June 28, 2012
Today, the U.S. Supreme Court issued its opinion on whether the Health Care Reform Act (“HCRA”) is a constitutional exercise of Congressional power. In its opinion, the Supreme Court upheld the HCRA, except for a small portion of Medicaid expansion.
Background. Twenty-six states, the National Federation of Independent Business, and individuals without health insurance petitioned the Supreme Court to determine whether:
- The individual mandate is a tax, such that the Supreme Court cannot review it until it is assessed and challenged;
- The individual mandate and Medicaid expansion are constitutional exercises of Congress’s power under the Commerce Clause, Tax and Spend Clause, and/or Necessary and Proper Clause; and
- In the event that the individual mandate is struck down as unconstitutional, the HCRA in its entirety is unconstitutional because it is inseverable from the individual mandate.
For a more in-depth discussion about these issues, see our newsletter on the Supreme Court Oral Arguments.
Opinion. The Supreme Court upheld the HCRA in its entirety, except for a small portion of Medicaid expansion. Specifically, it ruled that:
- The individual mandate is not a tax under the Anti-Injunction Act, so that the Supreme Court can review it before it is assessed and challenged (i.e., this closed the door on a later challenge of the HCRA);
- The individual mandate is a tax under the Tax and Spend Clause, so that it is upheld as a constitutional exercise of Congress’s power to tax and spend (i.e., a tax is not always a tax); and
- The Medicaid expansion is a constitutional exercise of Congress’s power to tax and spend. However, Congress may not withdraw existing Medicaid funding for states that refuse to offer the expanded Medicaid coverage. (This ruling will result in anomalies in comprehensive coverage for everyone.)
Because the Supreme Court upheld the entire HCRA, group health plan sponsors must continue to implement HCRA mandates, pending regulatory guidance or Congressional/political actions to the contrary. Mazursky Constantine will continue to monitor guidance issued by the Departments of Treasury, Health and Human Services, and Labor on how group health plan sponsors can continue to comply with the HCRA.
Contact Information. For more information from Mazursky Constantine, please contact Amy Heppner (404.888.8825) or Kelly Meyers (404.888.8838). For more information from VCG Consultants, please contact Leslie Schneider (770.863.3617).
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