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WASHINGTON—At the core of the Republican state attorneys' general challenge of the individual mandate in the health care reform law was the argument that Congress lacked the authority to impose the requirement under the interstate commerce clause of the U.S. Constitution.
In a single sentence, however, Chief Justice John Roberts said the commerce clause was not relevant in evaluating the legality of the mandate, which the court upheld Thursday on a 5-4 vote as well as most of the rest of the law. That mandate will require most U.S. residents to enroll in a qualified health care plan by 2014 or pay a penalty.
While “the individual mandate cannot be upheld as an exercise of Congress' power under the Commerce Clause…in this case, however, it is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance,” Justice Roberts wrote. “Such legislation is within Congress' power to tax.”
In fact, while the federal government does not have the power to force individuals to buy health insurance, “it does have the power to impose a tax on those without health insurance,” he wrote.
Referring to the individual mandate, the requirement is constitutional “because it can reasonably read as a tax,” he concluded.
For employers, the decision means an end to uncertainly they faced since lawsuits challenging the legality of the Patient Protection and Affordable Care Act were filed by Republican state attorneys general shortly after President Barack Obama signed his signature domestic initiative into law in March 2010.
“The Supreme Court's ruling removes a major source of uncertainty surrounding this important national issue,” Sharon Cunninghis, leader of Mercer L.L.C.'s U.S health and benefits business in New York, said in advance of the ruling.
With the statute's legality upheld, employers no longer will have to worry about issues that would have erupted had it been overturned. For example, employers with early retiree health care plans no longer have to worry about returning to the federal government claims reimbursement money from a $5 billion program authorized by the health care reform law.
Nor do employers have to worry that coverage they extended to employees' adult children will be retroactively taxable.
But the Supreme Court decision does not end all uncertainty. Regulatory agencies, for example, have yet to issue final rules on provisions that are of crucial importance to employers, such as calculating the size of the financial penalty assessed when not all full-time employees are offered coverage.
“The uncertainty is by no means over,” said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.
“There still needs to be a lot of details settled before the health care reform law can be fully implemented,” said Michael Thompson, a principal with PricewaterhouseCoopers L.L.P. in New York.
And there is political uncertainty as well. The Supreme Court ruling has not cooled the interest of top congressional Republicans in working to scrap the law.
“Today's ruling underscores the urgency of repealing this harmful law in its entirety,” Speaker of the House John Boehner, R-Ohio, said in a statement.
In addition, Republican presidential candidate Mitt Romney said earlier, if elected, one of his first acts would be to seek repeal of the law.
But whether Mr. Romney is elected and whether Republicans retain control of the House of Representatives and obtain at least a 60-40 vote margin in Senate—a basic necessity for a repeal to have any chance—is far from known.
“If you can tell me who will be in the White House and who will control Congress, then we will be better able to tell what will happen to the law,” said J.D. Piro, a senior vp with Aon Hewitt in Norwalk, Conn.
PLUS: Read Business Insurance's complete coverage of the Supreme Court health care decision.
WASHINGTON—Some groups representing insurance agents expressed disappointment with the Supreme Court's decision to uphold the Patient Protection and Affordable Care Act.