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A Better Partnership


Jun 2012
June 28, 2012

An Analysis of Supreme Court Decision for Health Care Providers

The Supreme Court has upheld the constitutionality of almost all of the Affordable Care Act. The constitution gives Congress broad powers to impose taxes.  Under the Affordable Care Act, the penalty for failing to obtain insurance is a tax. Through its taxing power (not its commerce power) Congress has the power to require Americans to obtain health insurance.

However, in response to states’ challenge to the Act’s changes to Medicaid, the Court has limited Congress’s right to force states to expand the Medicaid program beyond what states can afford. If Congress does not supply adequate money for the Medicaid program’s expansion, states cannot be penalized with a loss of all Medicaid funds if they then decline to expand their own Medicaid programs.

All of this means that the law’s opponents must now re-focus their appeals, this time to Congress and to the President.

Now that the law has been upheld, physicians and hospitals will likely join in new Medicare accountable care organizations. Hospitals and physicians may also want to become involved in federally supported CO-OP health insurance programs.

Warner health law partner Rich Bouma has put together the following analysis of the Supreme Court decision.

Key Questions Before the Supreme Court, and the Court’s Answers

1.  Individual Mandate.
Q: Is it constitutional for Congress to require individual Americans to obtain health insurance?
A: Yes, if the penalty for not having insurance is in reality a tax.  Congress has a broad right to impose taxes.

2.  Separability.
Q: How much of the Affordable Care Act will the Court strike down?
A: The only part of the statute that is limited is the power of Congress to threaten states with the loss of their entire Medicaid funding.

Status of Other Key Provisions in the Affordable Care Act.

ACA Provision Status
Health Plan Requirements: 

Prohibitions against lifetime or annual limits; prohibition against rescissions; requirements for preventive health services; expanded dependent coverage; medical loss ratios; prohibitions on preexisting condition exclusions; premium rating; guaranteed availability; health status nondiscrimination; comprehensive essential health benefits.
Requirements for State Health Insurance Exchanges:

The ACA establishes state-based Exchanges to facilitate the purchase of health insurance at an affordable price by qualified individuals and qualified employer groups. The ACA creates four benefit tiers of health coverage for health insurance, listed as bronze, silver, gold and platinum. 
Minimum Benefits:

The ACA requires that qualified health plans offer minimum benefits, called “essential health benefits.” The ACA limits how much the premiums on individual or small group policies can vary based on factors like tobacco use.
Dependent Coverage:

The ACA requires that health plans offer coverage to dependent children until the child turns 26. 

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