The Court Has Spoken - Now What?

On June 25, 2012, I was sitting at the American Health Lawyers Association conference with about 1,000 other health care lawyers waiting to hear from the Supreme Court. When we learned the decision would not come out until Thursday, the speaker asked for a show of hands as to the outcome. Less than a third of the group thought the mandate would be upheld.

The Supreme Court issued their ruling Thursday morning and as we know fooled CNN and Fox News as well. The cable news had already prepared their stories about the law being overturned. The Supreme Court, however, decided that the Patient Protection and Affordable Care Act (the "Act") was constitutional.

The networks expected that the Court would conclude that Congress could not use its power to regulate commerce between the states to require everyone to buy health insurance; which it did. However, they were fooled because the Court, in a 5-4 decision drafted by Justice Roberts, went on to say that the penalty that someone must pay if he refuses to buy insurance is a tax that Congress has the authority to impose. "The Affordable Care Act's requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax," Chief Justice Roberts wrote in the majority opinion. "Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness."

Most reports have focused on the court upholding the mandate, however the ruling did put some limitations on the Act. For example, under the Act, the federal government offers each state federal dollars to expand Medicaid coverage to 133 percent of the federal poverty level and withholds all federal Medicaid funds for the state if a state refuses to comply with the expansion. The Court held Congress may significantly expand the Medicaid program as stated in the Act. However, Congress cannot withhold existing Medicaid Federal Medical Assistance Percentages funding, the anticipated federal dollars for Medicaid states expect and rely upon, as a penalty if a state does not agree to the expansion. The ruling provides...