Health Act Intact: U.S. Supreme Court Upholds Affordable Care

News | Health

With the constitutionality of the Obama administration's health care reform law assured, policy experts are looking to the November elections for the fate of the law

By Katherine Harmon and Christine Gorman ?| June 28, 2012

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The Supreme Court ruled today to uphold the 2010 Affordable Care Act (ACA), which aims to expand health insurance coverage to 32 million more Americans. However, the Court also ruled that the federal government may not penalize states that decline to participate in the expansion of Medicaid that accompanies the ACA by taking away other Medicaid moneys.

The Court, which heard arguments on the case in March, decided that the law's provisions, including the individual mandate and the expansion of Medicaid, are, indeed, constitutional. While several Justices thought the individual mandate could be struck down under the Commerce Clause of the Constitution, the majority of them held that the penalty for not getting health insurance was in effect a tax?which the federal government has the power to levy.

Most people would have already met the requirements of the "minimum essential coverage" provision via employer-provided health insurance or federal coverage, such as Medicare or Medicaid. The individual mandate requires most Americans to be covered by health insurance or a federal program, such as Medicare or Medicaid, by 2014 or else pay a small penalty. (People who spend more than 8 percent of their annual incomes on premiums and other select groups will be exempt from the mandate.)

With the Medicaid expansion, an additional 16 million people, many well above the poverty line, are also expected to gain insurance coverage in the next several years?provided that the states in which they pay their share of the expansion costs (Medicaid is funded out of both federal and state budgets).

The extended uncertainty leading up to the Court's ultimate decision forced many states and companies to chart their own courses in the chaotic health care waters.

Some states have been determined to continue on the path toward their own localized changes whatever the national ruling. California, for example, decided to institute insurance exchanges anyway; other states, such as Vermont, might follow Massachusetts's lead and establish their own individual mandates. And several of the largest insurance companies, including Aetna and UnitedHealth Group, said they would continue offering many popular benefits already in place from ACA, such as allowing young people under 26 to remain on their parents' insurance plan.

Other states, such as Florida and Texas, which have opposed many of the law's provisions while it was in legal jeopardy, might have to scramble to prepare for the insurance exchanges.

As legal and political scholars have pointed out, however, the fate of the health care law rests perhaps even more on the elections in November than on this ruling.

Although the state-based health care system Mitt Romney set up as governor of Massachusetts served in part as a model for the Obama plan, the Republican front-runner has asserted that if elected in November, he will "repeal and replace" the law. In a speech earlier this month in Orlando Fla., Romney noted, "It's important for us, in my view, to make sure that every American has access to good health care." He suggested that a better way to do that is by allowing states to create their own solutions without requiring them to provide coverage for their residents.

What is clear is that something will have to change. Health costs have exploded to 10 times their 1980 levels in just 30 years and are projected to continue to increase dramatically into the future. In 2010 costs approached $2.6 trillion, which is about a fifth of all U.S. spending combined. The largest chunk of the health care pie (31 percent) went to hospital care, according to the Kaiser Family Foundation, a nonpartisan policy analysis organization. That number would likely decrease if more people were able to obtain earlier, preventive care.

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