Supreme Court Upholds Federal Health Care Reform

This article was previously published in the June 28, 2012 issue of the National eAuthority.

On June 28, 2012, the U.S. Supreme Court issued its highly-anticipated opinion deciding the constitutionality of the federal health care overhaul known as the Affordable Care Act (ACA). The Court upheld the entire Act except a provision related to expanding eligibility for Medicaid. Chief Justice John Roberts, writing for the Court, construed the individual mandate as an option to have "minimum essential coverage" or to pay a tax and upheld the provision on the basis that the Act merely uses a tax penalty as a means of incentivizing an individual to have minimum essential coverage. The Court also held that the Medicaid expansion provision, although unconstitutional, can be severed so that the remainder of the Act can stand despite the unconstitutionality of one portion. Florida, et al. v. United States Department of Health and Human Services, et al., Nos. 11-393, 11-398, and 11-400, U.S. Supreme Court (June 28, 2012).

The case has been one of the most closely-watched matters on the Court's docket this year, particularly by the employer community, because it called into question the constitutionality of two key provisions in the Act. By anyone's standards, Florida v. HHS has been an extraordinary case. The ACA is one of the most ambitious and far-reaching legislative efforts since the New Deal, and the case put every one of its provisions in jeopardy. Speculation over what the Court would decide in Florida v. HHS ran especially high after the arguments in March, along with speculation that some issues in the case might be decided without a majority opinion. Now the waiting is over, even if the uncertainties, challenges, and opportunities for employers are not.

Summary of the Court's Holding

With one exception, the ACA, including its "individual mandate" that requires most individuals to have health care coverage, is constitutional. Even though the Court determined that the individual mandate provision exceeded Congressional power under the Commerce Clause and the Necessary and Proper Clause of the U.S. Constitution, five justices agreed that the individual mandate was a permissible exercise of the power of Congress to impose taxes. This decision turned upon the Court's conclusion that the individual mandate penalty, which would have been imposed on an individual who does not have health care coverage, is a permissible federal tax.

With respect to...