Our Analysis of the Supreme Court Ruling on the Affordable Care Act
Yesterday the Supreme Court issued a 5-4 decision upholding nearly all of the Affordable Care Act (“ACA”). In summary, there were four key pieces to the Court’s ruling:
- A majority of the court (Justices Roberts, Scalia, Kenney, Thomas, and Alito) held Congress did not have the authority under the Commerce Clause to impose an individual mandate requiring nearly all Americans to maintain health insurance coverage.
- A different majority (Justices Roberts, Ginsburg, Breyer, Sotomayor, and Kagan) held the individual mandate, despite being characterized by Congress as a penalty, was in fact a tax, and that Congress has the authority under the Tax and Spend Clause to impose a tax on persons with a certain level of income who refused to maintain health insurance coverage.
- The first majority, along with Justices Breyer and Kagan, held the ACA provision authorizing the federal government to withhold all Medicaid funding for a state that refused to expand coverage to include all persons at or below 133% of the federal poverty level was unconstitutional.
- In effect, the second majority held the entire ACA does not fall as a result of the unconstitutionality of the Medicaid expansion provision. Instead, the effect of that ruling will be to make the expansion optional for the states.
Assuming no Congressional action to repeal or revise these provisions, the majority of the existing law remains largely intact.
- Medicare reforms now underway–accountable care organizations, value-based purchasing, the Center for Innovation–remain in effect. Additional program changes will come on line over the next several months.
- Effective January 1, 2014, health plans will be prohibited from using pre-existing conditions as a basis for denying, limiting, or charging excessive amounts for health insurance coverage.
- Eighteen months from now, all non-exempt U.S. residents will be required to maintain minimum essential healthcare coverage or pay an uninsured tax not to exceed 2.5 percent of taxable income. Uninsured individuals who do not pay the tax will not be subject to criminal penalties, fines, or levies–only withholding of future tax refunds.
- Those required to have coverage will have new options for securing it through state- or federal-run health insurance exchanges, including federally-funded premium subsidies for low-income individuals. For expansion opt-in states, many of these individuals will be eligible for Medicaid coverage.
Over the next several weeks, we will offer in-depth analysis of these and other ACA provisions and their impact on healthcare providers on our website at www.pyapc.com.
For further information please feel free to contact any of the following PYA Consulting Executives at (800) 270-9629: