Health Care Reform Today
May 10, 2012
At the end of March, the U.S. Supreme Court spent three days and a record number of hours listening to oral arguments about the constitutionality of key provisions of the Patient Protection and Affordable Care Act (PPACA).
The Upcoming Supreme Court Decision – Answering your Questions
At the end of March, the U.S. Supreme Court spent three days and a record number of hours listening to oral arguments about the constitutionality of key provisions of the Patient Protection and Affordable Care Act (PPACA). While we await their ruling, I'd like to take a few minutes to tackle some of the questions I've been hearing.
Why is the Supreme Court taking on the constitutionality of the PPACA?
Twenty-six states and the National Federation of Independent Business (NFIB) have sued the federal government claiming that certain provisions of the PPACA are unconstitutional. The cases have made their way through the federal courts to the Supreme Court, which agreed to rule on key challenges to the law.
The Court is considering four questions:
1. Does the individual mandate exceed Congress' constitutional authority to regulate interstate commerce to the federal government?
Beginning in 2014, the PPACA requires that all individuals maintain "minimum essential coverage." This is commonly referred to as the "individual mandate". Individual taxpayers are subject to a tax penalty if they fail to maintain the required coverage. The question before the Court is whether Congress exceeded its powers under the Constitution in requiring individuals to purchase insurance coverage. The government argues that the "individual mandate" is within the federal government's power to regulate commerce under the commerce clause of the Constitution. Opponents contend that the commerce clause does not give the federal government the power to compel individuals to purchase insurance.
2. Can the courts consider a lawsuit challenging PPACA now, or – under the Anti-Injunction Act – is it premature, since no penalties have been imposed?
Under the Anti-Injunction Act, people can't sue the government to challenge federal taxes they haven't yet paid.
The Court could conclude, based upon this Act, that it is premature to decide the challenge to the individual mandate since no individual has yet been harmed by having to pay the penalty for not maintaining minimum essential coverage. Key to answering this question is whether the penalty is considered a "tax" by the Court.
3. If Congress did exceed its authority to act and the mandate is unconstitutional, can the mandate be severed from other provisions of the law?
If the Supreme Court rules that the individual mandate is unconstitutional, then it must decide whether the individual mandate is "severable" from the rest of the law. In other words, does the rest of the law work without the individual mandate provision? And, if not, which provisions would need to be struck down to make the law work in the absence of the mandate? In the most extreme case, the Court may decide that no part of the law works without the individual mandate, and strike all of it down in its entirety.
4. Did Congress exceed its constitutional authority by expanding Medicaid eligibility and coverage thresholds that states must now adopt?
Under the PPACA, Medicaid coverage – the government-run program that helps people in need or with low incomes – will be extended to 133% of the poverty line. While the federal government is funding the bulk of this expansion, it will put financial ($20 to $40 billion by some estimates) and administrative pressure on the states to meet the needs of this newly Medicaid-eligible population. And, while states can opt out of the expansion, if they do they will lose all of their Medicaid financing from the federal government (not just the funding tied to the expansion). The states contend that Congress is unfairly and coercively abusing their Constitutional power by driving a bargain that the states realistically cannot refuse.
When do we expect to hear their ruling?
The last day the Court meets before its current term ends is June 25. A number of other critical rulings are due in this Court's term and will be issued beginning the second and third week in June. Controversial decisions are usually issued on the last day of the Court's term – and a ruling on the PPACA may likely fall into this category.
What does this all mean for you - our clients, brokers and customers?
Regardless of the Supreme Court's decision, we will stay focused on delivering on our mission for you. Your underlying health and cost challenges will continue to persist under any post-Supreme Court scenario, and our core beliefs will remain the same – every person should have access to quality and affordable health care. Our goals, objectives and advocacy efforts will continue to revolve around these principles.
Beginning with 2014 plan years, some plans will have limits on annual deductibles and out-of-pocket maximums for Essential Health Benefits.
Read answers to frequently asked questions about health care reform.