On June 28, 2012, the United States Supreme Court issued its highly anticipated decision in National Federation of Independent Business v. Sebelius.

The case challenged the constitutionality of two key provisions of the Patient Protection and Affordable Care Act (the “Act”), namely, (1) the individual mandate, which requires most Americans to maintain “minimum essential” health insurance coverage; and (2) the Medicaid expansion, which expands the scope of the Medicaid program and increases the number of individuals the States must cover.
In a 5-4 vote, the Court upheld the individual mandate concluding that it was within Congress’s power under the Taxing Clause. However, the Court struck down the Medicaid expansion holding that it violates the Constitution by threatening States with the loss of their existing Medicaid funding if they decline to comply with the expansion. You can download a full copy of the Supreme Court’s decision by clicking here.
As a practical matter, the Act survives intact, but the Court’s ruling on the Medicaid expansion provision creates a hole in the universal coverage promise that is the foundation of the legislation. While individual States may still voluntarily opt-in to the Medicaid expansion, there is no longer any requirement that they do so. As a result, Congress may be forced to re-evaluate the Act’s individual mandate, the subsidies provided under the law, and the Medicaid financing scheme. With this being an election year, one can be certain that any such re-evaluation will not occur until after this Fall’s elections.
Given the impact that the Act will have upon individuals and businesses alike, we will continue to closely monitor this area of the law. If Twomey Latham can be of any assistance to you on this or any other matter, please do not hesitate to give us a call.