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"United States Supreme Court Issues Ruling on Health Care Reform Law"

By: Jill E. Hall Attorney at Law
Labor and Employment Alert
June 28, 2012

Today, the United States Supreme Court issued its long awaited ruling on the constitutionality of the Patient Protection and Affordable Care Act (PPACA), the health care reform law that has been wildly controversial since its passage. The Court was asked to determine whether the individual mandate provision of PPACA, effective in 2014, is constitutional and, if not, whether that provision is severable from the rest of the law. The Court also was asked to consider the validity of PPACA's Medicaid expansion provisions, also effective in 2014. Finally, the Court was asked to consider whether this is the appropriate time to rule on the constitutionality of PPACA or whether it must wait until after taxpayers actually incur a financial penalty for failing to comply with the individual mandate.

In a 5-4 decision issued today, the Court upheld the individual mandate provision of PPACA. Although the Court ruled the mandate is an unconstitutional exercise by Congress under the Commerce Clause, it nonetheless allowed the individual mandate to stand as a valid use of the federal government's power to impose taxes. Because the individual mandate was upheld, the Court did not need to consider whether that provision was severable from the rest of the law. The Court also held the Medicaid expansion constitutional, but limited the ability of the federal government to penalize states that choose not to participate in the expanded program.

After the enactment of PPACA in March 2010, several lawsuits were filed in federal courts across the country. Many were dismissed, but some federal appellate courts issued conflicting opinions on the merits of the law. Regarding the individual mandate issue, those challenging the law argued that the requirement that most people obtain health insurance coverage in some acceptable form is not a valid exercise of Congress' legislative powers. The Court disagreed.

While this settles the validity of PPACA as enacted under President Obama's administration, questions remain. What effect will this year's elections have on health care reform efforts, if any? Will Congress make any changes to the requirements that are expected to go into effect in 2014 and beyond? Will states continue their efforts in establishing insurance exchanges, or will they wait to see what happens in the fall elections? We will be analyzing these issues and the Court's opinion over the coming days and weeks and welcome your thoughts and questions.