Takes narrow view on Medicaid expansion for states
WASHINGTON – The Supreme Court ruled on June 28 that it is constitutional to require all Americans to either obtain health insurance coverage or pay a penalty, defying the expectations of many that the majority conservative leaning justices would strike it down.
Chief Justice John Roberts provided the support needed to make a 5-4 majority and uphold the health reform law, assuring a place in history for his legacy. His support for the individual mandate was that it was constitutional based on Congress’ taxing authority and not on the Commerce clause and regulation of interstate commerce.
“The mandate can be regarded as establishing a condition – not owning health insurance ¬– that triggers a tax–the required payment to IRS,” Roberts said in the opinion.
The remaining parts of the Patient Protection and Affordable Care Act (ACA) also remain intact, resulting in a clean sweep for the healthcare reform overhaul advanced by President Barack Obama and a majority in Congress in 2010.
The justices, however, did take a narrower view of the Medicaid expansion, limiting the potential penalty to states if they did not participate in the program.
The historic Supreme Court decision – precipitated by a lawsuit brought against the federal government by 26 states, led by Florida, and the National Federation of Independent Business – offers some certainty with regard to how healthcare will proceed in the future and how Americans will obtain and pay for health coverage.
Two of the most far-reaching consumer breakthroughs of the ACA, which rely on the individual mandate, also remain: guaranteed issue, which requires payers to insure all applicants regardless of their health status, and community rating, which prohibits insurers from charging customers more based on pre-existing conditions and demographics.
During oral arguments in March, the government had asked the justices that if they overturned the individual mandate, then they should also strike the two consumer protections, since premiums would then skyrocket.
An individual mandate would produce a broad pool of both high-and low-risk customers for insurers. Without the mandate, insurers would be stuck with the sickest and most expensive patients, so they would hike premiums to pay for escalating costs.
The health reform law was designed to provide for the biggest increase in the number of insured individuals since the creation of the Medicaid and Medicare programs in the 1960s.
The justices upheld the expansion of the Medicaid program for low-income individuals and families for which the federal government and states share costs. But they also held that the provision is constitutional as long as states would only lose new funds if they didn't comply with the new requirements, rather than all of their Medicaid funding as originally put forth.
The Medicaid expansion was expected to survive the challenge because the lower courts had upheld it, said Timothy Jost, law professor at Washington and Lee University in Lexington, Va. “No federal court has ever held a federal law to be unconstitutional based on this theory,” he said at a recent Medicaid conference.
Medicaid will widen its safety net to those earning up to 133 percent of the poverty level from 100 percent, accounting for about 15 million individuals who will be insured under the health reform law. Under ACA, the federal government will pay 100 percent of the cost of the expansion through 2016 and phase down to 90 percent by 2020. Currently, states pay from 40-50 percent of Medicaid costs. Many states had already begun to increase coverage on their own, especially children.
ACA will also increase pay to primary providers who treat Medicaid patients to that of Medicare rates. Because the Supreme Court justices upheld the mandate, the rest of the law stands, including federal tax credits that will help consumers within a certain income range afford to purchase health coverage on the individual insurance market and the creation of health insurance exchanges, which will be state-based online marketplaces.
