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Health care law individual mandate upheld

Individual mandate ruled constitutional, but questions remain

Health care law individual mandate upheld

WASHINGTON—While the landmark Supreme Court decision upholding the heart of the health care reform law puts an end to years of uncertainty over whether law was constitutional, regulatory and political uncertainties continue.

In a 5-4 decision written by Chief Justice John Roberts, the high court upheld the law's individual mandate, ruling that lawmakers have the power to impose penalties on those who do not purchase health insurance.

“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.”

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.

In upholding the individual mandate, which will require most U.S. residents to enroll in a qualified health care plan in 2014 or pay a financial penalty, the high court let stand nearly all of the Patient Protection and Affordable Care Act of 2010.

The only PPACA provision rejected by the court was one in which states would have lost federal funding for their Medicaid programs if they did not expand those programs to cover more lower-income individuals.

The court ruling eliminates the huge uncertainties employers would have faced had the justices invalidated the entire law.


For example, one uncertainty was whether employers and other early retiree health care plan sponsors would have to return $5 billion they received in federal claims reimbursements under a program created by the law.

A second uncertainty involved a provision in the law that, generally effective Jan. 1, 2011, required employers to extend health insurance coverage to employees' adult children up to age 26. Along with that new requirement, Congress also changed tax law so the coverage would be tax-free up to age 26. Generally, under prior law, the tax-free age limit was 24.

Had the law been repealed, employees could have been liable for back taxes for children who qualified for the expanded coverage.

While those and other uncertainties have been put to rest by the Supreme Court decision, plenty of others remain.

“The uncertainties are by no means over,” said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.

“On the one hand, at the macro level, the case has been settled. But there are still a lot of details to be settled before health care reform can be fully implemented,” said Mike Thompson, a principal with PricewaterhouseCoopers L.L.P. in New York.

On the regulatory side, federal officials have yet to issue final rules relating to several of the law's core provisions affecting employers.

For example, the law imposes a $2,000-per-employee penalty on employers that do not offer coverage to full-time employees.

But regulators have yet to make clear if the full penalty would apply if, for example, an employer made an inadvertent error or if just one full-time employee was not offered coverage.

Similarly, the penalty applies only for full-time employees—those working an average of 30 hours a week. No final guidance has been issued, though, on how the penalty would apply for employees whose hours significantly vary week by week or month by month.


In sum, “There is a great need for clarity on various aspects of the law,” said Jane Jensen, a senior consulting actuary with Towers Watson & Co. in Denver.

“Many of the biggest regulatory questions remain unanswered,” said Paul Dennett, senior vp-health care reform with the American Benefits Council in Washington.

Political uncertainties loom as well.

“There still will be efforts to repeal” the law, said Helen Darling, president of the National Business Group on Health in Washington.

The decision has not dampened Republican opposition to the law. Within hours of the Supreme Court ruling, Speaker of the House John Boehner, R-Ohio, renewed his call for health care reform law repeal.

“Today's ruling underscores the urgency of repealing this harmful law in its entirety,” he said in a statement.

Indeed, later this month, the House of Representatives is expected to vote on a measure to repeal the law.

While a repeal bill has no chance of winning Senate approval, potentially that could change after the November elections if Republicans, who now hold 47 seats, gain control of the Senate and Mitt Romney, a supporter of repeal, defeats President Barack Obama. The only other way Republicans could succeed if President Obama is re-elected would be to have veto-proof majorities in both houses.

“The decision to uphold the entire ACA shifts the battlefield from the courts to Congress. The success of ACA opponents will depend largely on the results of the November election cycle,” said Andy Anderson, a partner with Morgan, Lewis & Bockius L.L.P. in Chicago.

“There are two major uncertainties that lay ahead: who will be president and who will control Congress,” added Paul Hackleman, health care and public employer analyst with the International Foundation of Employee Benefit Plans in Burlingame, Calif.


In fact, until the outcomes of the November elections are clear, making accurate predictions about the future of the health care reform law are difficult, if not impossible, some say.

“If you tell me who will be president and which party will control Congress, we can talk about what will be likely to happen,” said J.D. Piro, a senior vp with Aon Hewitt in Norwalk, Conn.

“Other chapters in the political front have yet to be written,” said Dave Guilmette, president of national pharmacy and product for Cigna Corp. in Bloomfield, Conn.