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Supreme Court Rules That the ACA is Constitutional

(June 28, 2012): In a landmark case for the healthcare industry, the Supreme Court ruled today that the “individual mandate” provisions of the Affordable Care Act (ACA), colloquially known as “Obamacare,”  were indeed constitutional. As such, ACA was largely upheld by the Court. This decision further expands Congress’ legislative powers and maintains some of the significant changes to healthcare under ACA, such as rules requiring insurers to cover young adults until they are 26, a penalty tax for those who don’t buy insurance, and restrictions against discrimination of patients with pre-existing conditions.  More information to come once the opinion is released in its entirety.

I.  Supreme Court Affordable Care Act Decision Update:

In a surprising twist, the majority opinion from the Supreme Court did not uphold ACA on the grounds that Congress could use its power to regulate commerce between the states to require everyone to buy health insurance. Many experts and pundits believed that the case would revolve almost exclusively on Congress’ legislative power under the Commerce Clause, which allows Congress to regulate interstate (and now most intrastate) trade. Instead, five Justices, in an opinion written by Chief Justice John Roberts, agreed that the penalty that someone must pay if he or she refuses to buy insurance is a form of a tax that Congress can impose under its taxing powers.

II.  Limitations Worth Noting in the Supreme Court’s Decision:

Nevertheless, there were some limitations within the Court’s opinion. In particular, ACA also included a provision that required the States to comply with various new eligibility requirements for Medicaid or risk losing their federal funding. On this issue, the Court held that the provision would be constitutional so long as States only lost new funding if they did not comply with the new requirements, rather than losing all of their funding. The bigger questions, though, especially concerning the authority of Congress, were answered by the Court in favor of an expansion of powers.

This decision does not just signify that Congress may wield increasing authority to tax, but also recognizes the fact that the healthcare industry is in the midst of a crisis, and that any strategies which may decrease healthcare costs should be encouraged. Had the law been overturned, Accountable Care Organizations (ACOs), the government’s newest HMO-like program, would cease to exist, and the Health Insurance Exchanges currently being set up to provide larger public pools (thereby reducing insurance risk) would be closed. As a result of this decision, the likely billions of dollars that have gone into revamping many healthcare programs will not be wasted.

Liles Parker is a full service health law and business transactions firm, representing clients throughout the country. Attorneys at Liles Parker assist clients in a variety of matters, including buying, selling, and financing businesses, conducting internal reviews and compliance audits, representing providers in Medicare and Medicaid administrative appeals, and counseling providers on healthcare fraud and abuse concerns. For a complimentary consultation, call us today at: 1 (800) 475-1906.

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