Supreme Court Upholds Part of Affordable Care Act, Strikes Down Medicaid Portion

June 28, 2012 - Today, the United States Supreme Court upheld the constitutionality of a portion of the Patient Protection and Affordable Care Act of 2010 (ACA), in part, while also reversing a portion of ACA.  The Court held that the individual mandate is constitutional; however, as Chief Justice John Roberts noted, it “is not a valid exercise of the Commerce Clause.”  Instead, the Court indicated the individual mandate is constitutional pursuant to Congress’ power to “lay and collect taxes” under the Constitution.  This distinction, important to legal scholars and so-called “ObamaCare” naysayers, should also be important to all Americans, who may face additional taxation in a few years for failure to have health insurance.

The Court ruled with a narrow five to four majority, with Chief Justice John Roberts, along with Justices Stephen Breyer, Ruth Bader Ginsburg, Elena Kagan, and Sonia Sotomayor, finding ACA constitutional.  The dissenting opinions came from Justices Samuel Alito, Anthony Kennedy, Antonin Scalia, and Clarence Thomas, who commented that “the federal government does not have the power to order people to buy health insurance.”

This decision means that Americans must have health insurance or pay a “[s]hared responsibility payment” (otherwise known as a tax/penalty), which will become effective in 2014.  ACA provisions in effect today will remain in effect and additional provisions will become effective on the future dates stated within the law.  Unless legislation is enacted prior to 2014, or unless the upcoming election results in the rewriting of ACA, employers must begin strategizing compliance with these requirements.

Although the individual mandate was upheld, Medicaid expansion was restricted by the Supreme Court’s decision.  The Court ruled that the federal government may not place conditions governing the use of funds when “such conditions take the form of threats to terminate other significant independent grants” or use conditions “as a means of pressuring the States to accept policy changes.”  The Court held that Congress may “offer… funds under the Affordable Care Act to expand the availability of health care,” and “require that States accept[ing] such funds comply with the conditions on their use,” but stated that Congress may not “penalize States that choose not to participate in that new program by taking away their existing Medicaid funding.”

We expect this issue will take many twists and turns prior to the ultimate 2014 individual mandate effective date, especially during the upcoming election season.

Stay tuned to Physicians Independent Management Services, Inc. (PIMS) and our website for updates and further in-depth analysis as it becomes available.

Jessica S. Cohen, Esquire, is In-House Counsel of Physicians Independent Management Services, Inc., specializing in health law.  She can be reached at



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