California v. Texas
The Supreme Court dismissed the latest challenge to the Affordable Care Act, ruling that the states and individuals who sued lacked the legal right to bring the case because they could not show their injuries were caused by the specific provision they attacked.
The decision leaves the ACA fully intact for the third time before the Supreme Court. The Court deliberately sidestepped — and explicitly declined to decide — whether the individual coverage requirement is actually unconstitutional now that its financial penalty has been zeroed out.
How it got here: A federal district court declared the individual mandate unconstitutional and the entire ACA unenforceable; the Fifth Circuit agreed on standing and unconstitutionality but remanded on severability; California and other state intervenors sought Supreme Court review.
The Case in Depth
What happened
The Affordable Care Act originally required most Americans to maintain health insurance and imposed a financial penalty on those who didn't. In 2017, Congress set that penalty to zero dollars. Texas, 17 other states, and two individual citizens then sued federal officials, arguing the coverage requirement was now unconstitutional — no longer justifiable as a tax — and that the entire law should fall with it. California and other states intervened to defend the law.
The question before the Court
Can states and individuals sue to challenge the Affordable Care Act's health-insurance coverage requirement after Congress removed the financial penalty for not having insurance?
The Court's answer
No — the Court ruled that neither the individual citizens nor the 18 states had the legal right to bring this lawsuit in federal court at all, so the Court never addressed whether the coverage requirement is actually unconstitutional.
The individual plaintiffs buy health insurance and claim the mandate commands them to do so — but because Congress eliminated the financial penalty, the government has no mechanism to enforce the requirement against anyone who ignores it. Without any actual or threatened enforcement action, there is nothing to trace their insurance costs back to any unlawful government conduct. The state plaintiffs' theories failed on similar grounds: their claim that the unenforceable mandate causes more residents to sign up for Medicaid lacked logical or evidentiary support, and the administrative costs they documented stemmed from separate ACA provisions that operate independently — not from the specific coverage provision they challenged as unconstitutional.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
The ACA's coverage rules, pre-existing condition protections, Medicaid expansion, and insurance subsidies remain fully in force for the tens of millions of Americans who rely on them. Any future legal challenge to the law will need to find plaintiffs who can draw a clear, direct line between their concrete financial harm and a specific, actively enforced ACA provision.
What changes now
The lower courts are directed to dismiss the lawsuit for lack of standing. The Affordable Care Act remains in full effect. The majority's ruling leaves unanswered whether the individual mandate is unconstitutional and whether it is severable from the rest of the law — those questions may return if a future plaintiff can establish a clearer, more direct injury traceable to an enforced ACA provision. The dissent notes the states may refile with different standing arguments.
What this does not decide
The Court explicitly did not decide whether the individual coverage requirement is unconstitutional now that it carries no financial penalty, and it did not decide whether the mandate is legally severable from the rest of the ACA. Both merits questions remain entirely open for future litigation.
Concurrences and dissents
Concurrence — Justice Thomas
Justice Thomas agreed with the majority's standing analysis but wrote separately to acknowledge Justice Alito's account of the Court's troubled history with the ACA — including what Thomas called two prior errors. He emphasized that today's dismissal is not another rescue of the law, but simply the correct application of Article III to the specific claims plaintiffs chose to bring. He declined to address the 'standing through inseverability' theory the dissent proposed, arguing it was not properly raised below and raises unresolved questions about whether inseverability is a remedy or a merits issue.
Dissent — Justice Alito
Justice Alito argued that the majority distorts the traceability requirement by demanding that injuries be traced specifically to the challenged unconstitutional provision, rather than to the defendant's conduct more broadly. In his view, the states suffer real, concrete financial burdens from actively enforced ACA provisions — such as costly employer reporting requirements and coverage mandates — and those injuries are fairly traceable to federal enforcement even if those provisions are inseverable from an unconstitutional mandate. Proceeding to the merits, he concluded the individual mandate is unconstitutional (permanently zeroed out, it can no longer qualify as a tax) and inseverable from the provisions that burden the states, entitling them to relief.
How the Court got there
The legal reasoning, step by step
- Under Article III of the Constitution, federal courts can only decide real 'Cases' and 'Controversies.' This requires a plaintiff to show an injury that is concrete, fairly traceable to the defendant's unlawful conduct, and capable of being fixed by the relief requested. The central question here was whether any plaintiff's injury was 'fairly traceable' to the government's enforcement of the specific ACA provision they challenged — the minimum essential coverage requirement.
- The individual plaintiffs argued they are harmed because the coverage requirement tells them to buy health insurance. But with the financial penalty set to zero, the IRS has no tool to enforce the requirement against anyone who refuses to comply. With no actual or threatened enforcement action, the plaintiffs' out-of-pocket insurance costs cannot be traced to any government conduct — the provision is unenforced statutory text with no practical bite.
- Standing also requires that a court ruling could actually remedy the plaintiff's injury — a concept called redressability. The only relief the individual plaintiffs sought regarding the coverage requirement was a court declaration that it is unconstitutional. But federal courts cannot issue what would amount to an advisory opinion on a provision the government cannot enforce anyway; there is nothing to enjoin, no damages to award, and no meaningful remedy on offer.
- The state plaintiffs' first theory — that the unenforceable mandate pushes residents to enroll in state Medicaid programs, raising state costs — fails on the evidence. Without any penalty, there is no logical reason a toothless statute would cause people to sign up for programs they would otherwise skip. The states' own evidence described enrollment increases during years when a penalty still existed, and no credible evidence connected the zero-dollar mandate to new Medicaid enrollment.
- The state plaintiffs' second theory — that the coverage requirement imposes costly reporting and administrative burdens on them as employers — also fails because those costs arise from entirely separate ACA provisions (the employer reporting requirements in §§6055 and 6056) that operate on their own, without any reference to the minimum essential coverage requirement. Striking down the coverage provision as unconstitutional would do nothing to relieve the states of obligations imposed by these other, independently enforceable sections that no party claims are unconstitutional.