Friday, June 29, 2012

ACA decision: some Friday thoughts

Ok, we’ve all had a day to digest more fully the decision in National Federation of Independent Business v. Sebelius.  Here are some additional questions (and possible answers) that come to mind.

How many dissenting opinions were there?
As we said yesterday, there were two opinions labeled in their entirety as dissents. However, Justice Ginsburg’s opinion of course dissented in part from the judgment, both with respect to the Commerce Clause, and with respect to the Medicaid expansion.
What’s the immediate impact of the decision on employers?
“Since the Supreme Court found the entire healthcare law constitutional, it should now be ‘business as usual’ from an employer’s standpoint,” according to Benjamin Lupin, director of compliance for Corporate Synergies Group, LLC. However, what that actually means can vary, depending on whether the employer has been taking an active role in complying with the law through 2011 and 2012. For those who have, “there shouldn't be much to be concerned with based upon the Court's ruling,” he said. “If, however, an employer was waiting for the Court’s decision before taking the actions needed to comply with the law, the time is now to ‘get into gear’ and think about 2012 requirements and the approaching 2013 and 2014 requirements.”

“For 2012, this means that employers will need to make sure that they are issuing summaries of benefits and coverage (SBCs) after September of 2012 and continuing to gather information to report on 2012 W-2s,” he explained. “Employers will also need to make sure their ERISA plan documents are in order. In addition, contributions to FSA accounts will be limited to $2,500 in 2013, and employers will need to prepare for the upcoming release of the state exchanges for review in 2013 and implementation in 2014, and will need to decide whether or not they will ‘pay or play’ moving forward.”

Lupin also cautions that although the ruling permits actions to continue (or begin) to be taken by employers to become compliant with the ACA, “we are still in the early stages of the implementation of this law.” The November election results and future regulations implementing the law will continue to give employers much to think about and plan for during the next several years. “Since we now know that the law is constitutional, it becomes vital for all employers to ensure compliance with the law,” he advised. “There are sure to be audits by the government to make sure that the law is being followed (and to raise revenue) and no employer wants to end up on the front page because of a failure to comply with the law.”

Are you still struggling to understand the Court’s discussion of the Medicaid expansion issue?
Here's a good explanation, courtesy of our colleagues at
“[T]he issue at hand was whether Congress exceeded its authority to require states to expand their Medicaid coverage to qualifying individuals as defined by PPACA. Specifically, by 2014, states would have to cover all individuals under the age of 65 with income below 133 percent of the federal poverty limit. Furthermore, everyone with Medicaid coverage would be entitled to an essential health benefit package.

“The federal government would cover 100 percent of the costs of this expansion through 2016; after that, federal assistance would gradually decrease until it reached 90 percent. Compliance with this expansion was governed by funding; states that chose not to expand their Medicaid rolls would obviously not receive the funding for expansion and would lose their former funding, forcing them to fund their Medicaid program on their own.

“In March, the states argued that this requirement exceeds Congress’s authority under the Spending Clause which grants Congress the power to pay the debts and provide for the general welfare of the states. This allows Congress to grant funds to the states and impose appropriate conditions on those funds to ensure they are properly spent.

“Previous Supreme Court cases have limited this power, however, typically when the Court has found that the program commandeers a State’s legislation or administration for a federal purpose or when Congress is using financial incentives to exert power that could be seen as undue influence. State officials must be responsible for deciding to accept or refuse federal funding without being forced.

“In this case, the Supreme Court found that Congress cannot threaten to terminate other significant independent grants of money (the original Medicaid funding) as a means of pressuring states to accept a policy change (the expansion of Medicaid). Specifically, the termination of all Medicaid funding was not “relatively mild encouragement” to expand a state Medicaid program to meet the needs of an entire population. States must be free to decline participation in the new program without losing their current level of funding.

“Furthermore, Congress can offer new funds under PPACA to expand availability, but they cannot withdraw any existing funding. Although Congress assumed that all states would participate in the expanded program, the Supreme Court found that even if they did not, the expanded coverage program can continue on a state by state basis. Failure of all the states to participate does not invalidate the entire portion of PPACA.”

How do you reconcile the Court’s characterization of the mandate as a “tax” with its decision that the Anti-Injunction Act, which prevents premature judicial review of the “collection of any tax” did not prevent the Court from hearing the case at this time?
Well, the dissenters don’t think you can: “Having found that [the mandate] is not [an exercise of Congress’s taxing power], we have no difficulty in deciding that these suits” are not precluded by the Anti-Injunction Act.
In his opinion, the Chief Justice states: “The Affordable Care Act does not require that the penalty for failing to comply with the individual mandate be treated as a tax for purposes of the Anti-Injunction Act. The Anti-Injunction Act therefore does not apply to this suit, and we may proceed to the merits.”
What’s the best rebuttal to the “if they can make you buy insurance, they can make you buy broccoli” argument?
We offer no definitive answers, but instead leave you with this one example, which comes to us courtesy of Justice Ginsburg’s opinion, who cross-references to this quote from Robert Bork: “Judges and lawyers live on the slippery slope of analogies; they are not supposed to ski it to the bottom.”



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