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Health Reform and
Related Policy News

June 28, 2012


Important Update for Valued Polsinelli Clients:

Supreme Court Upholds Majority of Health Care Reform Law


This morning, the U.S. Supreme Court issued its much anticipated ruling regarding the constitutionality of the Patient Protection and Affordable Care Act of 2010 (ACA) in National Federation of Independent Business et al. v. Sebelius, Secretary of Health and Human Services. The Court upheld the constitutionality of ACA and the majority of its provisions. The decision can be downloaded here.

In a 5-4 decision written by Chief Justice Roberts and joined by Justices Ginsburg, Breyer, Kagan, and Sotomayor, the Court upheld the individual mandate as a valid exercise of Congress's power to impose taxes, while rejecting the administration's primary argument that it was a valid exercise of the Commerce Clause power.

The individual mandate, or minimum essential coverage provision, requires all citizens to obtain health insurance for themselves and their dependents beginning in 2014 or pay a penalty.1 As a result of the decision, the individual mandate will go into effect as planned in 2014. Penalties for failure to obtain insurance begin at $95 in 2014. While this is much less than the current cost of a typical insurance premium, the penalty will increase if an individual continues to remain uninsured.

The decision preserves most of the provisions of the ACA, but the Court did limit the federal government's ability to require states to expand their Medicaid obligations. The Court found that the federal government could not threaten states with the loss of existing Medicaid funding if they decline to expand their Medicaid enrollment. The Court indicated that the federal government can pay a state more to encourage states to expand their Medicaid programs but could not withhold existing Medicaid funding for failing to do so.

While the Court's decision may be viewed as anti-climactic, the practical result of the decision will be a flurry of activity as affected parties that have been delaying implementation pending the decision find that they now have a short deadline to implement many of the ACA's remaining requirements. In addition, many states will be under tremendous pressure to have their health insurance exchanges in place before the deadline of January 1, 2014. For health care providers, the decision reaffirms the direction of reform and will accelerate the current consolidation of delivery systems and alignment to address payment systems focused on value and quality that were enacted as part of the ACA.

For businesses, today's ruling has no practical effect. The changes imposed under ACA on employer-sponsored group health plans that previously took effect, such as coverage requirements for adult children, restrictions on lifetime and annual limits, and removal of preexisting conditions, all remain intact. Further, all existing efforts to comply with upcoming deadlines for 2013 and 2014 remain. For example, all group health plans must begin providing a 4-page Summary of Benefit statement to all eligible plan participants beginning for open enrollment periods that begin on or after September 23, 2012 (such as for the upcoming January 1, 2013 plan year renewals) to provide consistent information (e.g., copays, deductibles, etc.) amongst all group health plans. For 2014, unless other legislative action is taken to slow the process from here, by January 1, 2014, all employers will have to then decide what, if any, type of group health plan coverage the employer intends to provide to all full-time employees (working 30 hours or more per week), or pay the applicable $2,000 penalty to forgo providing such coverage instead.

Moving Forward

Hospitals, providers, and other employers who have worked towards ensuring compliance with the ACA should continue their progress and will remain relatively unaffected by today's decision. However, providers should monitor legislative updates as this issue will continue to be in the spot light. Shortly after the release of the decision, Eric Cantor, the House Majority Leader, announced that the House of Representatives will vote on legislation repealing the ACA on July 11, 2012.

Two Important Webinars

For a more detailed overview of the decision and insight on where reform is headed, please register for our two webinars on the decision and the direction of reform:

Tuesday, July 10, 2012

Impact of the Supreme Court Decision
on Health Care Providers



Thursday, July 12, 2012

What the Supreme Court Decision
Means for Employers



For More Information

If you have questions or concerns or would like to discuss the effects of today's decision, please contact:


1 A Guide to the Supreme Court's Review of the 2010 Health Care Reform Law, Kaiser Family Foundation, Jan. 2012


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