U.S. Supreme Court Upholds PPACA Mandate As A ‘Tax’

By  //  June 28, 2012

Healthcare Policy

(VIDEO: By PBSNewsHour)

BREVARD COUNTY–The anticipation of the U.S. Supreme Court (SCOTUS) ruling on the constitutionality of the Patient Protection and Affordable Care Act (PPACA also called  Obamacare) came to an end this morning when the high court, by a 5-4 decision, upheld the law, elements of which had been ruled by lower courts to be unconstitutional.

Today's landmark SCOTUS decision to uphold the mandate as a tax will impact the provision of healthcare and health insurance in America for decades to come. (Shutterstock Image)

With one sixth of the U.S. economy, and care and coverage for tens of millions of Americans affected, this landmark SCOTUS decision will impact the provision of healthcare and health insurance in America for decades to come.

Justice Roberts Surprisingly Issues Deciding Vote To Uphold

The deciding vote to uphold the law’s controversial individual mandate was issued by conservative Chief Justice John Roberts, a George W. Bush nominee, with the Court concluding that the mandate was constitutional when interpreted as a form of tax.

Other justices voting in favor of the mandate were Justices Ruth Bader Ginsburg, Stephen Breyer, Sonya Sotomayor, and Elena Kagan, with Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas, and Samuel Alito dissenting and concluding that the entire health reform law should have been struck down.

Chief Justice Roberts (official photo)

According to Roberts’ majority opinion in the 193-page National Federation of Independent Business (NFIB) v. Sebelius ruling, the PPACA’s “requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax,” and therefore falls under Congress’ taxing power.

It is notable that SCOTUS’ stance that the law’s requirement that everyone have insurance is a tax was not included in any of the lower court rulings, and that both the Obama administration and the NFIB and 26 states involved in the suit against the federal government argued that the mandate is a penalty, not a tax.

Limitations Placed On Medicaid Provision

Although the mandate was characterized as a tax and essentially upheld as constitutional, the Court did elect to put some limitation on the provisions related to planned Medicaid expansion.

PPACA provision for HHS to have the authority to terminate all state medicaid funding for non-compliance of the law's changes was struck down.

Under the PPACA, the federal government proposed a major Medicaid eligibility expansion, which included new Medicaid funds for states that expanded coverage to adults with incomes of up to 133% of the federal poverty level beginning in 2014. According to the Court, the government can terminate the PPACA’s new Medicaid funds when states refuse to comply with the law’s new provisions.

However, the court struck down the provision that would have given the Secretary of Health and Human Services (HHS) the authority to terminate all state Medicaid funding for states that refused to fully comply with the law’s changes, which were thought by most states to be too onerous and a significant threat to their financial stability.

For an hour-by-hour update on today’s ruling and  reaction to it, go to MedPageToday Washington Watch.