On June 25, 2012, I was sitting at the American Health Lawyers
Association conference with about 1,000 other health care lawyers
waiting to hear from the Supreme Court. When we learned the
decision would not come out until Thursday, the speaker asked for a
show of hands as to the outcome. Less than a third of the
group thought the mandate would be upheld.
The Supreme Court issued their ruling Thursday morning and as we
know fooled CNN and Fox News as well. The cable news had
already prepared their stories about the law being
overturned. The Supreme Court, however, decided that the
Patient Protection and Affordable Care Act (the "Act")
The networks expected that the Court would
conclude that Congress could not use its power to regulate commerce
between the states to require everyone to buy health insurance;
which it did. However, they were fooled
because the Court, in a 5-4 decision drafted by Justice
Roberts, went on to say that the penalty that someone must pay if
he refuses to buy insurance is a tax that Congress has the
authority to impose. "The Affordable Care Act's
requirement that certain individuals pay a financial penalty for
not obtaining health insurance may reasonably be characterized as a
tax," Chief Justice Roberts wrote in the majority opinion.
"Because the Constitution permits such a tax, it is not our
role to forbid it, or to pass upon its wisdom or
Most reports have focused on the court upholding the mandate,
however the ruling did put some limitations on the
Act. For example, under the Act, the federal
government offers each state federal dollars to expand Medicaid
coverage to 133 percent of the federal poverty level and withholds
all federal Medicaid funds for the state if a state refuses to
comply with the expansion. The Court held Congress may
significantly expand the Medicaid program as stated in the
Act. However, Congress cannot withhold existing Medicaid
Federal Medical Assistance Percentages funding, the anticipated
federal dollars for Medicaid states expect and rely upon, as a
penalty if a state does not agree to the expansion. The
ruling provides states with an option to participate in the
Medicaid expansion and removes the penalty if the states decide not
to expand their Medicaid programs. We will have to watch and
see if states decide to opt out of the Act's Medicaid
The big questions the ruling leaves us with are: What now?
And, how does this impact the average American or average
health care provider? First, we will have to comply with the
provisions of the Act. This means:
Young adults can stay on their parents' insurance up to age
Insurers cannot deny coverage to children with health
Policies cannot place limits on what they will pay
out to each person over a lifetime.
Hundreds of older people will continue to save money
through improved Medicare prescription
Co-payments for preventive care will continue to
be eliminated for all ages.
Starting in 2014, most people will be required to be insured or
pay a fine or "tax" if they do not have health
insurance. This tax is intended to encourage younger people
who often don't have insurance to buy into the insurance
market. The hope is that these younger people will be sick
less often and help defray the cost of providing insurance for
people with pre-existing conditions. However, the IRS cannot
prosecute violators or place liens against people who do not obtain
health insurance. At this time, it is believed the only
enforcement power the IRS will have is to withhold any money from
refunds that violators would otherwise have due.
Despite The Supreme Court's much awaited ruling, debate
over the Act continues as Republicans push for a
repeal. This will be a central issue in
the upcoming elections. Stay tuned!
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