Today, the long awaited and historic ruling by the Supreme Court has been issued. There were essentially four primary elements of the Patient Protection and Affordable Care Act (PPACA) that were being challenged by a combination of States (led by Florida) and the National Federation of Independent Business. The four issues under review were as follows:
1. Anti- Injunction Act (AIA): Since full implementation doesn’t take effect until January 1, 2014, the Anti-Injunction Act prevents the consideration of complaints until someone has been affected by the law. The ruling largely surrounds the use of the term “penalty” or “tax” as to whether AIA should be applied.
2. Individual Mandate: This is arguably the linchpin of the bill. The question comes down to whether Congress (and its powers granted under the Commerce Clause) has the Constitutional authority to compel someone to buy a product–in this case health insurance.
3. Severability: The Severability issue will come into play depending upon the ruling issued for the Individual Mandate. If the Individual Mandate is up held, then there likely is no need for a ruling on this issue. If it is struck down, the court needs to decide whether the whole bill goes down as well. PPACA did not include “severability” language as part of its provisions.
4. Medicaid: Because PPACA requires an expansion of Medicaid, there is a significant impact on the States and their ability to respond. The court will need to decide whether the States are being coerced into expansion or compelled.
The Ruling:
The Supreme Court provided 193 pages of disposition which will be interpreted and re-interpreted to determine both the legal and political ramifications, but the bottom line is that the Court has upheld the fundamental elements of PPACA.
A summary of comments on each issue:
1. Anti- Injunction Act (AIA): The AIA did not bar the Court from ruling on the other contested elements. As Justice Roberts writes in the decision, “Congress did not intend the payment to be treated as a ‘tax’ for purposes of the Anti-Injunction Act. The Affordable Care Act describes the payment as a ‘penalty,’ not a ‘tax.’ That label cannot control whether the payment is a tax for purposes of the Con¬stitution, but it does determine the application of the Anti-Injunction Act. The Anti-Injunction Act therefore does not bar this suit.”
2. Individual Mandate: In a somewhat surprising ruling, the Individual Mandate was upheld. But the legal opinion made an interesting distinction as why the mandate is Constitutional. The Government had argued that the Commerce Clause provided the Constitutional authority to implement an individual mandate. That argument was denied. However, Judge Roberts and the four more liberal judges determined that, as it relates to the Constitution, the individual mandate would impose a “tax” for non-compliance. Since Congress has the authority to tax the mandate remains Constitutional.
3. Severability: Though the Court provided analysis on the issue of severability, the fact that the Individual Mandate has been upheld renders this issue moot as it pertains to the Individual Mandate.
4. Medicaid: The Court did rule that “the Medicaid expansion violates the Constitution by threatening States with the loss of their existing Medicaid funding if they decline to comply with the expansion.” Though the Federal Government can coerce States to expand their Medicaid programs, they cannot compel States by use of a penalty to do so.
Brian Driscoll, Partner & Chief Operating Officer
So for the time being, it is full steam ahead with the implementation of provisions of PPACA. Naturally, there will be political and likely additional legal implications to this ruling. Surely, there will be ongoing discussions regarding the use of “penalty” vs. “tax.” Though the Court has made their ruling and cleared up the uncertainty of PPACA for now, the ultimate ruling may be issued in November.
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Join us for an upcoming webinar to learn more:
The Future of the Affordable Care Act:
The Supreme Court’s Decision Analyzed
Thursday, July 12, 2012
11:00 am to 12:00 pm EST
We know now that the Supreme Court has upheld the PPACA. Proskauer has been at the forefront of health care reform since the law’s enactment, and the team at Ovation is uniquely positioned to analyze and have Proskauer explain the Court’s decision.
Join our team, including Proskauer Associate, Stacy Barrow, for in-depth analysis of the Supreme Court’s decision and a practical discussion of what it means for employers and their group health plans.
Questions? Call 800.364.7575 for more information.
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