U.S. Supreme Court Upholds the Patient Protection and Affordable Care Act of 2010 ("PPACA")

Saul Ewing Arnstein & Lehr LLP
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Today, June 28, 2012, the United States Supreme Court (“Court”) upheld PPACA by a 5-4 vote, with Chief Justice Roberts providing the swing vote with respect to the individual mandate to purchase health insurance (“Mandate”). While the majority of the Court agreed that the Mandate was unconstitutional under the Commerce Clause (and under the Necessary and Proper Clause), the Court ruled it constitutional under the taxing power, finding that the penalty paid if insurance was not purchased was in the nature of a tax.

Upon initial review, the only limitation the Court placed upon the implementation of PPACA is that the Congress may not remove all Medicaid funding from those States that refuse to expand their Medicaid programs, limiting Congress to withholding payment to the States for only the additional program requirements.

This decision removes a cloud of uncertainty that hung over the PPACA. While it is still true that PPACA’s existence could be subject to the results of the November elections, the degree of uncertainty seems much diminished. For PPACA to be repealed, not only would there have to be a change in the holder of the Office of the President, but the Senate would have to experience a swing to a Republican majority of at least 60 seats, which would require that party to retain all 10 seats it holds that are up for reelection, and pick up at least 9 of the 23 seats held by Democrats and Independents (since the latter usually vote in a manner consistent with the Democrats) that are up for reelection.

Consequently, providers of care and insurers should review the requirements of PPACA, and the many rules that have been promulgated under PPACA by various government agencies, and set priorities for their implementation. Accountable Care Organizations have been a focus of much attention lately, and may be considered more important as a result of this decision. Some states that have been hesitant to implement Health Insurance Exchanges may reconsider now that there is little doubt PPACA will be implemented [see our comment on the veto of the proposed New Jersey law here]. Many other requirements may be seen as more pressing of consideration now that this historic decision is made. For example, the Internal Revenue Service has just issued proposed rules for the implementation of the new community benefit requirements. See our comment here.

Over the next few weeks, we will provide information on the PPACA statutory requirements, and the rules that have been issued, with particular emphasis on issues for various sets of participants in the health care delivery, finance and insurance systems, in the hope of helping clients consider their next steps.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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