A Look at the Latest ACA Lawsuit

Twenty states this week asked a federal court to declare the Affordable Care Act unconstitutional because the recent Tax Cut and Jobs Act repealed the tax penalty enforcing the ACA's individual mandate. The lawsuit was filed by the attorneys general for Texas, Wisconsin, Alabama, Arkansas, Arizona, Florida, Georgia, Indiana, Kansas, Louisiana, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Tennessee, Utah and West Virginia, and the governors of Maine and Mississippi.

In the first lawsuit challenging the ACA brought by the National Federation of Independent Businesses, the courts upheld the ACA's individual mandate to purchase health insurance on the grounds that the penalty for not doing so was a tax. The states' new lawsuit argues that, since the tax bill did not actually repeal the individual mandate but, instead, zeroed out the tax penalty, the mandate is now unconstitutional. Since it is not severable, they argue, the entire statute must fall.

The severability argument is essential to the case. Severability comes down to congressional intent: Did Congress intend the entire statute to fall if the mandate is held unconstitutional? In the tax bill passed this fall, Congress eliminated the tax penalty but left the rest of the ACA in place. This may make it difficult to argue that Congress intended that a court invalidate the entire statute if they invalidated the, now meaningless, mandate.

In addition, the plaintiffs may have a difficult time showing injury, the key to standing and getting into court, since there is no longer a penalty for not following the mandate. 

Despite these challenges, the lawsuit could proceed through the federal courts in Texas, where it was filed, and eventually wend its way to the Supreme Court.