Filed Under:Your Practice, Regulatory

Supreme Court Upholds PPACA

(AP Photo/J. Scott Applewhite, File)
(AP Photo/J. Scott Applewhite, File)

In one of the most anticipated rulings of the century, the Supreme Court has announced its decision on the Patient Protection and Affordable Care Act of 2010.

The text of the opinion, in National Federation of Business vs. Sebelius, Case Number 11-393, is available here.

The court has ruled 5-4 that Congress does not have authority under the Commerce Clause of the U.S. Constitution to require individuals to own a minimum level of insurance but does have the authority to use its taxation authority to impose a coverage mandate.

The court has narrowed the scope of a provision dealing with state Medicaid program expansion requirements, forbidding the government from taking existing Medicaid funding away from states that fail to comply.

State attorney generals and others have been arguing that a provision in PPACA that calls for most individuals to own a minimum level of health insurance starting in 2014 or else pay a penalty is unconstitutional, and that Congress has no authority to make individuals buy a commercial insurance product.

Chief Justice John Roberts has written in an opinion for the majority that the Commerce Clause of the Constitution gives Congress no more authority to require the purchase of health insurance than to require the purchase of broccoli.

According to the Obama administration, a requirement that citizens buy health insurance is different from a requirement that they broccoli because “[h]ealth insurance is not purchased for its own sake like a car or broccoli; it is a means of financing health-care consumption and covering universal risks,” Roberts writes.

The connection between mandated insurance purchases and future use of insured health care is too remote for the goverment to use the Commerce Clause to justify the PPACA mandate, Roberts says.

But, Roberts says, "boccoli are no more purchased for their 'own sake' than health insurance. They are purchased to cover the need for transportation and food."

But the Constitution does give Congress the authority to "lay and collect Taxes," Roberts says.

The Obama administration and congressional PPACA supporters have avoided calling the penalty to be imposed on taxpayers who fail to meet individual health insurance ownership requirements a tax, but, under one Obama administration theory, "the mandate is not a legal command to buy insurance," Roberts says. "Rather, it makes going without insurance just another thing the Government taxes, like buying gasoline or earning income. And if the mandate is in effect just a tax hike on certain taxpayers who do not have health insurance, it may be within Congress’s constitutional power to tax. The question is not whether that is the most natural interpretation of the mandate, but only whether it is a 'fairly possible' one."

Imposition of a tax "leaves an individual with a lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice," Roberts says. "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. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness."

Of the Medicaid expansion requirements in PPACA, Roberts writes that, "Permitting the Federal Government to force the States to implement a federal program would threaten the political accountability key to our federal system.“

The PPACA Medicaid expansion requirements would change the nature of Medicaid, not merely expand it, turning it into a comprehensive national plan, not just a safety net for the neediest, Roberts says.

Congress could give states more Medicaid funding and require the states to use the money to expand the program, Roberts says. 

But Congress cannot "penalize States that choose not to participate in that new program by taking away their existing Medicaid funding," Roberts says.

Justices Clarence Thomas, Antonin Scalia, Samuel Alito and Anthony Kennedy opposed the ruling and joined to write a dissenting opinion.

President Obama signed PPACA, the main bill in the two-bill Affordable Care Act package, March 23, 2010. He signed the other bill, the Health Care and Education Reconciliation Act of 2010, March 30, 2010.

Obama and Democrats started the process of crafting PPACA with strong Democratic majorities in both the House and the Senate and polls showing that Americans supported the idea of reforming the health care system. As time went on, their majority in the Senate weakened, and they lost their majority in the House.

Democrats unveiled drafts that were hundreds or thousands of pages long just hours before the committees with jurisdiction were supposed to review the drafts. Once the bill reached the Senate floor, Republicans maneuvered to force much of the debate and many of the procedural votes and other votes into the wee hours of the morning.

The Senate voted to pass PPACA, for example, at 7:16 a.m. Dec. 24, 2009 -- on Christmas Eve.

Perhaps due in part to the rushed schedule and the complicated efforts to round up the votes needed for passage, the final version included especially controversial provisions, such as the individual mandate provision, and left out the kind of "saving clause" that can keep a multi-part law in force if courts throw out other sections.

In the case of PPACA, the Medicaid expansion funding is still available, just to more states, so the provision is not really invalid, Roberts says.

Even if the provision were invalid, "when a court confronts an unconstitutional  statute, its endeavor must be to conserve, not destroy, the legislation," Roberts concludes.

Some had suggested that the federal Anti-Injunction Act, a law that keeps taxpayers from suing to block new taxes before the taxes are in place, could have given the Supreme Court an excuse to defer action on PPACA.

The PPACA label of the individual mandate penalty as a penalty, rather than a tax, does not control whether an exaction is within Congress's power to tax, but it "is fatal to the application of the Anti-Injunction Act," the court says in a syllabus summarizing the ruling. 

For exclusive, ongoing coverage of the PPACA verdict and its impact on the industry, visit  www.lifehealthpro.com/PPACA

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