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Special Health Care Reform Memo: June 28, 2012

Deloitte Center for Health Solutions publication

Supreme Court rulings on ACA

The health care reform memos are issued on a weekly basis, highlighting news from the previous week's activities in the administration and implications for the C-suite and various stakeholder groups.

Breaking news

At 10:10am ET, the Supreme Court handed down its rulings on the four legal challenges to the Affordable Care Act (ACA) finding in favor of defendants, Sebelius et al., in the case of National Federation of Independent Business et al. v. Sebelius et al. on the central issue of the individual mandate and upholding the balance of the law with the exception of federal power to terminate states’ Medicaid funding. The majority of the Court decided that the Anti-Injunction Act (AIA) did not apply; the Court did not vote on the question of severability because the mandate was upheld. The challenge to the federal government’s power to require a minimum Medicaid eligibility for the states at 133 percent of the federal poverty level was limited but not invalidated; the Court ruled that states have a choice to participate in the expansion since federal government does not have the power to revoke existing Medicaid funds if a state chooses not to participate.

Challenge Court Decision Comment
Is the individual mandate a violation of the Commerce Clause of the U.S. Constitution? Violation of the Commerce Clause The Court holds that the mandate violates the Commerce Clause. However, the individual mandate was upheld as within Congress’s power to lay and collect taxes.
Is the individual mandate a tax or penalty? Does the AIA apply? Mandate “functions as a tax”, but AIA does not apply The Court holds that the AIA does not apply, because the ACA does not require that the penalty for failing to comply with the individual mandate be treated as a tax for purposes of the AIA.
Is the individual mandate severable from the rest of the law? Is the entire law unconstitutional as a result of the centricity of the individual mandate to every other element?
Not applicable The Court does not reach severability issues, having upheld the mandate.
Does the federal government have the right to impose a minimum threshold of 133% of the federal poverty level for Medicaid eligibility? Is this a usurpation of states’ rights by the federal government? Constitutional, but without penalty to states for non-participation States have a choice about whether to participate in the expansion of eligibility and the Federal government does not have the power to terminate states' Medicaid funds if states do not participate (they can continue to receive funds for the rest of the program).

The Deloitte Center for Health Solutions will publish a special edition Monday Memo tomorrow (Friday 6/29) with more analysis of the rulings, and implications for industry and policymakers.

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Special edition Dbrief webcast

Today the Supreme Court ruled on the Affordable Care Act. What are the likely impacts for businesses and governments? Learn from the Deloitte Center for Health Solutions about what may result from the Supreme Court ruling and explore your options for moving ahead with health care reform.


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