California v Texas (2021) was a United States Supreme Court case that dealt with the constitutionality of the 2010 Affordable Care Act (ACA), colloquially known as Obamacare. It was the third such challenge to the ACA seen by the Supreme Court since its passage. The case in California followed after the passage of the Tax Cuts and Jobs Act of 2017 and the change to the tax penalty amount for Americans without required insurance that reduced the "individual mandate" to zero, effective for months after December 31, 2018. The District Court of the Northern District of Texas concluded that this individual mandate was a critical provision of the ACA and that, with a penalty amount equal to zero, some or all of the ACA was potentially unconstitutional as an improper use of Congress's taxation powers.
Under the Donald Trump administration, the federal government had declined to challenge the lower court ruling, leading California and several other states to intervene and appeal the ruling, which the Fifth Circuit Court of Appeals granted. The Court of Appeals for the Fifth Circuit upheld the ruling that the individual mandate was unconstitutional but determined that the mandate might be severable from the rest of the ACA. Both California and Texas petitioned review of the Fifth's decision to the Supreme Court; the Court consolidated both California v Texas and Texas v California under the same case.
In a 7–2 decision issued on June 17, 2021, the Supreme Court ruled that Texas and other states that initially challenged the individual mandate did not have standing, as they had not shown past or future injury related to the provision. The Supreme Court otherwise did not rule on the constitutionality of the individual mandate in this case.
Background.
The ACA (Obamacare) was passed in 2010 under Democratic leadership in both houses of Congress and signed by President Barack Obama. Among many of its provisions, it provided programs for states to provide free or low-cost health insurance to low-income residents through programs like Medicare and Medicaid. ACA encouraged all Americans to have health insurance and as part of this, created an income tax penalty for those that did not have health insurance, otherwise known as the "individual mandate". Passage of the ACA was controversial, and remained an issue that was divided along political lines, with Democrats seeing the law as promoting the public good and Republicans seeing it as a tax burden. The law had been challenged in courts multiple times, with the Supreme Court having seen two cases previously. Notably, in 2012, the Court ruled 5–4 in National Federation of Independent Business v Sebelius that the individual mandate was constitutional as a granted power of Congress under the Taxing and Spending Clause.
In 2016, the Republican Party held control of both the House and Senate and gained control of the Executive branch with the election of President Donald Trump. Trump had campaigned on the promise of replacing the ACA once in office, and repealing the law was one of the early targets of the Republicans, but early efforts failed by mid-2017 due to in-party disputes, specifically the deciding vote which was to come from Senator John McCain was denied the Republican Party due to the fact that a promised replacement plan was not forthcoming.
