California v. Texas
The Supreme Court threw out a challenge to the Affordable Care Act, ruling that neither the states nor the individuals who sued had the legal right to bring the case in federal court — ending the third major Supreme Court battle over the law without deciding whether it is constitutional.
The decision leaves the ACA fully in place and its insurance protections intact, but it does not permanently foreclose challenges; it simply means these particular plaintiffs could not show the kind of direct, traceable harm that federal courts require before they can hear a case.
How it got here: A federal district court declared the entire ACA unconstitutional; the Fifth Circuit agreed the mandate was invalid but found the severability analysis incomplete and remanded; California and other states defending the law petitioned the Supreme Court, which agreed to hear the case.
The Case in Depth
What happened
Texas and 17 other states, later joined by two private individuals, sued federal officials claiming the Affordable Care Act's requirement to maintain health insurance coverage became unconstitutional after Congress reduced the financial penalty for not having coverage to $0 in 2017. With no penalty and no way to enforce the mandate, they argued it could no longer be justified as a tax — and that the rest of the massive healthcare law should fall with it.
The question before the Court
Could Texas and other states go to federal court to challenge the Affordable Care Act's health insurance coverage requirement after Congress reduced the penalty for not having insurance to zero dollars?
The Court's answer
No — neither the individual plaintiffs nor the states had the legal right to bring this challenge in federal court. The rules of standing require that a plaintiff's injury be caused by the specific government conduct being challenged. The two individuals said the coverage mandate forced them to buy insurance, but with the penalty at $0, the government has no power to make anyone comply or punish them for not doing so — meaning no government action is causing their costs.
The states argued they faced higher Medicaid enrollment costs because the mandate prodded residents to sign up, and also that separate ACA reporting and employer-coverage requirements imposed direct costs. Both theories failed: an unenforceable mandate with no penalty cannot logically cause enrollment in valuable benefits programs, and the reporting and coverage costs flow from entirely separate ACA provisions that operate independently of the coverage mandate. Striking down the mandate would not remove those other obligations, so those costs cannot be traced to the provision the states challenged.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
The Affordable Care Act — including its protections for people with preexisting conditions, its coverage expansion, and its employer requirements — continues to operate without disruption. States and individuals who want to challenge the law in the future must demonstrate a clearer, more direct injury tied to a specific enforceable provision, raising the bar for any future legal assault on the ACA.
What changes now
The case is dismissed for lack of standing, and the Affordable Care Act remains in full effect. The constitutional questions at the heart of the lawsuit — whether the $0-penalty mandate is unconstitutional, and whether it is separable from the rest of the law — were left entirely undecided. Justice Alito's dissent notes that dismissed parties may file a new suit, and that many other parties facing enforceable ACA obligations could potentially establish standing to raise similar challenges in the future.
What this does not decide
The Court explicitly did not decide whether the ACA's coverage mandate is unconstitutional now that its penalty is $0, or whether the mandate can be severed from the rest of the law. The ruling only dismisses this particular lawsuit; it does not immunize the ACA from future challenges brought by plaintiffs who can show a more direct, traceable injury.
Concurrences and dissents
Concurrence — Justice Thomas
Justice Thomas joined the majority but wrote separately to acknowledge the ACA's 'dubious history' in the Court and to concede that the dissent's inseverability-based standing theory has some historical and legal support. He nonetheless declined to address that theory for four reasons: it was not properly raised below, not argued in the states' opening brief, never directly addressed by the Court in prior cases, and complicated by the Court's inconsistent treatment of severability as either a remedy or a merits question. He closed by noting that, unlike prior ACA decisions, the Court is not 'rescuing the Act' — it is simply ruling on the claims the plaintiffs chose to bring.
Dissent — Justice Alito
Justice Alito, joined by Justice Gorsuch, argued that the states clearly have standing: they face real, documented financial costs from ACA provisions that are actively enforced against them, and those injuries are traceable to the federal government's conduct. He accused the majority of distorting the traceability requirement by demanding that injuries flow specifically from the unconstitutional provision rather than from the defendant's allegedly unlawful conduct more broadly. Reaching the merits, he concluded that the coverage mandate is now plainly unconstitutional — a 'tax' that raises $0 cannot be sustained under the taxing power — and that the ACA provisions burdening the states are inseverable from the unconstitutional mandate, entitling the states to relief.
How the Court got there
The legal reasoning, step by step
- The Constitution's Article III limits federal courts to deciding real 'Cases' and 'Controversies,' which requires anyone who sues to show three things: a concrete injury, a direct connection between that injury and the government conduct being challenged, and a realistic chance that a court ruling would fix it. This entire case turns on the second element — whether the plaintiffs' alleged financial harms are 'fairly traceable' to the government's enforcement of the coverage mandate specifically.
- The two individual plaintiffs said they were harmed by the money they spent buying health insurance because the law told them to. But with the penalty zeroed out, the IRS cannot sanction anyone for failing to carry coverage. There is simply no government enforcement action connecting the mandate's text to the plaintiffs' insurance costs — and without an action to point to, no traceability exists. The Court stressed that its precedents consistently require an injury caused by a statute's 'actual or threatened enforcement,' not merely by the existence of unenforceable statutory language.
- A declaratory judgment — a court ruling that the mandate is unconstitutional — cannot supply standing on its own. Declaratory relief still has to satisfy Article III's case-or-controversy requirement. Because there is no one to enjoin and no penalty to eliminate, any declaration of unconstitutionality would amount to an advisory opinion, which federal courts are forbidden from issuing.
- The states' indirect injury theory held that the mandate, even without a penalty, caused state residents to enroll in Medicaid and similar programs, raising state costs. The Court found this theory counterintuitive and unsupported: neither logic nor the evidence the states actually presented showed that a toothless, unenforceable mandate would drive enrollment in benefits programs that people could claim for free anyway. The states' own evidence referred only to enrollment trends from the years when the penalty was still in effect.
- The states' direct injury theory pointed to ACA reporting requirements (filing annual insurance-coverage forms with the IRS) and employer-coverage obligations as concrete financial harms. But those requirements are imposed by entirely separate ACA provisions — §§6055 and 6056 of the tax code and the employer mandate — that operate independently of the coverage mandate and cross-reference it only to borrow a definition. A court ruling that §5000A(a) is unconstitutional would not affect those other provisions at all, so the costs of complying with them cannot be traced to the provision the states challenged as unlawful.
- Because no plaintiff could tie their actual financial injury to any government enforcement of §5000A(a) specifically, none had standing. Federal courts therefore had no authority to hear the case at all, and the Court reversed the Fifth Circuit and directed that the lawsuit be dismissed — without reaching any question about whether the mandate is actually unconstitutional or whether it could be severed from the rest of the law.