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The Supreme Court ruled today 5-4 that the Affordable Care Act
is constitutional and upheld the individual mandate, requiring most
Americans to maintain "minimum essential" health
insurance coverage. The decision was written by Judge Roberts for
the majority. The Court held that the argument relying on the
Constitutional commerce clause would not support the Affordable
Care Act, but then looked to the constitutional right of Congress
to impose taxes. Noting that the enforcement and operational
structure for the individual mandate compliance and penalties was
administered through the Internal Revenue Service, the Court upheld
the individual mandate as a valid exercise of the Taxing Clause of
the U.S. Constitution.
A notable result of the decision also was the holding by the
Court that the federal government could not penalize states by
withholding or withdrawing Medicaid funding for those states which
choose not to participate in the Medicaid expansion. The Court
reasoned that the type of change contemplated to the Medicaid
program by the Affordable Care Act was transformational and not
contemplated previously and therefore was not subject to the prior
statutory reservation of rights by the federal government that
allowed the alteration or amendment of the Medicaid program.
Further analysis of the decision is required, but this holding
may allow for states individually to choose not to support the
Medicaid expansion program and to do so without fear of reprisal
from the federal government. Put another way, the Supreme Court
decision potentially removes the "stick" held by the
federal government and therefore may require a shift by the federal
government to more of a "carrot" approach (i.e.,
providing incentives to the states for allowing the Medicaid
expansion to proceed). Use of an incentive approach obviously will
carry a price tag and may be difficult to accomplish, given the
current economic conditions and the pending election.
In any event, we expect to see additional legislative or
regulatory action to address this Medicaid state expansion aspect
of the Supreme Court decision. The question arises though as to
whether or not the Obama administration will wish to address this
prior to the November election or to undertake this post-election.
If post-election, the timing for such regulatory or legislative
action may be somewhat pressured in light of the 2014 Affordable
Care Act implementation schedule. Therefore, there will be
significant state level activity on this issue, with opportunities
for industry input, lobbying and contracting. We also anticipate
seeing an acceleration of the current hospital and physician
consolidation trends in order to accommodate the expected increased
covered population.
We will be providing additional analysis of the Supreme Court
decision in further blog postings.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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