Obamacare Wars Part III: Supreme Court Rejects Latest Challenge to Obamacare

The Affordable Care Act – aka Obamacare – has survived a third Supreme Court challenge to its constitutionality.  In a 7-2 ruling, the Supreme Court held that states and individuals had no standing to sue over Obamacare’s individual mandate because the tax penalty is currently $0.

Paradoxically, the Supreme Court’s support for Obamacare has risen even as the Court has become more conservative. The Supreme Court upheld the individual mandate of Obamacare in a 5-4 vote in 2012, with Chief Justice Roberts casting the critical swing vote. The Supreme Court ruled 6-3 in 2015 that Obamacare subsidies could be paid in both federal and state run exchanges.

The Affordable Care Act was enacted in 2010. It bans insurance companies from discriminating on the basis of preexisting conditions. Children can stay on their parents’ insurance until age 26. Copays are not permitted for preventive care and there are no lifetime caps on benefits. It also includes an individual mandate, which requires all Americans to have healthcare coverage or pay a monetary penalty.

In 2017, Congress failed to repeal the Affordable Care Act but set the individual mandate penalty to $0. Texas and several other states, joined by a couple of individual citizens, filed a lawsuit seeking to overturn the Affordable Care Act.

The End of the Obamacare Wars?

The federal government cannot pass any laws unless those laws are supported by a provision in the constitution. For instance, the federal Justice Department has jurisdiction to prosecute crimes that occur between states because the constitution gives Congress (and therefore the rest of the federal government) the power to regulate interstate commerce. Similarly, many parts of the Environmental Protection Act are constitutional because Congress has the power to regulate pollution between states.

This latest challenge is based on the Supreme Court’s ruling on the Affordable Care Act in 2012. When Obamacare was passed, the “lynchpin” of the law was the individual mandate. Chief Justice Roberts wrote in 2012 that Obamacare was constitutional because the individual mandate is a tax and therefore constitutional under Congress’s tax powers. The logic behind this latest lawsuit is that if the tax penalty is $0, then it cannot be a tax and therefore the remainder of Obamacare (including the discrimination ban, market exchanges, etc.) was also unconstitutional.

This reasoning is flawed in several respects. First, most courts follow rules regarding severability. This means that a law or contract can survive even if one part of that law or contract is unenforceable. Even if the individual mandate is unconstitutional, the rest of Obamacare can be severed from the individual mandate and survive on their own.

Second, Texas and the other challenges lack standing to file the lawsuit in the first place. Standing is a basic requirement of any lawsuit. In order for a person or state to having stating, the challenger must show that the law somehow harmed him, her, or it and the only redress would be to overturn said law. In this instance though, a tax penalty of $0 cannot harm anyone because even if one violates the tax penalty, the punishment is non-existent.

The Supreme Court’s latest ruling has efficiently closed the door on further Obamacare challenges unless a non-monetary penalty is added to the law. If the tax penalty is greater than $0, then Obamacare is constitutional as a tax. If the tax penalty is $0, then nobody can sue over Obamacare because they would lack standing.

The only way out of this paradox is if violation of the individual mandate results in a non-monetary penalty, such as denial of coverage. However, Obamacare itself prohibits insurance companies from engaging in certain conduct, such as denying coverage for pre-existing conditions. The future of Obamacare appears bright for the time being.

Do I Need a Lawyer If I Am Being Denied Insurance or Benefits?

The Affordable Care Act provides expanded minimal standard of health care for those who were previously uninsured. If an insurance company or a health care provider is refusing a health care service, then the Affordable Care Act has been violated. A personal injury attorney who specializes in health care can fight for your legal rights.