Is health reform law constitutional? Supreme Court will decide

November 23, 2011

Have you and your colleagues expended significant time and money to understand and meet the requirements of a law that may be declared unconstitutional? The answer is not clear at this point, but at least the issue is headed toward resolution. The U.S. Supreme Court has agreed to rule on the constitutionality of the Patient Protection and Affordable Care Act, with oral arguments likely this spring and a decision later next year. Find out what issues before the court could have the biggest effect on your practice.

Have you and your colleagues expended significant time and money to understand and meet the requirements of a law that may be declared unconstitutional?

The answer is not clear at this point, but at least the issue is headed toward resolution. The U.S. Supreme Court has agreed to rule on the constitutionality of the Patient Protection and Affordable Care Act (PPACA), with oral arguments likely this spring and a decision later next year.

Many physicians support the concept of better health coverage for their patients, such as Medicare paying for enhanced preventive care, and better care models, such as accountable care organizations, promoted by the law. But they also have been negatively affected by some PPACA provisions, including significant cuts to Medicare reimbursement. A recent Kaiser Family Foundation report noted that the PPACA included more than $424 billion in net Medicare savings ($528 billion in gross Medicare savings) over a 10-year period, with reductions in payment updates to providers of nearly $2 billion. The law also created the Independent Payment Advisory Board to find additional ways to reduce Medicare payments if growth rates exceed targets.

The nation’s highest court has agreed to review an opinion from the 11th U.S. Circuit Court of Appeals in Atlanta, which held by a 2-1 vote that the healthcare reform law oversteps federal power with its individual mandate provision and is unconstitutional. The PPACA includes a requirement that nearly all U.S. citizens purchase health insurance. In the case, State of Florida et. al. v. U.S. Department of Health and Human Services et. al., governors and attorneys general from 26 states were among the plaintiffs.

Although the question of an individual mandate has generated the most discussion, some of the other issues in the 11th Circuit Court opinion may be even more important to physicians. The majority of the appeals panel ruled that the individual mandate provision could be “severed” from the overall law, a decision that had the effect of partially overturning the lower court decision. The U.S. District Court for the Northern District of Florida had held that the individual mandate and the lack of a severability clause in PPACA required that the entire law be thrown out. In other words, the 11th Circuit Court decision said the rest of the law could stand even if the individual mandate provision was discarded; the Supreme Court will decide whether it agrees with that position.

The Obama administration argues that the individual mandate is essential. “People who make a decision to forego health insurance do not opt out of the healthcare market,” the White House blog stated in September, after the 11th Circuit Court decision. “Their action is not felt by themselves alone. Instead, when they become ill or injured and cannot pay their bills, their costs are shifted to others. Those costs-$43 billion in 2008 alone-are borne by doctors, hospitals, insured individuals, taxpayers and small businesses throughout the nation.”

The White House asked the Supreme Court to rule on the legal issues raised by the PPACA. Among the issues is a challenge to the expansion of Medicaid to millions of additional beneficiaries, including families without children. Both the U.S. District Court in Florida and the 11th Circuit Court rejected that challenge, which now will be considered by the Supreme Court.

Other federal appeals courts have ruled on the constitutionality of the PPACA, including those in Washington, D.C., and Cincinnati, Ohio, both of which upheld the individual mandate. The federal appeals court based in Richmond, Virginia, voided two lower court decisions on jurisdictional grounds. All of those issues are expected to be considered by the justices when they decide whether the law should stand as is.

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