On Monday, the Supreme Court began hearing oral arguments addressing the Patient Protection and Affordable Care Act. Day one of the oral arguments focused on the application of the “Anti-Injunction Act,” which could prohibit the Supreme Court from ruling on the constitutionality of PPACA (if it is considered a tax law) because the penalties would not become applicable until 2015. Although both parties agree that the Supreme Court’s review should not be barred by the Anti-Injunction Act, the Supreme Court is required to determine whether the issues to be considered regarding PPACA are within the scope of its jurisdiction. Most commentators agree that based on the Justices’ questions regarding this issue, it is unlikely that the Supreme Court will postpone their review until the penalties become applicable.
The Supreme Court resumed on Tuesday to hear oral arguments regarding one of the most controversial aspects of PPACA — the requirement that individuals purchase health insurance or pay a penalty (commonly referred to as the “individual mandate”). First, the U.S. government argued that the individual mandate is within Congress’s authority to regulate interstate commerce under the Commerce Clause. Then, the 26 states challenging the constitutionality of the individual mandate argued that the mandate exceeds the scope of Congress’s authority under the Commerce Clause because the mandate requires individuals to actively engage in commerce when they might not otherwise choose to do so. The Justices peppered both sides with challenging questions regarding the limits of the Commerce Clause and posed interesting hypothetical situations, including two notable situations involving broccoli and burial insurance.
On Wednesday, the Supreme Court heard oral arguments addressing whether PPACA should be struck down in its entirety if the individual mandate is declared unconstitutional (i.e., whether the individual mandate is “severable” from PPACA’s other provisions). The Justices expressed some concern regarding the fate of provisions in PPACA that are unrelated to health care (e.g., the Indian Healthcare Improvement Act) if they were to find that PPACA, in its entirety, should be struck down. In addition, on Wednesday, the Supreme Court heard oral arguments regarding the legality of PPACA’s expansion of the Medicaid program.
Generally, the impact of the Supreme Court’s ruling on group health plan sponsors will depend upon whether the Supreme Court decides to invalidate the individual mandate and strike down the remaining provisions of PPACA. If the Supreme Court determines that the individual mandate is unconstitutional and that the remaining provisions of PPACA cannot stand on their own without the mandate, the PPACA mandates affecting group health plan sponsors (e.g., the requirement to provide coverage to adult children up to age 26, and the requirement to provide a summary of benefits and coverage) would be invalidated. The Supreme Court could determine that the individual mandate is unconstitutional, but that it is severable from PPACA, in which case the remaining provisions of PPACA would remain in effect. This would require group health plan sponsors to continue to maintain their plans in compliance with the PPACA mandates and proceed with the implementation of future PPACA mandates. In addition, the Supreme Court could determine that the individual mandate is constitutional and that there is no reason to sever the provision from PPACA, in which case group health plans sponsors would be required to continue to maintain their plans in compliance with PPACA and proceed with the implementation of future PPACA mandates.
Despite much speculation in the media regarding the outcome of the oral arguments at the Supreme Court, it is unclear how the Supreme Court will rule regarding these issues, and a decision is not expected from the Supreme Court until late June. Therefore, group health plan sponsors should continue to maintain their group health plans in compliance with the existing PPACA mandates, and should continue with the implementation of upcoming PPACA mandates. Delaying implementation of upcoming PPACA mandates due to the Supreme Court’s deliberations on PPACA will likely hinder a group health plan sponsor’s ability to timely comply with the PPACA mandates, and could lead to potential penalties and administrative difficulties.