Ending months of debate and uncertainty, on June 28, 2012, the U.S. Supreme Court upheld the Patient Protection and Affordable Care Act (the "Act") in a decision that surprised many who had expected all or a portion of the Act to be overturned. Most noteworthy is the Court's decision upholding the so-called "individual mandate" provisions of the Act, which require individuals to obtain health insurance or face imposition of penalties. Although the decision is a general stamp of approval for healthcare reform, much uncertainty remains because of continuing efforts on the political and judicial levels to repeal or modify the law, in whole or in part. In responding to the Court's approval of the Act, it may be wise for states, insurance companies, employers and other interested parties to consider how the Act impacts each of them and how their respective obligations under the Act should be satisfied. This Alert, which is part of a comprehensive series prepared by Duane Morris regarding the Court's decision, relates to the impact of the decision on employers.
The enactment of the Act on March 23, 2010, and enactment of the Health Care and Education Reconciliation Act of 2010 on March 30, 2010, implemented historic reforms of the American healthcare system. In the intervening two years, thousands of pages of regulations, notices and guidance have been published by a number of governmental agencies implementing the Act's 900 pages. These arrangements affect every constituency in the health insurance market: insurance companies, payors, individuals who receive coverage and employers.
Analysis of the Supreme Court Decision
The Act's most controversial provision, the individual mandate, is not scheduled to take effect until January 1, 2014. This provision requires virtually all Americans to purchase a health insurance policy providing a minimum level of coverage by 2014 or to make a "shared responsibility payment" to the Internal Revenue Service with their income taxes. It was this provision of the Act that raised the most significant constitutional questions and ultimately found its way to the Court.
While ruling that the individual mandate is not a valid exercise of Congress's power under the Commerce Clause and the Necessary and Proper Clause of the U.S. Constitution, the Court upheld the individual mandate as within Congress's enumerated power to lay and collect taxes. In assessing this issue, the Court concluded that "it is...