U.S. Supreme Court rejects latest effort by Texas, Arkansas AGs to roll back Obamacare

June 28 - July 4, 2021

By Wesley Brown


The U.S. Supreme Court rejected the latest attempt by attorney generals in Texas, Arkansas and several others states to undo the comprehensive healthcare reform law commonly known as Obamacare.


Enacted in 2010 as the Patient Protection and Affordable Care Act (ACA), the legislation backed by former President Barack Obama that overhauled the nation’s healthcare system required most Americans to obtain minimum essential health insurance coverage. Among many other things, it also imposed a monetary penalty upon most individuals who failed to do so.


Under former Democratic Gov. Mike Beebe, Arkansas became the first state in the nation to receive approval from CMS to offer health care to newly eligible patients through ACA’s Medicaid expansion. The initiative, often referred to as the “private option,” allowed Arkansas to cover close to 220,000 Medicaid beneficiaries. It has since been expanded to more than 900,000 under Gov. Asa Hutchinson, a Republican.


However, a challenge against the law was filed in 2017 in the U.S. District Court for Northern District of Texas. Known as California v. Texas, Texas Attorney General Ken Payton, Arkansas AG Leslie Rutledge, and a coalition of AGs from 16 other Republican-led states filed a federal lawsuit along with two Texas citizen who did not want to buy health insurance.


They claimed that without the penalty the minimum essential coverage provision, the mandate was now unconstitutional because it could no longer be justified as a tax. They also contended if the minimum coverage provision is no longer constitutional, then all of ACA’s other provisions were also severable such as the Medicaid expansion that created Arkansas Works and other protections for people with pre-existing conditions.


After the original case was filed, the federal judge in Texas agreed that the plaintiffs had standing, and that the minimum coverage mandate is unconstitutional because a 2017 change to the penalty under former President Donald Trump’s $2.2 trillion Tax Cut and Jobs Act. That law, it said, transformed the mandate into a “standalone command” to buy health insurance – something that Congress lacks the power to do. And without the mandate, the district court concluded, the entire ACA must fall.


The New Orleans-based U.S. Court of Appeals for the Fifth Circuit also agreed as to the existence of standing and the unconstitutionality of ACA but concluded that the district court’s severability analysis provided insufficient justification to strike down all the provisions of Obamacare.


In addition to Arkansas, the coalition – led by Texas – includes the attorneys general of Alabama, Arizona, Florida, Georgia, Indiana, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Tennessee, Utah and West Virginia. The citizen challengers in the case were Neill Hurley and John Nantz, both Texas residents.


After Congress eliminated the tax portion of the individual mandate as part of former President Donald J. Trump’s tax overhaul in 2017, Rutledge joined the multistate lawsuit filed in Texas arguing that Congress rendered Obamacare unconstitutional by doing away with the tax penalty.


The Supreme Court first encountered ACA in 2011. That case, National Federation of Independent Business v. Sebelius, involved the constitutionality of the Act’s individual coverage mandate. Despite correctly recognizing that Congress’ enumerated powers did not allow it to impose such a mandate, the Court nonetheless upheld it by characterizing the “financial penalty” imposed on those who failed to comply with the mandate as a “tax.


In King v. Burwell in 2015, the high court in a 6-3 ruling affirmed a decision of the U.S. Court of Appeals for the Fourth Circuit that held because the relevant text of the ACA was ambiguous, the Internal Revenue Service had not exceeded its authority by issuing a rule to implement tax credits for insurance purchased on either a state or a federal exchange.



ACA’s ‘third trilogy”


In knocking down the latest ACA challenge, U.S. Justice Steven Breyer was joined by six of the other eight justices the “plaintiffs do not have standing to challenge (ACA’s) minimum essential coverage provision because they have not shown a past or future injury fairly traceable to defendants’ conduct enforcing the specific statutory provision they attack as unconstitutional.”


The Constitution gives federal courts the power to adjudicate … only genuine cases and controversies,” Breyer wrote. “To have standing, a plaintiff must ‘allege personal injury fairly traceable to the defendant’s allegedly unlawful conduct and likely to be redressed by the requested relief.’”


Further, Breyer also pushed back on the claim by the two individual plaintiffs that they had a “particularized individual harm” in the form of past and future payments necessary to carry the minimum essential coverage that ACA requires in holding that neither the states nor the individual plaintiffs have standing to challenge the mandate.


“Assuming this pocketbook injury satisfies the injury element of Article III standing, it is not “fairly traceable” to any “allegedly unlawful conduct” of which the plaintiffs complain. Without a penalty for noncompliance, ACA is unenforceable,” wrote Breyer. “The individuals have not shown that any kind of government action or conduct has caused or will cause the injury they attribute to ACA. The Court’s cases have consistently spoken of the need to assert an injury that is the result of a statute’s actual or threatened enforcement, whether today or in the future.”


In a terse reply, Breyer also said that Texas, Arkansas, and the other states challenging ACA had similarly failed to show that the pocketbook injuries they allege are traceable to the federal government’s allegedly unlawful conduct. Because neither the individual plaintiffs nor the states have standing to challenge Obamacare, the high court reversed the court of appeals decision and sent the case back to the federal district court in West Texas with instructions to dismiss it.


Breyer, who delivered the opinion of the Court, was joined by Chief Justice John Roberts and associate justices Clarence Thomas, Elena Kagan, Sonia Sotomayor, Brett Kavanaugh, and Amy Coney Barrell. Thomas filed a concurring opinion, while Associate Justice Samuel Alito filed a dissenting opinion, joined by fellow conservative Neil Gorsuch.


