Nation’s Highest Court Hears Landmark ACA Challenge

Situation Report | November 16, 2020

The U.S. Supreme Court last week heard oral arguments on the fate of the Affordable Care Act (ACA) — the third major challenge to ACA thus far fielded by the nation’s highest court. A decision is not expected until June of 2021, according to various reports.

One big question is the issue of “severability”: whether the entire law is struck down if only a part of it is deemed unconstitutional.

The part in question is ACA’s “individual mandate.” Prior rulings have upheld this provision on the basis that it falls within Congressional authority to levy taxes, given that the mandate called for a penalty (aka, a tax) on Americans who did not maintain insurance coverage. However, Congress zeroed-out that penalty in 2017, and Plaintiffs now argue that this action makes the “individual mandate” unconstitutional because it no longer effectively comprises a tax.

It remains to be seen whether the “individual mandate” survives this challenge and, if it does not, whether the entire law is struck down along with it. Many analysts seemed to suggest that at least two key justices — Chief Justice John Roberts and Justice Brett Kavanaugh — signaled skepticism that all of ACA would be toppled if the individual mandate were struck down (i.e., whether the “individual mandate” is severable).

The outcome will be consequential for Americans who rely on ACA’s coverage expansion. It will also determine the fate of other provisions affecting individuals, employers and state governments alike. Among these are provisions that: prohibit insurers from denying coverage due to pre-existing conditions; provide funds for Medicaid expansion; and require many employers to provide minimum essential coverage to most of their full-time workforce (i.e., the “employer mandate”).

New York State’s Department of Health projects that ACA has covered over 3 million New Yorkers, not only through the state’s ACA market exchange but also ACA’s expansion of Medicaid and Essential Plan services.