Supreme Court Rejects Third Challenge to the Constitutionality of the ACA

In June 2021, the United States Supreme Court rejected a challenge to the constitutionality of the Patient Protection and Affordable Care Act (“ACA”).  California, et al. v. Texas, et al., Slip Op., Case No. 19-840 (June 17, 2021). In a 7-2 opinion, Justice Breyer, writing for the majority, held that the plaintiffs in that case lacked standing to pursue their claims.  The concept of standing is foundational to our system of adjudicating disputes and stands for the principle that a plaintiff seeking redress in the courts must demonstrate a “personal injury fairly traceable to the defendant’s allegedly unlawful conduct and likely to be redressed by the requested relief.”  The State of Texas, joined by more than a dozen other states, sought a declaration that the ACA’s minimum essential coverage provision is unconstitutional.  Two individual plaintiffs also joined the suit and claimed they were harmed by the requirement that they purchase minimum essential coverage.  The Supreme Court disagreed and found that the individual plaintiffs could not show they “a realistic danger of sustaining a direct injury” because the penalty associated with failing to do so had been zeroed out in 2017’s Tax Cuts and Jobs Act.  As to the state plaintiffs, the Supreme Court likewise found that they lacked standing because they did not show that that the unenforceable individual mandate “will cause their residents to enroll in valuable benefits programs that they would otherwise forgo.”  The Supreme Court also found that the state plaintiffs’ argument regarding alleged injury based on direct costs to the states due to increased enrollment (and, therefore, increased cost) in Medicaid and the requirement to offer minimum essential coverage to state employees was not tied to the provision the states’ claimed was unconstitutional—the individual mandate.  Therefore, the state plaintiffs lacked standing to pursue their claims.  The Supreme Court overturned the Fifth Circuit’s decision and remanded the case with instructions to dismiss.

What does this mean for Colorado employers?  Employers should continue compliance with the ACA in light of this latest decision.  In general, under federal law, employers with 50 or more full-time employees or equivalents are subject to the ACA’s requirements.  Smaller employers are generally exempt but can claim a tax credit if they offer group health insurance.  Employers in Colorado should also be aware of a new law signed by Governor Polis in June 2021 requiring the Colorado commissioner of insurance to create a standardized health benefit plan to be offered by health insurance carriers.  It is anticipated these plans will hit the market in 2023.  Governor Polis also signed a bill into law in June 2021 that creates a board in the division of insurance to perform affordability reviews of certain prescription drug prices.  Colorado employers should work with qualified counsel to ensure continued compliance with all federal and state healthcare laws.


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