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WASHINGTON—The 2010 health care reform law is constitutional, the Supreme Court ruled Thursday.
In a 5-4 decision that contradicted much of the conventional wisdom, the high court said Congress had the authority to impose an individual mandate—the centerpiece of the lawsuit challenging the health care reform law.
“The Affordable Care'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,” Chief Justice John Roberts wrote for the majority.
For employers, the decision means an end to the uncertainly they have 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's signature domestic initiative was signed into law in 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.
Now, employers will be able to fully focus on complying with the law and making any necessary changes to their health care plans.
“It's full steam ahead for employers,” J.D. Piro, a senior vp at Aon Hewitt in Norwalk, Conn., said before the court made its decision.
At the same time, experts expect regulatory agencies will accelerate their efforts to finalize a slew of rules needed to enable employers to comply with the law.
“We suspect that the regulators will really kick things up to get the rest of the law implemented,” Mr. Piro said.
Still, not all uncertainty related to the reform law is over. Congressional GOP opponents are unlikely to give up their efforts to dismantle the law. Those efforts could receive a boost if Mitt Romney, who has pledged to seek repeal of the law, wins the presidency in the November elections and the GOP gains control of the Senate and retains control of the House of Representatives.
“One thing we can safely predict is that both sides will be even more vocal on the health reform issue as we get closer to November, and the composition of Congress and who controls the White House will, of course, determine many things including the future direction of health care reform,” said Paul Dennett, senior vp-health care reform at the American Benefits Council in Washington.
PLUS: Read Business Insurance's complete coverage of the Supreme Court health care decision.