A sharply divided U.S. Supreme Court Thursday upheld key provisions of the Patient Protection and Affordable Care Act, including the contentious individual mandate that requires people to either purchase health insurance or pay a penalty.
Healthcare leaders say economic realities impel reform. The ruling will have no short-term effect on healthcare's soaring costs.
On a 5-4 vote, with Chief Justice John Roberts siding with the majority, the high court ruled that the individual mandate violated the Commerce Clause of the U.S. Constitution, but fell within the taxing authority of Congress.
"The individual mandate… does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product, on the ground that their failure to do so affects interstate commerce," Roberts wrote for the majority.
"Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority. Congress already possesses expansive power to regulate what people do. Upholding the Affordable Care Act under the Commerce Clause would give Congress the same license to regulate what people do not do."
Roberts went on to write that: "The Affordable Care Act's requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness."
The release of the ruling at 10 a.m. this morning was met with shouts and cheers and screams on the sun-bleached steps of the Supreme Court, reported HealthLeaders Media editor Joe Cantlupe.
Michael Newman, MD, a Washington, D.C.-based internist who practices a few blocks from the Supreme Court, was one of hundreds of bystanders outside the court. Wearing his white physician's coat, he praised the ruling.
"This will be a foundation for the future as we go forward to improve healthcare," Newman told HealthLeaders Media. "We recognize that healthcare is evolving and there are things that have to be improved, but there is no turning back now from what the Supreme Court has done."
Joining Roberts in the majority were Justices Sonia Sotomayor, Elena Kagan, Stephen Breyer, and Ruth Bader Ginsburg.
Justices Antonin Scalia, Clarence Thomas, Anthony Kennedy, and Samuel Alito dissented, and said in a joint statement that PPACA "exceeds federal power both in mandating the purchase of health insurance and in denying non-consenting states all Medicaid funding."
In his dissent Scalia wrote that the Obama Administration was engaging in sophistry on the issue of whether or not the individual mandate constitutes a tax or a penalty. In March the Administration had argued before the high court that the suit was not valid because the Anti-Injunction Act stipulates that a tax cannot be challenged until it has been collected.
"What the Government would have us believe in these cases is that the very same textual indications that show this is not a tax under the Anti-Injunction Act show that it is a tax under the Constitution. That carries verbal wizardry too far, deep into the forbidden land of the sophists," Scalia wrote in dissent.
In a victory for the 26 states that filed suit against PPACA, the high court called unduly coercive the provision to allow the Secretary of Health and Human Services to cut all Medicaid funding for states that choose not to participate in the Medicaid expansion under the Act.
"The threatened loss of over 10% of a State's overall budget is economic dragooning that leaves the States with no real option but to acquiesce in the Medicaid expansion," Roberts wrote.
"The Government claims that the expansion is properly viewed as only a modification of the existing program, and that this modification is permissible because Congress reserved the 'right to alter, amend, or repeal any provision' of Medicaid. But the expansion accomplishes a shift in kind, not merely degree."
"The original program was designed to cover medical services for particular categories of vulnerable individuals. Under the Affordable Care Act, Medicaid is transformed into a program to meet the healthcare needs of the entire nonelderly population with income below 133% of the poverty level. A State could hardly anticipate that Congress's reservation of the right to 'alter' or 'amend' the Medicaid program included the power to transform it so dramatically. The Medicaid expansion thus violates the Constitution by threatening States with the loss of their existing Medicaid funding if they decline to comply with the expansion."
HealthLeaders Media will continue reporting on the implications of the decision for healthcare leaders and their organizations.
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.