In a landmark ruling released on June 28, 2012, the United States Supreme Court held that the Affordable Care Act (“ACA”) is constitutional relative to the individual mandate provision contained in the act. The Supreme Court also struck down the expansion of Medicaid on the grounds that withholding all Medicaid funding from a state that refuses to implement an expansion of Medicaid to include the class of persons indicated in ACA is not within the scope of the central government’s enumerated powers, which are contained in the United States Constitution. The full opinion can be reviewed here.
For the sake of this article, I will not address the Medicaid expansion portion of the decision because it is beyond the scope of this post. This post is by no means an exhaustive study or a definitive forecast about legal rights that could be affected by the Court’s decision.* That would be a lot of work. In fact, I will predict that most law students will study this case along with the Court’s other seminal commerce clause opinions in their Constitutional Law classes for decades to come. In any event, this post is for the individuals and businesses that are perhaps wondering what does the Supreme Court’s ruling mean to them.
For most Americans and businesses, the ACA’s individual mandate will not have any deleterious effect on their health insurance coverage. On the contrary, the ACA will expand coverage for those with medical insurance supposedly without an increase in premium. President Obama addressed some of the direct benefits of the Court’s decision when he spoke to the American people after the decision was released:
First, if you’re one of the more than 250 million Americans who already have health insurance, you will keep your health insurance — this law will only make it more secure and more affordable. Insurance companies can no longer impose lifetime limits on the amount of care you receive. They can no longer discriminate against children with preexisting conditions. They can no longer drop your coverage if you get sick. They can no longer jack up your premiums without reason. They are required to provide free preventive care like check-ups and mammograms — a provision that’s already helped 54 million Americans with private insurance. And by this August, nearly 13 million of you will receive a rebate from your insurance company because it spent too much on things like administrative costs and CEO bonuses, and not enough on your health care.
There’s more. Because of the Affordable Care Act, young adults under the age of 26 are able to stay on their parent’s health care plans — a provision that’s already helped 6 million young Americans. And because of the Affordable Care Act, seniors receive a discount on their prescription drugs — a discount that’s already saved more than 5 million seniors on Medicare about $600 each. Read more: http://www.foxnews.com/politics/2012/06/28/transcript-obama-remarks-on-supreme-court-decision-upholding-his-health-care/#ixzz203rpuweN
Clearly, the benefits of this legislation will assist many Americans in the coming years, but what about the other side of the coin? There is definitely a concern that the power of the federal government was expanded with this ruling. The argument is basically that the Court has found that the taxing power of the federal government is indeed vast and all-encompassing. However, the fact that the Court limited the power of Congress to regulate all activities even remotely related to interstate commerce in this decision should be applauded in my humble opinion and not overlooked by the political posturing of the Democrats and Republicans. The Chief Justice eloquently made the argument that allowing the legislative branch of government to pass a law that commands an American to do something because he/she might engage in an activity related to interstate commerce is not allowed by the Constitution. To allow that much power to Congress would allow Congress to pass laws like commanding Americans to buy vegetables because vegetables are healthy and food is clearly a regulated activity in interstate commerce. The Chief Justice said no dice, and I agree with his reasoning. What is unfortunate is that many of the forces opposed to lowering healthcare costs like corporations that insure medical care, corporations that own and operate hospitals, nursing homes, surgical centers, convalescent facilities, pharmaceutical manufacturers, etc. either do not recognize or admit that there is a distinction between the commerce power of Congress and the taxing & spend power of Congress.
The Chief Justice found ACA’s individual mandate lawful because Congress does indeed have the power to tax and spend to promote the general welfare and raise land and naval forces for the defense of the United States. The Chief Justice wrote that the tax and spending clause in the Consitution is an enumerated power of the central government. The ACA offers a choice to Americans under the individual mandate. One may choose to purchase medical insurance and avoid a penalty or one may choose not to purchase health insurance and pay a penalty (or tax) to the U.S. Treasury. What an American may not choose to do is not purchase healthcare insurance and not pay the penalty.
It is doubtful that there will be any criminal prosecutions related to a violation of ACA’s provision to pay a penalty. However, the same cannot be said for criminal prosecutions related to refusing to pay the penalty at the same time you pay your income taxes. That nuance was not addressed in the decision other than a couple of references to the ACA’s explicit prohibition on the IRS’s powers to levy, lien and prosecute tax evaders. In the short term, the ACA will be enacted over the next several years. The enactment of any law is usually followed by legal challenges to the substance and procedure of the law.
It is especially interesting how the law will affect businesses that subsidize group health insurance for their employees, or how employees who have large families will cope with less wages because employers will demand a higher percentage co-pay or contribution from their employees. Sullivan Heiser, LLC’s attorneys will be closely monitoring the implementation of the Act and its affect on our existing clients. If you believe that you or your business require legal advice about the provisions of ACA, you should contact your attorney and consult with him or her accordingly. If you don’t have an attorney, feel free to contact our office to schedule a consultation.
*Nothing contained in this blog post should be construed as advice from an attorney. Legal advice in Connecticut, New York, New Jersey and Maryland cannot be dispensed without a written agreement between an attorney and a new client.