Nov 14, 2011

U.S. Supreme Court to Rule on Constitutionality of Health Care Reform Legislation

On November 14, the U.S. Supreme Court agreed to hear a challenge to the health care reform legislation brought by the governors and attorneys general for 26 states in the case of Florida v. U.S. Department of Health and Human Services. The Court of Appeals for the 11th Circuit had ruled on August 12 that the individual mandate of the health care reform legislation is unconstitutional, although it held that the remaining provisions of the law could remain standing. The central issue in this case is whether Congress exceeded its constitutional powers when it mandated that individuals either carry health insurance or pay a penalty. If the Supreme Court holds that the mandate is unconstitutional, it will also decide whether the rest of the health care reform legislation should be struck down or whether it can remain intact. The states’ challenges to the expansion of Medicaid under the health care reform legislation will also be considered by the Supreme Court.

There is a possibility that the Supreme Court will not consider the constitutionality of health care reform at this time. On procedural grounds, the Supreme Court could decide that the insurance mandate penalty is a tax that can only be contested after it is collected. In that scenario, the Supreme Court would not be able to consider any constitutional challenge until individuals start paying the penalties in 2014.

The Court is expected to hear oral arguments in March 2012, with a decision expected in June. The timing of this decision will likely mean that health care reform will remain a pivotal issue in the upcoming presidential election.

While the future of the health care reform legislation is being determined by the Supreme Court, employers must continue to comply with the requirements of the health care reform legislation. For more information on the health care reform legislation, contact your SGR Executive Compensation and Employee Benefits counsel.

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