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Potential impact of Supreme Court changes on the ACA

Health and Benefits|Total Rewards|Integrated Wellbeing

By Anu Gogna and Ben Lupin | October 13, 2020

A Q&A on the future of the Affordable Care Act in light of the November elections and timing to fill the Supreme Court vacancy.

On November 10, 2020, the U.S. Supreme Court is scheduled to hear oral arguments challenging the constitutionality of the Affordable Care Act (ACA) in the case of California v. Texas.1 Many questions surround this case and the future of the ACA in light of the timing to fill the Supreme Court seat vacated by the death of Justice Ruth Bader Ginsburg.


In 2017, Congress enacted tax reforms that cut the ACA’s individual mandate penalty to $0 starting in 2019. Texas and other Republican-led states, along with two private citizens, sued, arguing that the individual mandate is unconstitutional if it no longer imposes any tax. Further, because the ACA lacks a severability clause, and the individual mandate is integral to the ACA, they argued that if that provision is unconstitutional, then the entire law must fall. The Fifth Circuit Court of Appeals ruled that the individual mandate was unconstitutional but sent the case back to the federal District Court to rule on the severability issue. That Fifth Circuit decision was appealed to the Supreme Court.2


Q. When is the Supreme Court scheduled to hear the case, and when is a decision expected?

The Supreme Court is scheduled to hear oral arguments on November 10, 2020 (one week after the presidential election). A decision on the case is expected by spring/summer of 2021.

Q. How might the Supreme Court rule on the case?

According to some Supreme Court analysts, the court generally has the following options when it decides the case:

  1. To dismiss the case on technical grounds, leaving the ACA in place (for example, holding that Texas and the individual plaintiffs lacked standing to bring the lawsuit)
  2. To uphold the individual mandate and therefore the entire ACA
  3. To uphold the ACA while finding the individual mandate is unconstitutional without its penalty, essentially maintaining the status quo
  4. To uphold the ACA generally but hold the individual mandate and other provisions closely linked to the mandate as unconstitutional
  5. To strike down the entire ACA as unconstitutional

Q. How would the nomination of Judge Amy Coney Barrett to the Supreme Court affect the decision?

Only those justices sitting on the Supreme Court when the case is heard will vote, and it is not yet known if President Trump’s nominee will be confirmed prior to when the case is argued. A vacancy on the court was created by the death of Justice Ruth Bader Ginsburg on September 18, 2020.

If the case is heard before a new justice is confirmed, and the vote splits 4 – 4, the justices could reschedule oral arguments or delay issuing any ruling until the case can be reheard by a full Supreme Court, possibly later in the spring of 2021 depending on the timing of confirmation. Alternatively, the court could issue a 4 – 4 ruling, which would maintain the status quo and leave the Fifth Circuit's ruling intact; the case would then be remanded back to the District Court. In this scenario, the ACA would remain in effect while the District Court analyzed the severability issue provision by provision. The litigation could continue for years, awaiting a new District Court decision, another appeal to the Fifth Circuit and most likely a return to the Supreme Court.

It’s possible that the Senate could confirm President Trump’s nominee before the scheduled date for oral arguments, and therefore the case could be heard with a full court. Judge Barrett has not issued any rulings on the ACA but has criticized the Supreme Court’s prior ruling to uphold it. Her position on the ACA and the Supreme Court’s prior rulings on the topic will likely be a key issue during her confirmation hearings, which are expected to occur in mid-October.

Q. What are the implications of the Supreme Court ruling for employers and plan sponsors?

A more complete understanding of the employer implications will depend on the scope of the Supreme Court’s ruling (i.e., what provisions, if any, are overturned, and the related timing). For example, if only the individual mandate is overturned, then there would be little to no impact on employer-sponsored health plans. If the individual mandate and provisions that are tied to it, such as guaranteed issue and the prohibition on preexisting condition exclusions, are overturned, then the impact would likely be minimal on many of the ACA employer requirements, such as the employer mandate (including the corresponding information reporting) and Patient-Centered Outcomes Research Institute fee.

However, if the ACA is overturned in its entirety, then plan sponsors would need to determine whether to continue to comply with some or all of the former requirements, including covering dependents to age 26, dollar limits on essential health benefits, the employer mandate, ACA information reporting and waiting periods.

Q. Could the election results affect the future of the ACA?

Based on the election results in November, particularly if the Democrats take control of the Senate and the presidency and retain the House, potential legislative fixes may be available (e.g., raising the individual mandate penalty from $0 to some minimal amount), which would resolve the issue raised in California v. Texas. If the fixes are adopted before a Supreme Court decision, they could make the need for a decision moot (and the ACA would remain in place).


1 See “Supreme Court to hear latest challenge to the ACA,” Insider, March 2020.

2 Note that the Supreme Court previously upheld the constitutionality of the ACA's individual mandate in 2012 in National Federation of Independent Business v. Sebelius, based on Congress’ power to tax.


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