Compliance News | March 2, 2020

U.S. Supreme Court to Hear Latest ACA Challenge

On March 2, 2020, the U.S. Supreme Court announced that it has agreed to hear the appeal in the latest challenge to the Affordable Care Act (ACA). This is an appeal of a decision from the U.S. Court of Appeals for the Fifth Circuit (Texas, et. al, v. United States, No. 19-10011 (5th Cir. Dec. 18, 2019)), which ruled last December that the law’s individual mandate is unconstitutional.

Supreme Court ACA Challenge

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The legal question at the heart of this case is whether the ACA’s individual mandate was rendered unconstitutional after Congress reduced to zero the tax penalty for not having health coverage. This reduction in the penalty, which was part of the Tax Cuts and Jobs Act (enacted in December 2017), took effect January 1, 2019. The core argument is that once Congress “zeroed” out the penalty, the individual mandate could no longer survive as a “tax” and thus was not supported by Congress’s power to tax individuals who do not purchase health insurance.

Other legal issues in the appeal include (1) whether the parties who brought the lawsuit were permitted to bring such a challenge in the first place; and (2) the implications of any decision to invalidate the mandate on other provisions of the ACA.

In the Supreme Court, this case will be referred to as California v. Texas. The Court will hear arguments during the court session that begins in October 2020, but it won’t likely issue a decision until well into 2021. In the meantime, the ACA remains in effect.

For more information about the background of this litigation, see our December 20, 2019 compliance news webpage.

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