Supreme Court Upholds Patient Protection and Affordable Care Act But Modifies Medicaid Provisions

Robert Bradner, Partner, Washington, D.C. Jim Davis, Partner, Tampa Randolph B. "Randy" Fenninger, Sr Policy Advisor, Washington D.C. Ronald J. "Ron" Klein, Partner, Ft Lauderdale Katharine K. "Kate" Leeson, Sr Policy Advisor, Washington, D.C. Morris H. Miller, Partner, Tallahassee Thomas F. "Tom" Morante, Partner, Miami Joel Edward Roberson, Associate, Washington, D.C. Lisa Tofil, Partner, Washington, D.C. Michael J. Werner, Partner, Washington, D.C.

The United States Supreme Court today issued its eagerly awaited ruling on the constitutionality of the Patient Protection and Affordable Care Act (PPACA). NFIB v. Sebelius/Florida et al v. HHS. In a nutshell, the Court upheld the individual mandate as constitutional but held that the mandatory expansion of the Medicaid program must be optional for states.

The Questions Before the Court

The Supreme Court decision focused on two primary issues. First, the Court was asked to determine whether it was constitutional to require individuals to obtain qualifying private health insurance coverage or pay a penalty (the "individual mandate"). Second, the Court was asked to determine whether it was constitutional to require states to significantly expand eligibility of the state–federal Medicaid program (to cover all citizens up to 133 percent of the federal poverty line) or risk losing all of their existing federal matching funds (the "Medicaid expansion"). The decision also deals with several questions related to these primary issues, such as the Anti-Injunction Act and severability.

The Decision

In an interesting twist, five of the nine justices found the individual mandate was not a permissible exercise of Congress' power to regulate interstate commerce under the Commerce Clause. However, a different constellation of five justices accepted the Obama administration's alternative argument that the individual mandate is constitutional under the Congress' power to tax. The net effect is that the individual mandate is upheld. Chief Justice John Roberts was decisive in the decision, joining the four more conservative justices to reject the Commerce Clause argument while siding with the four more liberal justices to accept the congressional taxing power argument.

In another interesting twist, the Court determined that the Medicaid expansion has to be construed as an optional, not a mandatory, requirement. The majority determined that the Medicaid expansion violates the Constitution because threatening...