What The Supreme Court's Decision On Health Care Reform Means For Employers

Author:Mr Barry Klein and Kari Knight Stevens
Profession:Blank Rome LLP

After many months of speculation, the Supreme Court of the United States ruled yesterday that the central provision of Health Care Reform, the individual health insurance mandate, is constitutional. The result is that this provision and the other provisions of the Patient Protection and Affordable Care Act will remain ­intact. Accordingly, employers should act now to ensure that they are in compliance with currently effective provisions of the law, as well as those that are slated to come into effect in the coming months and years.


On March 23, 2010, President Obama signed into law the ­Patient Protection and Affordable Care Act (P.L. 111-148) ("Health Care Reform"). The centerpiece of Health Care Reform is the requirement that, with limited exceptions, all individuals must be covered by an employer-provided health plan or individual health insurance policies that provide "minimum essential coverage" (i.e., the "individual mandate") beginning in 2014. In order to help individuals find such coverage at a reasonable ­expense, states must set up insurance exchanges and individuals will be provided with tax credits to help pay insurance premiums. Employers will have the choice to offer compliant health coverage for employees or pay significant penalties ("pay or play").

Constitutional Challenge & Supreme Court Ruling

In response to the enactment of Health Care Reform, several parties, including a joint effort of 26 states, challenged its constitutionality, particularly that of the individual mandate. Challengers to the law argued that the individual mandate was an abuse of Congress's federal authority under the Commerce Clause of the United States Constitution. They concluded that because this key piece of the law is unconstitutional, the entire law must also be overturned.

The court challenges to Health Care Reform reached several Federal Circuit Court of Appeals, but the results were conflicting. The Fourth and Sixth Circuit Court of Appeals found the individual mandate to be constitutional. The Eleventh Circuit Court of Appeals found that the individual mandate was unconstitutional, but did not find the entire law to be invalid.

The Supreme Court agreed to resolve the split among the ­Circuits, and did so yesterday, in a 5-4 opinion in the matter of­ National Federation of Independent Business v. Sebelius ­authored by Chief Justice John Roberts. The Supreme Court found that, while the individual mandate is not a valid exercise of Congress's power under the Commerce Clause, it is constitutional under Congress's taxing authority. The Supreme Court also found that while Health Care Reform's expansion of Medicaid programs is constitutional, the federal government...

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