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Small Business Employee Benefits and HR Blog

Health Reform (ACA) is Upheld by Supreme Court

June 28, 2012
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Today, the Supreme Court issued an opinion related to health care reformA divided Supreme Court upheld the constitutionality of the Obama administration's health-care law. The court said Congress was acting within its powers under the Constitution when it required most Americans to carry health insurance or pay a tax. Chief Justice Roberts' vote saved the ACA.

The Affordable Care Act, including its individual mandate that virtually all Americans buy health insurance, is constitutional. There were not five votes to uphold it on the ground that Congress could use its power to regulate commerce between the states to require everyone to buy health insurance. However, five Justices agreed that the penalty that someone must pay if he refuses to buy insurance is a kind of tax that Congress can impose using its taxing power. That is all that matters. Because the mandate survives, the Court did not need to decide what other parts of the statute were constitutional, except for a provision that required states to comply with new eligibility requirements for Medicaid or risk losing their funding. On that question, the Court held that the provision is constitutional as long as states would only lose new funds if they didn't comply with the new requirements, rather than all of their funding.

The bottom line is that the entire ACA is upheld, with the exception that the federal government's power to terminate states' Medicaid funds is limited.

Please see below for a detailed overview of each opinion.

health reform supreme court ruling

  1. The individual mandate survives as a tax. The only effect of not complying with the mandate is that you pay the tax. The Court holds that the mandate violates the Commerce Clause, but that doesn't matter b/c there are five votes for the mandate to be constitutional under the taxing power. The Court holds that the Anti-Injunction Act doesn't apply because the label "tax" is not controlling.
     
  2. The Medicaid provision is limited, but not invalidated.  A majority of the Court holds that the Medicaid expansion is constitutional but that it will be unconstitutional for the federal government to withhold Medicaid funds for non-compliance with the expansion provisions. Another way to think about Medicaid is that the Constitution requires that states have a choice about whether to participate in the expansion of eligibility; if they decide not to, they can continue to receive funds for the rest of the program.

Click here to read the official opinion.


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