Affordable Care Act Upheld by United States Supreme Court
In 2010, Congress passed a major healthcare reform bill, the Patient Protection and Affordable Care Act (“ACA”). This law was designed to increase the number of people covered by health insurance, and to control the costs of healthcare. On June 28, 2012, the United States Supreme Court ruled that most provisions of the ACA are constitutional. The major provisions of this law, and their expected impacts, are discussed below.
One of the main components of the ACA is the “individual mandate.” This provision requires everyone who can afford health insurance to have a minimum level of coverage after January 1, 2014. The ACA requires that individuals purchase insurance, or else pay a penalty (the penalty is phased in over time, and depends on the individual’s income).
The Supreme Court ruled that this provision is constitutional. According to the majority, the ACA effectively creates a tax on individuals who choose not to purchase insurance. While a majority of the Justices held that Congress’s power to regulate commerce does not justify the individual mandate, they read the Act as creating a tax designed to incentivize purchasing insurance.
The ACA expands access to health insurance for low-income individuals and families by instructing states to expand Medicaid eligibility. Medicaid was designed to cover medical services for low-income families, the elderly, and people with disabilities. The Federal Government provides funds for States to run Medicaid programs (California’s is called Medi-Cal). The ACA increases the funds provided to states, and would have required states to cover anyone earning less than 133% of the federal poverty line (about $15,000 per year for an individual), or else lose their federal Medicaid funding—new and existing.
The Supreme Court ruled that Congress cannot force the States to accept this new program through incentives stemming from existing laws. Therefore, the Court struck down the portion of the law that would have cut off all Medicaid funds if States do not implement this expansion. However, the Court stated that Congress may withhold new Medicaid funds from States that do not expand coverage.
Other Important Features of the ACA
Until this decision, there was some uncertainty about whether the Supreme Court might invalidate other parts of the law, including new regulations on insurance companies and the newly-created Healthcare Exchanges. We now know that these other provisions, designed to increase access to health insurance, are constitutional and will be implemented. Stay tuned for further discussion about these and other provisions of the ACA.
By Linda Baldwin Jones and Daniel Brome