Affordable Care Act upheld

The Supreme Court says the health system reform law is constitutional but effectively gives individual states the ability to opt out of the Medicaid expansion.

By , — Posted June 28, 2012

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The U.S. Supreme Court has deemed the Affordable Care Act constitutional in a much-anticipated ruling that preserves the signature legislative achievement of President Obama’s first term.

In a 5-4 decision issued on June 28, the court said the federal government’s power to tax people means it is within its rights to require that as part of the law, nearly all Americans must obtain health insurance by 2014 or pay a tax penalty. The individual mandate had been the primary target of states and small businesses suing to have the law invalidated.

Chief Justice John Roberts Jr. joined the four more liberal justices — Stephen Breyer, Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor — in upholding the ACA.

The court held that the law was not constitutional under Congress’ ability to regulate interstate commerce, which was the primary argument of the Obama administration. But the court said it was valid under Congress’ taxation powers, which was one of the alternative arguments offered by the administration.

“Our precedent demonstrates that Congress had the power to impose [the individual mandate] under the taxing power, and that [the provision] need not be read to do more than impose a tax. That is sufficient to sustain it,” the majority justices wrote in their opinion. They said the law gave individuals the choice of obtaining health insurance and forgoing the tax, or refusing to obtain insurance and paying the tax.

The dissenting justices — Samuel Alito Jr., Anthony Kennedy, Antonin Scalia and Clarence Thomas — insisted that Congress had overstepped its bounds when it approved the coverage mandate. They rejected not only the argument that lawmakers had the power to do so under the Commerce Clause, but also under its taxation power. They said the mandate involves a penalty for refusing to engage in commercial activity, not a tax.

“Against the mountain of evidence that the minimum coverage requirement is what the statute calls it — a re­quirement — and that the penalty for its violation is what the statute calls it — a penalty — the [administration] brings forward the flimsiest of indications to the contrary,” the justices wrote in their dissent. They later added that “to say that the individual man­date merely imposes a tax is not to interpret the statute but to rewrite it.”

The act also survived a constitutional challenge based on the law’s expansion of Medicaid, a provision that opponents said amounted to federal coercion of states. The court’s opinion rejected that argument, but it stipulated that the federal government cannot withhold all Medicaid funding to states that refuse to go along with the program’s expansion of coverage of everyone up to 133% of the federal poverty level.

“Nothing in our opinion precludes Congress from offering funds under the Affordable Care Act to expand the availa­bility of health care, and requiring that states accepting such funds comply with the conditions on their use,” Roberts wrote in his portion of the opinion. “What Congress is not free to do is to penalize states that choose not to participate in that new program by taking away their existing Medicaid funding.”

The ruling caps more than two years of heated national debate about whether the Affordable Care Act is constitutional, during which dozens of lawsuits were filed against the measure, including a complaint by 26 states that made it all the way to the high court.

In the lead-up to the high court action, appeals and district courts across the nation issued mixed opinions as to whether the law should stand. Starting March 26, the Supreme Court held a marathon three days of oral arguments on the legal challenges. Justices had the option of upholding the law in its entirety, invalidating part or all of the statute, or effectively postponing a final determination by ruling that the plaintiffs could not challenge the law until after it took full effect in 2014.

Supporters of the ACA, including the American Medical Association, applauded the court’s ruling.

The AMA “has long supported health insurance coverage for all, and we are pleased that this decision means millions of Americans can look forward to the coverage they need to get healthy and stay healthy,” AMA President Jeremy A. Lazarus, MD, said in a statement. “The AMA remains committed to working on behalf of America’s physicians and patients to ensure the law continues to be implemented in ways that support and incentivize better health outcomes and improve the nation’s health care system.”

The decision arrives in the thick of the 2012 presidential election cycle and is seen by many as a major victory for Obama, but it also is expected to mobilize Republican opponents of the statute to redouble their efforts at repealing it.

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