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Supreme Court Upholds Key Portions of ACA

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Supreme Court Upholds Key Portions of ACA

June 29, 2012

The anticipation over whether the Patient Protection and Affordable Care Act would be upheld or struck down is finally over, as the U.S. Supreme Court issued its ruling on the morning of July 28.

There were four issues before the Court in this case—one of which was largely procedural in nature and one of which did not require a ruling because it became irrelevant after another ruling in the case. The two significant rulings involve the individual mandate and the Medicaid expansion provision.

The first key issue in the case, the individual mandate, was upheld by a 5–4 decision written by Chief Justice John Roberts. While the Supreme Court rejected the stated justification for the mandate, which the government initially argued was authorized under Congress' ability to regulate commerce, it upheld the mandate on the grounds that the mandate is a tax that is permissible under Congress' taxing authority.

This means that the majority of citizens must either hold private health insurance, be covered under an employer-based health plan or be enrolled in a public plan such as Medicare or Medicaid. Those who are not covered under one of these programs will be subject to a tax. Whether and how this tax would be enforced is unclear, though the court was clear that it would be considered a tax like any other.

The second key issue of Medicaid expansion was upheld, but read in a narrow way that essentially makes states' participation in the expansion optional. The decision came as a plurality ruling, meaning that there was not a majority consensus among the Court for why the expansion was deemed constitutional.

The ultimate results of the ruling, however, include the following:

  • The expansion of Medicaid services as put forth in the ACA is constitutional;
  • States may agree to expand coverage in exchange for increased funding; and
  • If states accept the additional funds, they must comply with the new rules for expanded coverage, though a state may choose to refuse to participate in the expansion and not lose all Medicaid funding.

The last point is the most significant.

As written, the ACA requires states to comply with expanded Medicaid provisions or risk losing all Medicaid funding. The ruling allows a state to turn down additional funds and continue its current, unexpanded plan. What states will do with this is unknown.

Twenty-six states sued the government in this case, saying that mandating the expansion was overreaching. Several commentators are optimistic that states will come on board, accepting additional funding and agreeing to the expanded provisions, as they see it ultimately allowing them to provide services more efficiently. However, since more than half of the states sued for the right to opt out, it is unclear how many states will ultimately participate.

The last remaining substantive issue was whether the remainder of the law could be upheld if the individual mandate was struck down. Since the mandate was upheld, however, the court did not have to rule on that issue.

A more complete analysis of the ruling will be available soon on the “DLLRC” community in the ANCOR Connected Community.