Supreme Court Upholds Federal Health Care Reform Law

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[authors: Andrew Malahowski and Dan Salemi]

Today, the United States Supreme Court upheld the Patient Protection and Affordable Care Act. In a 5-4 decision authored by Chief Justice Roberts, the Court upheld the “individual mandate”—the requirement that everyone must have health insurance or else pay a tax—on the basis that the mandate is a constitutional exercise of Congress’s power to tax. In its opinion, the Court stated that “[o]ur precedent demonstrates that Congress had the power to impose the [individual mandate] under the taxing power, and that [the individual mandate] need not be read to do more than impose a tax. This is sufficient to sustain it.”

In another aspect of the decision that is not directly applicable to employers, the Court did find one part of the law’s Medicaid expansion rules to be unconstitutional. Under the law as written, the federal government has the power to withhold state Medicaid funds if a state does not comply with the new Medicaid expansion rules. The Court held, however, that it is unconstitutional for the federal government to withhold existing Medicaid funding for a state’s failure to comply with the new expansion rules.

The Supreme Court’s decision today is the most significant decision this year for employers. It makes clear, for one thing, that employers will be required to continue adjusting to this game changing law. In the future we will be providing more detailed information on the impact of this decision on employers and the next steps that employers will be required to take.