why the rest of the law cannot stand without the individual mandate.

As such, the upcoming SCOTUS case will review three things:

  1. Standing to sue

    Do the plaintiffs (individuals and States) have the right to challenge the law? Here they look at whether the law causes the parties to suffer harm or injury;

  2. Whether the individual mandate penalty is a tax:

    Does the elimination of the monetary penalty for failure to have insurance coverage under the ACA’s individual mandate cause the penalty to lose its status as a “tax”? [This was the basis for the SCOTUS previous decision regarding the constitutionality of the individual mandate; and

  3. Severability:

    If the individual mandate, i.e., the minimum-essential-coverage requirement, is now invalid, are the remainder of the ACA’s provisions inseverable from the law or can the rest of the law stand on its own?

Background

The challenge to the constitutionality of both the individual mandate provision of the ACA, as well as the ACA law, continues. The past articles provide context and chronology to the battle beginning in 2010.

Over the past few months, many parties began filing briefs on constitutional interpretations and analyses of the impact of the law without the individual mandate. SCOTUS will review all briefs along with prior court findings and the outcome of upcoming hearings on the topic before ruling on the matter.

New Developments

Last week’s 82-page Department of Justice brief provides arguments to each of the three questions. The DOJ contends that:

  1. The plaintiffs have standing to sue

    • They can show that, due to the passage of the Affordable Care Act, individuals suffer higher premiums and the inability to seek treatment from their preferred physicians.
    • The courts agree that this constitutes harm or injury, financial or otherwise. Additionally, the court of appeals finds that the individual mandate caused two injuries – a “financial injury” of being forced to obtain insurance and an increased regulatory burden.
    • Likewise, the States also suffered “fiscal injuries” as employers by having to comply with the various provisions of the ACA.
  2. The individual mandate is no longer a tax

    • Without any monetary assessment, the individual mandate cannot be considered a tax. [This is in direct opposition to the intervenor States and House (defendants) who feel that they mandate should still be considered a tax, even if it is $0.]
    • The saving construct for the individual mandate, per the prior SCOTUS decision, is the fact that the “tax” is coupled with the requirement to have individual health coverage so without the “tax” there is no saving construct for the provision.
    • Therefore, it exceeds Congress’ power under both the Necessary and Proper Clause and the Commerce Clause to mandate such coverage. Both courts agree with this interpretation.
  3. The individual mandate is not severable from the rest of the ACA

    • They state that the individual mandate is inseverable from certain insurance market reforms that ACA imposes, e.g., community rating and guaranteed issue. [These two provisions require that insurance carriers in the individual market provide coverage equally to everyone who applies.]
    • They further state that, absent the individual mandate, community rating and guaranteed issue provisions would not have been adopted.
    • There is no evidence that Congress intended, or the rest of the ACA to operate without the three provisions, i.e., individual mandate, community-rating, and guaranteed issue.

Next Steps

Hearings are scheduled this fall, where both sides will present their case. The upcoming SCOTUS session runs from October through June. We anticipate a SCOTUS decision sometime before the end of their session but do not anticipate anything prior to the Presidential election.

In the interim, the ACA remains the law of the land and employers should continue to comply with all its provisions.

As always, we will continue to bring updates as they arise. In the meantime, visit OneDigital’s Compliance Confidence Fresh Thinking Blog for the latest developments.

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