Legal Challenges to the Affordable Care Act

Updated August 5, 2020 | Infoplease Staff

Opponents determined to dismantle Obamacare

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Ever since President Barack Obama signed the landmark Affordable Care Act into law in March 2010, opponents, mostly Republican, who believe the new law is too expensive and verges on socialism, vowed to dismantle the legislation. "Repeal and replace" became their mantra. The law has experienced setbacks but so far survived legal challenges. It faces its biggest hurdle in 2015.

Early Challenge

In late March 2012, the U.S. Supreme Court reviewed the constitutionality of the Affordable Health Care Act, also called Obamacare. The review focused on the individual mandate, the act's requirement that all citizens buy health insurance or pay a fine. Republicans challenged the mandate, saying that it was an unconstitutional expansion of the federal government's power. The Obama administration insisted that the individual mandate was needed to fix significant flaws in insurance coverage and to ensure that everyone receives healthcare regardless of pre-existing health conditions.

On June 28, 2012, the Supreme Court announced its verdict, upholding the individual mandate. The Supreme Court ruled that the fine attached to the individual mandate was a tax that the federal government had a right to impose. Therefore, the mandate was not unconstitutional and could survive. The ruling was a victory for President Obama and a loss for the 26 states that sued over the individual mandate.

Obamacare Suffers a Setback

The Affordable Care Act suffered a blow in June 2014, when the Supreme Court ruled 5-4 in Burwell v. Hobby Lobby that some closely held businesses with religious objections cannot be forced to pay for insurance that covers contraception for female workers because doing so is a violation of the Religious Freedom Restoration Act of 1993.

Two conflicting rulings handed down on July 22, 2014, jeopardized a key component of the Affordable Care Act. Both cases centered on the Internal Revenue Service rule that makes some people who buy insurance on federal exchanges eligible for subsidies. The rule says that subsidies are offered in exchanges "established by the State." In Halbig v Burwell, a three-judge panel in Washington, DC, ruled 2–1 that the federal subsidies are illegal because they weren't explicitly mentioned in the law. Thirty-four states have not created their own exchanges, forcing residents to enroll through federal exchanges.

In the other ruling, King v Burwell, the panel in Virginia unanimously upheld the rule. In the decision, Federal Judge Roger Gregory wrote that the panel would not "deny to millions of Americans desperately-needed health insurance through a tortured, nonsensical construction of a federal statute whose manifest purpose, as revealed by the wholeness and coherence of its text and structure, could not be more clear." The Supreme Court announced in November 2014 that it would hear a challenge to King v Burwell, and opening arguments in the case began on March 4, 2015. About seven million people are covered under the federal exchanges, and millions could lose coverage or pay more for it if the Court decides against the Obama administration. The Supreme Court ruled, 6–3, in June that the subsidies should be allowed in states that set up their own exchanges and in those that use the federal marketplace.

"Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible we must interpret the Act in a way that is consistent with the former, and avoids the latter," Chief Justice John G. Roberts Jr. wrote in the majority ruling.

—Beth Rowen
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