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Supreme Court to decide: Is health care reform law constitutional?

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in Compensation and Benefits,Human Resources

The U.S. Supreme Court has agreed to hear a challenge in March to the sweeping federal health-care reform law enacted in 2010, with an eye toward a June ruling on the constitutionality of the Obama administration’s signature domestic policy achievement. No matter how the High Court rules, its decision could affect HR and employee benefits for years to come.

If the court strikes down the Affordable Care Act (ACA), expect the employer-provided health insurance landscape to remain largely as it has for the last 50 years. If the court affirms it, the ACA’s ambitious timetable for revamping the nation’s health insurance system will continue.

The ACA—which requires almost all Americans to have at least basic health insurance coverage by 2014—has been challenged four times this year in federal appeals courts:
  • Two panels said the law passes constitutional muster.
  • One said it was too soon to decide the question.
  • A fourth ruled parts of the law unconstitutional.
The Supreme Court agreed to hear the government’s appeal of the last case, an August decision by the 11th Circuit Court of Appeals in Atlanta. That case was originally filed by attorneys general from 26 states.

The Justices will decide four questions from the 11th Circuit case:

1. Does Congress have the authority to require individuals to purchase health insurance—the so-called individual mandate? Under the ACA, those who don’t have at least minimal coverage by 2014 would be required to pay a penalty on their 2015 federal income tax returns.

2. If the Supreme Court decides that the individual mandate is unconstitutional, can the rest of the law stand? The government concedes that many of the ACA’s provisions, such as requiring insurance companies to cover everyone, will not be financially feasible unless everyone actually has insurance.

3. Is it unconstitutional for Congress to require states to expand (and pay for) Medicaid health coverage for those too poor to afford it on their own? The ACA requires states to offer Medicaid coverage to individuals and families with incomes equal to or less than 133% of the federal poverty level.

4. Is it premature to even address the first three questions? The government has argued that the ACA’s noncompliance penalties amount to a tax. (Opponents of the law dispute that.) If the Supreme Court agrees that the penalties are taxes, then it could rule that the ACA’s constitutionality cannot be decided until someone has to pay the tax in 2015.

It is notable that the Supreme Court chose not to address ACA provisions that would force large private-sector employers and government employers to provide health insurance benefits to employees by 2014. That “pay or play” mandate would require employers with 50 or more employees to provide affordable bare-bones health coverage to full-time employees or else pay a penalty.

Instead, the court will focus on the larger implications of the law: federal versus state power. Oral arguments in March will be the lengthiest in modern Supreme Court history; the Justices have set aside five and a half hours for attorneys representing both sides to make their cases. Most oral arguments before the Supreme Court last only an hour.

For more analysis of the legal issues involved in the case, click here.

Read the Supreme Court’s docket information on the case here.

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{ 2 comments… read them below or add one }

Peggy@ billing services November 22, 2011 at 7:07 am

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Health Care November 22, 2011 at 6:23 am

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