The Affordable Care Act Lives On: Now It Must Be Strengthened and Expanded

On June 17, 2021, the Supreme Court upheld the Affordable Care Act (ACA) for the third time in California v. Texas, in what Justice Alito called, in dissent, “the third installment in our epic Affordable Care Act trilogy.” The first two rulings were decided by narrow majorities—by 5-4 in 2012 and 6-3 in 2015. But this time the Act survived with a 7-2 majority—with the Court’s most conservative justices dissenting (Justices Alito and Gorsuch). Eighteen states (all Republican-led) and two individuals had challenged the constitutionality of the ACA’s minimum essential health insurance coverage provision (the “individual mandate”), arguing that the whole Act was unconstitutional. The Court dodged the merits of the plaintiffs’ argument, instead ruling that they lacked the standing to sue, in a decision President Biden called “a big win for the American people.”

As one of us (LG) wrote in an earlier opinion piece for the Milbank Quarterly, the future of the ACA should not be decided by unelected judges but should become a social and political decision. That is exactly what California v. Texas will accomplish. President Obama’s signature health care reform will now become woven into the fabric of the health care system.

The Court was asked to decide whether the ACA’s individual mandate was valid after the tax penalty on which it was previously held to be constitutional was effectively nullified by Congress in 2017. The plaintiffs argued that when Congress removed the penalty, the individual mandate was rendered unconstitutional. Since it could not be severed, they argued, the whole ACA should be struck down.

Ultimately, the Court held that the plaintiffs did not have standing because they could not show any past or future injury that was or would be “fairly traceable” to the individual mandate. The two individuals did not suffer any injury because the individual mandate is now toothless and unenforceable in the absence of a tax penalty. The states argued that the absence of a mandate would result in more people enrolling in state programs like subsidized health insurance or Medicaid, but there is no evidence for this proposition. “Neither logic nor intuition suggests that the presence of the minimum essential coverage requirement would lead an individual to enroll in one of those programs,” reasoned Justice Breyer in the majority opinion. Without a penalty, “what incentive could the provision provide?”

Since the Court ruled that the plaintiffs lacked standing, it did not have to consider whether the individual mandate could be severed, including questions about Congress’ intent in removing the penalty, or if the impugned provision would cause the ACA to fall in its entirety. That was an important outcome because Justices Alito and Gorsuch were fully prepared to find the individual mandate unconstitutional and that the entire law should be struck down—a marked departure from the Court’s own precedents on severability.

Striking down one of this generation’s most transformational social frameworks due to the elimination of an inconsequential penalty would have involved the kind of judicial activism conservative jurists have railed against for years. It would also have had far-reaching and dangerous consequences for individual and population health in the United States.

The ACA has enabled 31 million Americans to access care—a nearly 70% increase. It expanded Medicaid eligibility, resulting in a further 14.8 million Medicaid enrollees in jurisdictions that adopted the expansion (12 states have refused and Congress cannot force them to expand eligibility, following a 2012 Supreme Court decision).

The loss of coverage would have been disproportionately felt among low-income adults, most of whom became eligible for Medicaid. Premium tax credits and cost-sharing subsidies were made available to other lower-income people who bought health coverage through the ACA marketplace. As part of President Biden‘s COVID-19 relief plan, eligibility for these subsidies was temporarily expanded. The ACA also enabled young people, who have been particularly hard hit by the pandemic, to stay on their parents’ insurance plans until 26 years of age. In other words, America’s most vulnerable people would have lost a health care safety net that is taken for granted in all our peer nations. And that safety net would have been dismantled during a once-in-a-lifetime health crisis.

The ACA introduced important and highly popular federal minimum standards for private health insurance, preventing millions from being overcharged or denied coverage due to pre-existing medical conditions like COVID-19, and removing financial barriers to patients seeking preventive care by requiring private insurers to cover those services without cost sharing. The accessibility of preventive health services remains vital since preventable diseases are still the leading causes of death among Americans. The law also made sweeping changes to the health insurance marketplace, rendering the system more accessible and the products of better quality.

Repealing and replacing the ACA has been a longstanding political priority of Republican politicians, many of whom ran and won on its repeal. However, the Court’s decision will likely lay future efforts to thwart it to rest. California v. Texas reaffirms that the ACA is here to stay. And any further challenge to the law would not be politically expedient, since the ACA has become increasingly popular, with only 35% of Americans having an unfavorable view of the law.

With the Court refusing to intervene to strike down the ACA for the third time, it is now clear that health care reform is squarely a decision for elected officials to make. While Congress seems paralyzed on major social reforms, the Biden administration plans legislative reforms of the ACA, including increased subsidies for ACA plans and Medicaid expansion. Half of the public says it wants the Biden administration to strengthen and expand the ACA.

Americans are grappling with the future of health care, especially considering the stark health system failures during the COVID-19 response. COVID-19 exposed and exacerbated health inequities along racial, ethnic, and gender lines and among income brackets. The ACA was designed to narrow these health inequities, but clearly disparities remain massive.

The United States spends considerably more than any other developed nation on health care as a share of gross domestic product, while trailing behind most of these nations in key health metrics. There is broad support among health care stakeholders for federal reforms that increase access to affordable, comprehensive health insurance and promote health equity. While the boldest proposals seem beyond political resolution, like “Medicare for All,” there are clear political pathways, including: a public option for lower-income Americans; expanded federal subsidies for low- and middle-income Americans to purchase private coverage; or simply strengthening the ACA and expanding Medicaid.

The ACA is a generational achievement, but it has major flaws. The 2012 decision that upheld the individual mandate also prevented Congress from requiring states to expand Medicaid eligibility. As a result of 12 states holding out on expanding eligibility, about 4.3 million Americans fall into a coverage gap–earning too much for their state’s low-income threshold for Medicaid but too little for subsidized coverage on the ACA marketplace. As of May 2020, two-thirds of those living in non-expansion states expressed the desire for Medicaid to be expanded. Attempts to nudge non-expansion states into reversing course through financial incentives did not work. Democrats in Congress are now formulating a strategy for the Centers for Medicare and Medicaid Services to grant section 1115 Medicaid demonstration waivers to local-level officials to provide coverage to low-income people in non-expansion states. The administration is also considering asking Congress to expand Medicare, including reducing the age threshold and expanding benefits to cover dental, optical, and hearing care.

Yet with Congress divided, President Biden may be unable to achieve his ambitious agenda for health care reform with bipartisan support. The President has broad executive power to expand access to health care. Some of his earliest executive actions included ordering government health insurance markets to take new applications for subsidized benefits under the ACA. President Biden could reverse his predecessor’s encouragement of direct-to-consumer sale of health coverage by limiting the ability to bypass insurance exchanges in the ACA and rescinding guidance on State Innovation Waivers that circumvent exchanges. President Biden can also use creative executive action to reform and expand Medicaid.

With the ACA seeming safe from further legal challenges for now, the conversation on Capitol Hill must shift to reforming health care and ensuring equitable access to quality health services for all. The COVID-19 pandemic has taught us a major lesson, which is that government must meet basic human needs for health care, and to do so equitably and with justice.

Lawrence O. Gostin is University Professor in Global Health Law at Georgetown University, faculty director of the O’Neill Institute for National and Global Health Law, and director of the World Health Organization (WHO) Collaborating Center on Public Health Law and Human Rights.

Alexandra Finch is a Fellow at the O’Neill Institute for National and Global Health Law at Georgetown University.

About the Authors