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Analysis: Supreme Court’s landmark health care reform decision

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in Employment Law,Human Resources

by Tom Christina, Esq., Ogletree Deakins

On June 28, the U.S. Supreme Court issued its highly anticipated opinion deciding the constitutionality of the federal health care reform overhaul known as the Afford­­able Care Act (ACA). The Court upheld the entire act, except a provision related to expanding eligibility for Medicaid.

Chief Justice John Roberts, writing for the Court, construed the individual mandate as an option to have “minimum essential coverage” or else pay a tax. The decision upheld the mandate on the basis that the ACA merely uses a tax penalty to create an incentive for individuals to have minimum, essential health insurance coverage.

The Court also held that the Medi­­caid expansion provision, although unconstitutional, can be severed, meaning the remainder of the act could stand despite the unconstitutionality of one portion.

The landmark case was Florida, et al. v. United States Department of Health and Human Services, et al., (Nos. 11-393, 11-398, and 11-400, U.S. Supreme Court, 2012).

An extraordinary case

By anyone’s standards, Florida v. HHS has been an extraordinary case. The ACA is one of the most ambitious and far-reaching legislative efforts since the New Deal, and the case put every one of its provisions in jeopardy. Speculation over what the Court would decide in Florida v. HHS ran especially high after oral arguments in March. Some Court-watchers thought some issues in the case might be decided without a majority opinion.

Now the waiting is over, even if the uncertainties, challenges and opportunities for employers are not.

Summary of Court’s holding

With one exception, the ACA, in­­cluding the individual mandate that requires most Americans to have health care coverage, is constitutional. Even though the Court determined that the individual mandate provision exceeded Congressional power under the Commerce Clause and the Neces­­sary and Proper Clause of the U.S. Constitution, five justices agreed that the individual mandate was a permissible exercise of the power of Con­­gress to impose taxes.

With respect to Medicaid expansion, the Court held that Congress exceeded its powers by threatening to withhold all Medicaid funds from states that decline to expand Medicaid coverage. It held that Congress cannot threaten to withhold existing Medi­­caid funds from states that choose not to expand Medicaid coverage, but that Con­­gress can deny those states additional money for Medicaid expansion.

On this issue, the Supreme Court agreed with the argument set forth by Ogletree Deakins in an amicus brief filed on behalf of Indiana state legislators, the James Madison Insti­­tute and economist Christopher Conover.

What happens next?

The decision does not mean that the validity of the ACA is settled once and for all.

The Court already has one request pending in another case to hear an appeal involving the constitutionality of other portions of the law. Similar lawsuits are winding their way through the lower federal courts, and more cases may be brought in the near future.

For now, however, and for the near future, there is no basis in any court decision for treating the ACA as invalid. The Court’s decision does not address the validity of Title I of the Act, the general ­­employment-related section.

The prudent course for ­­employers now is to proceed with efforts to comply with the law on the assumption that it will remain valid and be implemented as originally designed.

Practical impact

Employers should proceed as if the law is constitutional. Future legal challenges, and, of course, the November elections, may determine the law’s ultimate fate, but for now, prudence is the wisest course of action.

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Tom Christina is a shareholder in Ogle­­tree Deakins’ Greenville, S.C., and Washington, D.C., offices. He is one of the authors of the amicus brief Ogletree Deakins filed in Florida v. HHS. Contact Tom at thomas.christina@ogletreedeakins.com or (864) 271-1300.

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