Healthcare Alert - Supreme Court Rules On Healthcare; Employers And Providers Eye Next Steps

The U.S. Supreme Court has upheld nearly every provision of the Patient Protection and Affordable Care Act (the Act), meaning that the health care industry and employers will need to prepare for full implementation of the Act this year and next in anticipation of a new health delivery and health benefits world in 2014. The only provision of the Act not affirmed by the Court affects state decisions on whether to participate in Medicaid expansion, and that likely will only have an impact on a state-by-state basis after 2016.

With the decision issued Thursday, June 28, 2012, only a new Act of Congress, signed by the President, will alter the program that changes benefit rules for most employers and imposes new regimens of payment and regulation for providers. For that reason, public policy discussions concerning the Act will likely dominate this November's race for Congress and the Presidency.

The Act attempts to ensure all Americans have health benefits by requiring that individuals purchase insurance or pay penalties; by creating standard packages of acceptable coverage; by requiring larger employers to offer benefits or pay a penalty; by creating state insurance exchanges to create vigorous competition for insurance; by subsidizing insurance purchases for the middle class; and by expanding Medicaid to cover a segment of Americans that earn more than the poverty level. In doing so, it also changes significantly the rules and reimbursements for health care providers that treat patients under those health benefits regimens.

In a victory for judicial conservatives seeking to slow the expansion of federal powers, Chief Justice John Roberts's 5-4 opinion united the Court's conservatives on one proposition: the Constitution's Commerce Clause does not provide the basis for permitting Congress to require that all Americans purchase health insurance. The conservative dissenters agreed on that principle directly, and the court's liberal members disagreed on the commerce clause but joined Roberts's majority opinion that upheld the law on other grounds. The Court narrowly upheld the mandate under the government's power to tax. The Court characterized the mandate as a tax because the monetary penalty for failing to purchase insurance is collected by the Internal Revenue Service through the normal means of taxation.

Regarding Medicaid expansion, the Court found that the Act's mechanism for enforcing the expansion did violate the spending power of the U.S...