Blog By: Beth Ede, SPHR
March 23, 2012 marked the 2nd anniversary of the Affordable Care Act, the 2010 major health care reform. Shortly after this anniversary the Supreme Court spent three days hearing oral arguments to determine the validity of the individual mandate. During this period there were four areas that were reviewed.
1) Should the case be heard at this time? If an individual does not purchase insurance they will be subject to a penalty administered by the Internal Revenue Service. The immediate question – is this a penalty or a tax? The Anti-Injunction Act (AIA) imposes a 'pay first, litigate later' rule that is central to federal tax assessment and collection. If the penalty is considered a “tax”, and it applies to the 2014 tax year, there has been no violation and, therefore, this cannot be heard until such time that the AIA is violated (i.e. 2015 or later).
2) Individual Mandate. The justices heard arguments over whether the individual mandate, which forces citizens to either purchase insurance or pay a fine, is constitutional. This is a pivotal provision of the Act. The failure to purchase health insurance results in a penalty/tax generating revenue to support other provisions of the act and avoids adverse selection. There was much discussion regarding the impact this decision may have on the government’s ability to require individuals to purchase other products such as cars and food.
3) Severability. If the individual mandate is considered unconstitutional, can some or all of the other provisions remain in tact? The Affordable Care Act does not include a severability clause which would allow other provisions of the Act to remain in place if one provision is deemed unconstitutional. Therefore, the Supreme Court has discretion to determine which, if any, provisions of the Act may remain in place, or if the entire Act is deemed unconstitutional. Should it be determined that severability does apply how do you determine which provisions remain in tact? Which provisions are directly associated with the individual mandate? Additionally, would some provisions that are included in the act have passed on their own merit had they not been included in the ACA? If the individual mandate is considered unconstitutional and severable, is it most appropriate to strike down the entire Act or leave a shell of an Act to be repaired by Congress?
4) Are the Amendments that expand Medicaid unconstitutional? Medicaid eligibility will be expanded for individuals from the current 100% of the federal poverty level to 133% of the federal poverty level. The federal government will fund this at 100% for 10 years and 90% thereafter. States provide the majority of Medicaid funds and administer the programs. States that do not comply with this expansion could lose federal Medicaid funds, not just these funds, but all federal Medicaid funds and have opined this as coercion.
A decision is expected by the end of June. We have been monitoring, evaluating and awaiting guidance on the current law. As this evolves, we will continue to monitor, evaluate and await guidance on the changes.