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California v. Texas (Texas v. Azar)

What is the California v. Texas (Texas v. Azar/U.S.) lawsuit?

California v. Texas is a lawsuit that was initially filed by 20 GOP-led states in early 2018, seeking to overturn the Affordable Care Act. The case was heard by the Supreme Court in November 2020, and a ruling is expected in the spring or early summer of 2021.

When the case began, in early 2018, it was called Texas v. Azar. But after two lower court rulings, California – the lead Democratic state working to protect the ACA – filed a petition in early 2020 asking the Supreme Court to hear the case on an expedited schedule. Texas, the lead Republican state seeking to overturn the ACA, also filed a petition with the Supreme Court, asking the justices to deny California’s request for an expedited review but to eventually hear the case.

Ultimately, the Supreme Court agreed to hear the case, but in the 2020-2021 term rather than the 2019-2020 term. The two petitions, from California and Texas, were combined into the case that is now called California v. Texas, and the Supreme Court heard oral arguments on November 10, 2020 (shortly after Justice Amy Coney Barrett was confirmed and Joe Biden won the presidential election).

Two states that were initially working with Texas on this case – Wisconsin and Maine – have since withdrawn from the suit after Democratic governors took office, but 18 GOP-led states continue to challenge the ACA in this case.

Californa v. Texas history

The case was filed (by Texas and 19 other states) soon after the Tax Cuts and Jobs Act reduced the ACA’s individual mandate penalty/tax to $0 (that provision took effect in 2019, but it was enacted in late 2017). The plaintiffs’ argument in Texas v. Azar hinged on the Supreme Court’s ruling in 2012 that the ACA’s individual mandate was constitutional because it was enforced with a tax and thus allowed under the federal government’s powers of taxation.

Without that tax, the plaintiffs in Texas v. Azar argued that the individual mandate is not constitutional after all. And they also argue that the mandate is not severable from the rest of the ACA, meaning that the entire law should be overturned. Legal scholars have called this interpretation “absurd,” but a federal judge sided with the plaintiffs in late 2018, ruling that the ACA should be overturned.

The case was appealed, and the U.S. Department of Justice initially supported the appeal (as is typical when a federal law is being challenged; the Department of Justice normally defends federal statute). But the DOJ’s position changed over time: By March 2019, the federal government agreed with the plaintiff states that the entire ACA should be overturned, and later argued that some ACA provisions should be allowed to survive (but not the law’s protections for people with pre-existing conditions). During the oral arguments in the 5th Circuit Court of Appeals in 2019, the federal government called for the ACA to only be overturned in the plaintiff states. Then in June 2020, the Trump administration filed a brief in support of the argument that Texas is making: That the individual mandate is unconstitutional, and the entire ACA should thus be overturned.

Oral arguments were heard in the 5th Circuit Court of Appeals in July 2019, and a ruling was issued in December 2019. But the ruling amounted to a delay: The panel of judges agreed with the lower court that the ACA’s individual mandate is unconstitutional, but they sent the case back to the lower court for a specific list of the ACA provisions that should thus be overturned (the lower court had previously ruled that the entire ACA should be overturned).

This delay caused additional uncertainty for insurers and consumers in the individual health insurance market, and pushed the case out past the 2020 elections. A group of Democratic-led states and the U.S. House of Representatives asked the Supreme Court to step in and hear the case in the 2020 term, without waiting for an update from the lower court regarding the portions of the ACA that should be overturned.

The Supreme Court initially declined that request, but later agreed to hear the case before it would otherwise have made its way there — the case (19-840) appeard on the Court’s order list as of March 2020, and oral arguments took place in November 2020, a week after the election. A ruling is expected in the spring or early summer of 2021.

The defense of the ACA in Texas v. Azar has been led by attorneys general from Democratic-led states, since the federal government, led by the Trump administration, mostly declined to defend the ACA. That changed soon after President Biden took office, with the DOJ officially reversing the previous administration’s position on the case, but there are no more arguments or filings due in this case, and all that’s left is for the Court to issue its ruling.

Although the ACA was upheld by the Supreme Court in 2012, the makeup of the Court is different now, as it includes three Trump appointees. Legal observers expect that Chief Justice John Roberts will join with the more liberal justices in upholding the ACA, but the final ruling remains to be seen.

Ironically, some of the original plaintiff states have been working to implement laws and regulations to protect their citizens from a potential overturn of the ACA — despite the fact that they’re simultaneously working to overturn the ACA. But without the ACA’s federal funding, including funding for premium subsidies and Medicaid expansion, few states would be able to replicate the ACA’s level of coverage and affordability.

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