Decision coming on Texas v. California ACA case

The seemingly never-ending court cases related to the Patient Protection and Affordable Care Act continued unabated late into 2020, with the U.S. Supreme Court finally hearing oral arguments in the infamous California v. Texas case in mid-November. The case, which is likely to decide the constitutionality of the ACA once and for all, is now expected to see a published decision at some point in 2021.

California v. Texas actually involves more than 20 states, and is based on the constitutionality of the ACA's individual mandate, which requires people to have health insurance and effectively undergirds the entire law, according to the health care law firm Sheppard Mullin. The ACA has survived a number of similar challenges in the years since its passage, most notably in 2012, and continued despite other legislative challenges in 2017 related to tax law.

With the final decision on this case still likely months from being formally issued, it is left to legal experts to play oddsmaker and try to handicap where the most powerful court in the country will land. Given the heavy conservative majority (current 6-3), it appears as though the individual mandate will be deemed unconstitutional. However, observers also believe there may be a break-off majority — including two justices from the conservative side of the aisle — which could rule that the problems with the individual mandate do not preclude the rest of the law, such as minimum essential coverage requirements, from existing going forward.

Don't expect a decision in California v. Texas before the end of 2020.

A closer look
While the individual mandate is certainly front and center in California v. Texas, there are other factors in play as well, according to the National Law Review. Three other outcomes exist, although they are considered more unlikely.

First is that the case would be dismissed, based on the issue of standing. That is, before weighing the legal merits of each side of the case, justices will first have to rule whether the plaintiffs were actually harmed by the individual mandate in some way, such as spending money they otherwise would not have spent if not for the rule's existence. Lower courts found the plaintiffs did have such standing, but there has not been much indication of what a majority of justices believe on this front one way or the other. 

The second is the individual mandate being declared unconstitutional, and with it, the entire ACA. Third, and probably least likely, is the Supreme Court will rule that despite the individual mandate, Americans still had the ability to choose not to purchase coverage and, thanks to the aforementioned tax law changes in 2017, no longer face a penalty for doing so.

What's at stake?
As many in the health care and insurance industries know, there's a lot more to the ACA than just the individual mandate, creation of state and federal coverage marketplaces and so on. The Kaiser Family Foundation recently found that the vast majority of people on Medicaid — more than 80% — in states that expanded their programs as part of the ACA were covered specifically because of that expansion. In addition, about 2.3 million people between the ages of 18 and 26 nationwide are covered thanks to their parents' insurance, another allowance built into the ACA.

Beyond that, 9.2 million people who purchased their coverage through Healthcare.gov or state-level exchanges received premium tax credits to help manage the cost, and 5.3 million got further premium reductions. Almost 900,000 more are enrolled in basic health plans administered by their state governments.

Furthermore, there are 54 million Americans under the age of 65 who have pre-existing conditions that insurers are now required to cover because of the ACA's mandates; almost half of all families without an elderly person have at least one member with such a condition.

The ACA gives some level of coverage to these people who otherwise would have had few or no options, and faced monumental health care costs as a consequence.

The industry take
Of course, none of the above takes into account how the health insurance sector itself feels about any of the possible decisions the Supreme Court could render. While there may be some discontent with aspects of the ACA within the industry, a number of underwriters have already filed amicus briefs with the Supreme Court, according to SCOTUSblog. In general, those industry leaders tell the justices that junking the entire law would create chaos for themselves and their policyholders, especially in the midst of the global pandemic that is likely to still be ongoing when the decision finally comes down.

Obviously, this is a case that those within and outside the industry will need to monitor carefully and, perhaps, begin crafting contingency plans for any decision that is handed down. Some believe the decision might not come until as late as May or June, so there is still plenty of runway for the sector to adjust accordingly, no matter what is decided.