The Supreme Court’s Health Care Decision

The Supreme Court today issued its ruling on the Patient Protection and Affordable Care Act. It’s a complex and nuanced opinion (PDF), but ultimately upheld the law’s most important provisions.

Although the law is broad and multifaceted most of the contention—and the suit, officially known as National Federation of Independent Business v. Sebelius—was focused on two elements. The law as passed:

  1. Called on states to expand their Medicaid programs under penalty of being deprived of all Federal funding for Medicaid.
  2. Imposed a requirement, as of January 1st, 2014, for Americans above a certain income level to buy health insurance. There is a carrot and stick approach here, with most employers required to offer insurance and subsidies offered all but the wealthiest Americans to purchase it, and a penalty, called the “shared responsibility payment,” imposed on people who choose to remain uninsured.

The mandate is an important part of the program. The intent of insurance is to pool risk; with other portions of the law preventing higher-risk patients from being denied insurance, lower-risk patients need to be brought in to balance it out. Moreover, uninsured people must be treated at emergency rooms; if they can’t—or won’t—pay for this care, the costs are borne by everyone else.

Under the court’s NFIB ruling:

  • The Medicaid expansion was upheld provided the penalty is only the withholding of funds intended to allow them to carry it out. That is, Federal monies that pay for the expansion of Medicaid can be withheld from states that opt out of expanding the program, but funding for the status quo must be left intact; a state’s Medicaid program cannot be completely defunded even if the state chooses not to expand it so that more people are eligible. Provisions making it more difficult for states to remove people from Medicaid were not effected.
  • The mandate provision, requiring individuals to be insured, was upheld. Although the court rejected the government’s primary argument as to the constitutionality of this provision, it did rule that the penalty payment functions as a tax, and that is something the government is allowed to do.

The ruling does not address whether the law is a good thing. However, it does stand as a declaration that the law does not violate the Constitution. In 2017, states will be able to apply to the Federal government to enact their own programs in place of the ACA, as long as those programs provide the same or greater quality and breadth of coverage at the same or lower cost.

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  • Mike Muth

    Problem.  Medicaid, not Medicare.

  • Court Jester

    It was surprising that the Court was not more supportive of the idea the Act was not permissible under the Commerce Clause.  Traditionally the Supreme Court has been willing to say that just about anything could affect “interstate commerce” (and thus was within the Fed’s power to regulate).  At times the link was so ridiculous it appeared the Federal Government could regulate anything they wanted by making this argument.  Here they rejected the argument but found the provisions amounted to a “tax” which is a legitimate power of Congress.  This change in direction is baffling.