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Fate of Obamacare in Limbo: Fight at Supreme Court Explained

June 3, 2021, 9:35 AM

The global Covid-19 pandemic has highlighted the need for health insurance and pushed hundreds of thousands of Americans to the Obamacare exchanges, but it’s unclear if those enrolled will be able to count on keeping that coverage.

The Supreme Court is expected to release a decision any day now on the constitutionality of the signature health-care law. It’s a ruling that could create chaos if the law is invalidated and make 29.8 million people lose their insurance, according to an estimate from the Economic Policy Institute.

But legal scholars on both sides of the ideological line doubt the court will go that far.

1. What are they fighting about?

The short answer: a change Congress made to the Affordable Care Act in 2017. In the Tax Cuts and Jobs Act, Congress dropped the tax penalty for those who fail to buy insurance to $0.

A group of states led by Texas and two individuals brought a lawsuit challenging the law after that change, arguing the ACA provision that requires everyone to buy insurance is no longer a valid exercise of Congress’s taxing power. And because the individual mandate is essential to how the law operates, the entire thing must be struck down as unconstitutional, they argued.

A group of states led by California intervened to defend the law after the Department of Justice under the Trump administration refused. The DOJ urged the court to strike down the ACA in its entirety but has since changed its position under the Biden administration.

2. What could the justices decide?

It all depends on whether the court rules the individual mandate is constitutional or not. If it is, the fight ends there with the law left intact. If it isn’t, the justices have to decide if it can be cut from the rest of the law and if the remaining provisions can survive without it.

If the justices decide the mandate is unconstitutional but severable from the rest of the law, it’s possible they could send the case back to the district court to decide what other provisions are tied to the mandate and have to be tossed out, too.

The court could also rule the mandate is not severable and strike down the law entirely.

But the justices could sidestep those questions altogether if they decide neither the states led by Texas nor the individuals that sued suffered the necessary injury for the district court to hear the dispute to begin with.

3. Didn’t they already decide the constitutionality of the law?

Yes. This is the second time a broad constitutional challenge to the Affordable Care Act has reached the high court. In a 2012 case, known as National Federation of Independent Business v. Sebelius, the justices upheld the individual mandate as a constitutional exercise of Congress’s taxing power in a 5-4 decision.

The court said it was unconstitutional to threaten to withhold federal funding to force states to expand Medicaid, but said that constitutional defect was remedied by prohibiting the Health and Human Services secretary from the pulling the purse strings on states that refuse. The other provisions of the ACA are not affected, the court said.

4. How likely is the court to strike down Obamacare?

Court watchers think it’s pretty likely the Affordable Care Act will remain, but they anticipate there being disagreements among the justices about why one provision can’t take down an entire statute.

Based on the oral arguments, the 2012 precedent in NFIB v. Sebelius, and the intervening cases challenging the ACA, legal scholars say it’s unlikely the court would find the individual mandate both unconstitutional and inseverable from the remaining provisions.

During arguments in November, at least five justices on the court indicated there’s a strong argument for cutting that one provision from the rest of the law.

Justice Brett Kavanaugh even said then he thinks this is a “very straightforward case for severability” under the court’s precedents.

5. Why is it taking so long?

The court heard arguments in the case on Nov. 10, about a month into the court’s 2020-2021 term. Supreme Court terms run from October through June, and it’s common for decisions in some of the biggest cases to come at the bitter end.

But the delay could signal the court is divided on one or more issues in the case. Legal scholars say Chief Justice John Roberts isn’t a fan of splintered 5-4 decisions and may be working to reach a greater consensus on the court’s majority opinion.

The court is scheduled to release more opinions on Thursday starting at 10 a.m.

To Lean More:

— From Bloomberg Law

Obamacare Skirmishes Await Regardless of Supreme Court Ruling

Kavanaugh, Roberts Signal Inclination to Keep Obamacare Alive

Covid Relief Laws Hint Congress Aimed to Keep Obamacare Alive

— From Bloomberg News

Biden DOJ Tells Top Court U.S. Flips Trump Stance on Obamacare

Obamacare Stakes Rise at High Court as Election Dooms Easy Fix

Ginsburg’s Death Injects New Doubt Into Fate of Obamacare (1)

To contact the reporter on this story: Lydia Wheeler in Washington at lwheeler@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Brent Bierman at bbierman@bloomberglaw.com

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