In his dissent, Alito wrote a colorful argument that the Court had again rescued Obamacare from the jaws of defeat. He then described the earlier challenges to ACA in National Federation of Independent Business v. Sebelius in 2012 and King v. Burwell in 2015 that were also rejected by the high court.


“Today’s decision is the third installment in our epic Affordable Care Act trilogy, and it follows the same pattern as installments one and two. In all three episodes, with the Affordable Care Act facing a serious threat, the Court has pulled off an improbable rescue,” wrote Alito.


According to Alito, the Court is presented with the daunting problem of a ‘tax that does not tax’ in the third challenge to ACA to reach the nation’s highest court. He wrote that the states’ have standing because they offered plenty of evidence that they incur substantial expenses to comply with obligations imposed by the ACA.”


“And if they were to prevail, Alito reasoned, they wouldn’t have to pay those expenses,” wrote Alito. “States that think the Act saddles them with huge financial costs, is entitled to sue. Can this be correct? The ACA imposes many burdensome obligations on States in their capacity as employers, and the 18 States in question collectively have more than a million employees. Even $1 in harm is enough to support standing. Yet no State has standing?


In his concurring opinion to the majority’s ruling, Thomas dismissed Alito’s dissent but agreed that the two earlier cases should have been upheld.


“There is much to commend Justice Alito’s account of ‘our epic Affordable Care Act trilogy.’ This Court has gone to great lengths to rescue the Act from its own text. So have the Act’s defenders, who argued in first instance that the individual coverage mandate is the Act’s linchpin, yet now, in an about-face, contend that it is just a throwaway sentence,” wrote Thomas. “But, whatever the Act’s dubious history in this Court, we must assess the current suit on its own terms. And, here, there is a fundamental problem with the arguments advanced by the plaintiffs in attacking the Act—they have not identified any unlawful action that has injured them. Today’s result is thus not the consequence of the Court once again rescuing the Act, but rather of us adjudicating the particular claims the plaintiffs chose to bring.”


Following Thursday’s decision, President Joe Biden and top administration officials that now oversee ACA cheered the Supreme Court’s latest ruling.


“Today’s U.S. Supreme Court decision is a major victory for all Americans benefitting from this groundbreaking and life-changing law. It is a victory for more than 130 million Americans with pre-existing conditions and millions more who were in immediate danger of losing their health care in the midst of a once-in-a-century pandemic,” said Biden.


U.S. Department of Health and Human Services Secretary Xavier HHS Secretary Xavier Becerra and U.S. Centers for Medicare and Medicaid Administrator Chiquita Brooks-LaSure, both former members of Congress that who supported ACA has lawmakers, echoed Biden’s comments that COVID-19 pandemic has underscored the importance of safeguarding this life-saving law.


“Once again, the Supreme Court has made clear that the landmark Affordable Care Act is the law of the land,” said Brooks-LaSure, whose agency with HHS is tasked with administering ACA and the Medicaid and Medicare programs. “Health care should be a right -- not a privilege just for the healthy and wealthy.”



Hutchinson, Rutledge offer responses as Obamacare expands in Arkansas 


Closer to home, Gov. Asa Hutchinson offered a measured response to the Supreme Court ruling, noting that the question on ACA’s constitutionality is still not resolved. Under the Republican governor’s tenure, Arkansas has expanded health care coverage to thousands across the state through ACA.  On April 21, Hutchinson signed the new $5.86 billion budget for fiscal 2022 into law that funds Arkansas’ Medicaid expansion for the next two years, among many things.


“The Supreme Court’s ruling, dismissing the case on procedural grounds, leaves the question of the constitutionality of the Affordable Care Act unanswered. In my view, the question of whether the Congress overreached its powers in enacting the far-reaching health care law was important and a legitimate issue to be resolved by the Supreme Court. The fact that the Court dismissed the case on the lack of standing makes it unlikely that the court will reconsider the issue in the future,” said Hutchinson.


In Arkansas, the state Department of Human Services manages all Medicaid appropriations from the federal government, including the state’s controversial ACA expansion program now known as Arkansas Health and Opportunity for Me, or ARHOME. Earlier versions of the state’s ACA program, also known as Obamacare, include the Arkansas Works and the Private Option.


Hutchinson said Arkansas will continue to pursue the ARHOME waiver request to avoid the interruption of health care services to hundreds of thousands of Arkansans. Under new rules approved by the legislature during the 93rd General Assembly, ARHOME will require insurance carriers to do more than cover the costs of medical care.


“We want the companies to play a role in motivating Arkansans to get healthy through changes in lifestyle such as quitting smoking, exercising more, getting preventative wellness exams, and prenatal care,” said Hutchinson. “We want our health care to make Arkansans healthier.”


On the other hand, Rutledge angrily decried the Supreme Court ruling in a statement following the challenge to ACA on procedural grounds. She noted that Arkansas was a part of an 18-state coalition arguing that the ACA’s individual mandate is unconstitutional.


“At no point in today’s decision do the Supreme Court Justices address the merits of our argument that Obamacare is unconstitutional,” said Rutledge, who is running for governor in the 2022 Republican primary against Sarah Sanders Huckabee. “Arkansans deserve better, and I will continue to urge Congress to establish a comprehensive healthcare law that will allow states to be flexible while ensuring coverage for pre-existing conditions.” 




1. ACA Trilogy: U.S. Supreme Court rejects latest Affordable Care Act challenge.


2. In 7-2 ruling, SCOTUS on June 17 spurned the third effort to dismantle the signature health care reform law enacted by former President Barack Obama.


3.  In the majority opinion, U.S. Supreme Court Associate Justice Stephen Breyer held that Texas, Arkansas and other states that oppose the Affordable Care Act had no standing to challenge the constitutionality of the reform law's individual coverage mandate.


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