On June 28th, the Supreme Court of the United States announced its decisions on several lawsuits that challenged Congress’s authority to enact two parts of the Affordable Care Act (ACA).
- The individual mandate - the Court decided that Congress can require most individuals to have health insurance or else pay a penalty in the form of a tax. This requirement is called the “individual mandate.”
Although the Court found that the individual mandate could not be upheld as part of Congress’ power pursuant to the Commerce Clause, it determined that Congress can require most residents who do not get health insurance through an employer or government program to purchase it or else pay a tax penalty.
As a result of this decision, most of the ACA does not change. For example, most young adults can still stay on their parent’s plan until age 26. In 2014, the requirement that there be a health insurance Exchange in every state still remains. The purpose of the Exchange is to help eligible individuals and small businesses purchase coverage. For coverage bought through the Exchange, eligible individuals will be able to get a subsidy to lower their insurance costs, and eligible small businesses will be able to claim, for two years, a tax credit for up to 50% of their premium costs.
- The expansion of the Medicaid Program - the Court decided that Congress cannot threaten to withhold all federal funding for Medicaid as a way to make states expand their Medicaid program to cover most low-income individuals under age 65. Instead, the Court said that this Medicaid expansion must be optional. States that chose not to expand their program cannot have federal funding withheld for their existing program.
Medicaid is a free public health insurance program for residents who meet income and other eligibility requirements, such as being disabled or pregnant. Medicaid is funded by both federal and state governments. In New York, local governments also pay a portion of Medicaid costs.
Under the terms of ACA, the Medicaid expansion was mandatory, which meant that the federal government could withhold all federal money for a state’s Medicaid program if it did not also cover this new group of people. The Court said the threat to withhold all money was not fair because the ACA was making a significant change to the Medicaid program and this type of requirement did not allow states to make a voluntary choice to accept or reject the expansion. Medicaid was originally designed to help needy and vulnerable people, but the ACA would have changed it to also cover almost all low-income residents under 65.
The Court’s decision on this issue means that states do not have to expand Medicaid to cover nearly all low-income residents under the age of 65, but they can do so if they wish.
- States that want to expand Medicaid will receive additional federal money as outlined in the ACA
- States that do not want to expand their Medicaid program can still get federal money for their existing program. The state would only lose out on the federal money they could have received if they had chosen to expand Medicaid.
The Court’s stated that its decision reflects judgment on the legal and constitutional issues as presented in the lawsuits under review and should not be construed as endorsement of Congress’ policy as reflected in the ACA.
The full Court decision is available here: http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf
To learn more about the Affordable Care Act, visit our website here.