On June 17 the Supreme Court decisively rejected California v. Texas, the latest lawsuit before the Court that challenged the legality of the Patient Protection and Affordable Care Act of 2010 (ACA). The notable 7 to 2 decision maintains the current status of the law and preserves the ACA’s landmark changes that have extended coverage to millions of Americans across states.

The lawsuit followed the enactment of the federal Tax Cuts and Jobs Act of 2017, which eliminated the financial penalty associated with ACA’s individual mandate beginning in 2019. The plaintiffs, which included 18 states led by Texas, questioned whether the zero-dollar penalty negated justification for the law under Congress’ constitutional taxing power. The lawsuit also raised questions about whether the mandate could be severed from the law, or if the entire law should be stricken if the mandate was found unconstitutional. The Supreme Court’s decision did not address these questions, but rather found that the plaintiffs did not have standing to bring the case forward as they did not prove that they had suffered any injury as a result of the mandate.

Since its passage, states have led the way in implementing the ACA’s significant changes to our health care system. Abolition of the law would have had significant consequences including billions of dollars in lost federal funding that are essential to support programs that would otherwise have to be eliminated or dramatically reduced. These programs, like expanded Medicaid and the health insurance marketplaces, have enabled the coverage of millions of individuals and families. (For more see Implications for States if the Supreme Court Upends the ACA). Recognizing the potentially severe impacts of overturning the ACA, 21 states, led by California, intervened in defending the law with the support of governors from six additional states.

With the SCOTUS decision, states and federal partners can continue their work without the lingering uncertainty of the law’s future. The timing of the decision is significant as the Biden Administration seeks to push forward reforms that build on the ACA. Such reforms include a permanent increase in tax credits that are currently available through the American Rescue Plan Act to those who purchase coverage through the marketplaces, which are helping to make premiums more affordable for more people. Similarly, states are actively engaged in work that builds upon the law’s major provisions from the additional states opting to expand to opportunities for innovation enabled under state funded health system reform programs authorized under the ACA. Looking ahead, NASHP will continue to work with states as they continue their work to leverage the ACA’s reforms to bring affordable coverage and improved health care systems to their populations.