Supreme Court Upholds Health-Care Law with Mandate

The justices voted 5-4 to uphold the Affordable Care Act, effectively declaring the law’s individual mandate and Medicaid expansion to be constitutional.
by | June 28, 2012

By a 5-4 majority, the Supreme Court upheld the Affordable Care Act (ACA) Thursday, effectively declaring the federal health-care reform law’s individual mandate and Medicaid expansion to be constitutional.

Chief Justice John Roberts, who wrote the majority decision, announced that the individual mandate's financial penalty would stand under Congress' tax authority.

The remainder of the law will also stand, although the federal government's power to reduce states' Medicaid funding is narrowly defined. The Court declared that the Medicaid expansion itself is constitutional, but it would be unconstitutional for the federal government to withhold states' Medicaid funding for non-compliance.

Roberts wrote that the individual mandate was not constitutional under the Constitution's Commerce Clause, but its financial penalty is allowed under the Taxing and Spending Clause. "This is sufficient to sustain it," Roberts wrote.

On the Medicaid side, the Court ruled that the expansion of eligibility to 133 percent of the federal poverty level is constitutional, but the U.S. Department of Health and Human Services (HHS) could not withhold existing Medicaid for states that opted not to participate in the expansion. This narrow reading could potentially impact whether some states adopt the new Medicaid requirements, but specific state reactions remain to be seen.

The decision appears to validate President Barack Obama’s signature domestic legislative achievement, expected to extended insurance coverage to as many as 30 million people, and confirms that states will be required to move forward with the ACA’s reforms.

Attention now turns particularly toward those states that have hesitated to implement the state-driven reforms, such as the Medicaid expansion and health insurance exchanges, while the law’s legal status remained uncertain.

Some states have taken significant steps to implement the ACA’s provisions since the law passed in 2010. The law’s Medicaid expansion is expected to bring 17 million additional people into state rolls by expanding eligibility to 133 percent of the federal poverty level. According to tracking by the Kaiser Family Foundation, eight states took an offer from the U.S. Department of Health and Human Services (HHS) to implement those standards early.

More than half of the states pursued other reforms related to the Medicaid expansion, such as upgrading their eligibility systems with enhanced federal funding and stating their intent to develop demonstration projects for coordinating care for dual-eligibles (people who qualify for both Medicaid and Medicare).

Eleven states had passed legislation or issued executive orders establishing health insurance exchanges, online marketplaces for purchasing insurance that the Congressional Budget Office estimated will serve 20 million people or more. Another 18 states have exchange legislation pending, according to the National Conference of State Legislatures (NCSL). HHS has pumped more than $850 million into 34 states plus the District of Columbia for exchange establishment.(View the map below to find out which states have received such grants.)

States must submit applications to HHS by Nov. 1 to demonstrate they will be able to run an exchange starting on Oct. 1, 2013, when enrollment is slated to begin. Otherwise, states will have a federally-facilitated exchange, the model for which the Obama administration has begun outlining in recent guidance.

Exchange planning is one element of the ACA in particular that has been slowed by the uncertainty over the law’s constitutionality. According to the Kaiser Family Foundation, 12 states halted their exchange planning in lieu of a Supreme Court decision.

The Court’s ruling brings some finality to a law whose legitimacy has been in question since its passage. President Barack Obama praised the outcome in a national address shortly after noon.

The Court has "reaffirmed the fundamental principle that here in America, no illness or injury should force a family to go bankrupt," Obama said. "I know there will be a lot of discussions about the politics of this decision, who won and who lost. That discussion completely misses the point. Today's decision was a victory for people all over this country."

After the ruling, GOP presidential nominee Mitt Romney repeated his pledge to repeal the ACA on his first day in office. House Republican leaders have also announced that they will hold a vote to repeal the law in early July, numerous news outlets reported.

“Our mission is clear, if we want to get rid of Obamacare, we are going to have to replace President Obama,” Romney said, according to the New York Times. “That is my mission. That is our work. And I’m asking the American people to join me.”

Reactions on the state and local level were also divisive, as expected.. Republicans were generally displeased.

"The battle isn’t over," the Republican Attorneys General Association said in a statement. “It now is up to the political process to repeal the act and replace it with measures that address the health care crisis within the confines of the Constitution. We must continue to oppose this act and multiple overreaching regulations proposed by the Obama Administration that cross the line of federal power."

“Today’s ruling crystallizes all that’s at stake in November’s election," Virginia Gov. Bob McDonnell, head of the Republican Governors Association, said in a statement. "The only way to stop Barack Obama’s budget-busting health care takeover is by electing a new president."

Democrats, on the other hand, commended the Court's decision.

“While Democratic governors across the country may take different steps in their approaches to health care, they share a commitment to increasing choices, lowering costs for families and small businesses, and expanding access to quality, affordable care for their states’ citizens," said Colm O'Comartun, executive director of the Democratic Governors Association, in a statement. "Democratic governors are committed to following the law of the land and working within their states to meet these goals."

“Today, the Supreme Court agreed with the vast majority of constitutional scholars that the Affordable Care Act is indeed constitutional – and state legislators are prepared to move full steam ahead in fully implementing the law,” said Ann Pratt, executive director of the Progressive States Network, a coalition of liberal state lawmakers, in a statement. “Once again, states will be the focus of national attention on health care, and responsible state legislators are prepared to lead.”

The court's full opinion can be viewed at the bottom of the page.

State Health Insurance Exchanges Map

Governing is tracking each state's implementation of the bill, shown in the map below:

 

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