The Patient Protection and Affordable Care Act was signed into law in 2010, and upheld by the U.S. Supreme Court on June 28, 2012. With its decision, the court ruled that the federal government is authorized to require all Americans to buy health insurance or pay a penalty.

On behalf of APHA, the National Health Law Program and the Network for Public Health Law provided an explanation of the verdict and its implications for Medicaid — in both technical definitions and understandable terminology.

“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. 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.” — U.S. Supreme Court ruling

Explanation

The memo first described the crux of the National Federation of Independent Business v. Sebelius decision, which dealt with the health reform law’s minimum coverage provision, known as  the “individual mandate,” and Medicaid expansion. The minimum coverage provision requires most Americans who can afford insurance to purchase it or pay a small penalty.

Additionally, the Affordable Care Act expands Medicaid coverage to individuals with incomes below roughly 133 percent of the federal poverty level, which is $30,675 for a family of four in 2012. Authors explain the court’s two chief holdings:

  • the individual mandate is a valid exercise of Congress’ taxing power; and
  • the Medicaid expansion remains part of the Affordable Care Act, but the federal government cannot terminate existing federal Medicaid funding to states that refuse to participate.

The court’s decision consisted of a series of rulings, as the memo outlines on page 9 in a helpful table. The court voted 5-4 that the individual mandate was constitutional since precedence — like federal taxes on tobacco products — has granted Congress taxing power to both affect individual conduct and raise revenue. The Medicaid decision amounted to a compromise of state and federal power: while the court ruled 7-2 that the expansion and states’ potential penalty for not participating was beyond Congress’ authority, it also voted 5-4 to maintain the Affordable Care Act and its Medicaid provisions while simply removing federal influence to enforce the expansion.

“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,” the ruling stated. “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.”

Implications

The memo clarifies that the Medicaid expansion is favorable for both state budgets and overall American health for obvious reasons:

  • the federal government will pay 100 percent of Medicaid expansion costs for three years to newly eligible beneficiaries, and 90 percent over time. On average, federal funding for existing Medicaid services is 57 percent; and
  • if states do not implement Medicaid expansion, many Americans with incomes below 100 percent of the federal poverty line — $23,050 for a family of four in 2012 — will be left uninsured.

Five states have expressed their intentions of refusing the Medicaid expansion, which the court’s ruling allows. Ten states plus the District of Columbia have expressed their intentions to go forward with the expansion, and many more have not yet stated their intentions. Numerous questions remain about the implications of this decision, and the new memo provides some initial analysis of them while everyone waits for official guidance from the U.S. Department of Health and Human Services.

Although the court’s decision means the health reform law’s many public health provisions — including the Prevention and Public Health Fund — are constitutional and may continue to be implemented, the ruling does not mean that Congress will stop attacking them.  The Prevention Fund was intended to receive $15 billion over the first 10 years for community-based prevention programs, but it was slashed by one-third in February and Congress has continued to attack it since — both before and after the court’s ruling — despite evidence of the health and economic benefits of prevention. The paper states that “regardless of which party controls Congress or the White House, federal public health sources are likely to be threatened.”

Visit APHA’s all-access “Supreme Court Decision” page for frequently asked questions, a July 5 webinar featuring notable public health panelists and numerous resources clarifying the ruling and its effect on American wellness.

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