The Supreme Court Ruling on the Affordable Care Act
June 28, 2012
The Supreme Court ruled on the constitutionality of the Affordable Care Act (ACA). There is no question that this has been one of, if not the, most anticipated rulings in the history of the Court.
The Court largely upheld the law, including the requirement that most Americans have health insurance. The decision was five to four, with Justices Sonia Sotomayor, Stephen Breyer, Ruth Bader Ginsburg and Elena Kagan voting with the majority that the Act is constitutional; Chief Justice John Roberts' fifth vote tipped the decision in favor of the Obama administration. The majority opinion said that the individual mandate is within Congress' constitutional authority to levy taxes. Under the law, people who do not have health insurance will have to pay 1 percent of their income to the IRS starting in 2014. There are exceptions for some religious beliefs and financial hardship.
Seven of the nine justices agreed that the law's expansion of Medicaid to an estimated 16 million low?income people by 2014 is unconstitutional as it was written. The Court decided that the federal government cannot threaten to withdraw existing Medicaid funds from states if they don't expand Medicaid. Instead, the government can only withhold future funds. Under the Affordable Care Act, Medicaid is transformed into a program to meet the health care needs of the entire non?elderly population with income below 133 percent of the poverty level. The narrowing of the Medicaid requirement allows for states to in effect opt out of the Medicaid expansion. It is now an option for them instead of a requirement.
What Happens Now?
All changes in the Affordable Care Act will move forward (i.e. coverage expansions, cost containment, insurance reforms) and the federal and state governments will have a great deal of work to do to prepare for full implementation in 2014. That's when states will have to set up their own health insurance exchanges, payroll taxes will go up on higher income workers, and Americans will have to buy health insurance (for many, with a government subsidy) or pay the penalty to the IRS.
Employers who have more than 50 employees and don't offer insurance will also begin to face a penalty. Insurers will no longer be able to turn away people with preexisting conditions, or charge people higher premiums based on their gender or health. In August, health care plans will have to offer preventative services (including birth control) at no extra cost to customers.