Last week, the United States Supreme Court heard oral arguments on the constitutionality of the Patient Protection and Affordable Care Act (PPACA). Call it an employee benefits version of "March Madness." The arguments were heard over 3 days and while the media generally reported that the "individual mandate" was the key argument, there were actually 4 separate issues being argued. I will attempt to summarize them below, but without betting on the outcome of any particular argument.
"Does the Anti-Injunction Act Bar the Challenge?"
The Anti-Injunction Act precludes the court from hearing challenges to assessments or collection of taxes before they actually go into effect. The Court itself was concerned about whether or not it even had the ability to hear this case before the 2014 penalties and assessments went into effect. Since both the White House and opponents of PPACA are anxious to have this case decided, both sides argued that the Anti-Injunction Act does not apply. The Supreme Court actually appointed an independent lawyer to argue that the Act did apply so that the Court could be certain it heard full argument on the issue. So day one involved an argument about whether or not the case was "ripe" for consideration before the mandate and tax go into effect.
"Is the Individual Mandate Constitutional?"
Day two saw the challenge and defense of the individual mandate. The White House argued that the individual mandate regulates the national health insurance market which is permitted because the Constitution gives Congress the power to regulate interstate commerce, because Congress can tax under the "General Welfare Clause," and Congress can do what is "Necessary and Proper" to carry out its ability to regulate interstate commerce. Opponents argued that the mandate does not actually regulate commerce but instead forces buyers into the commerce stream. Therefore, PPACA does not regulate commerce but rather forces people to engage in commerce.
"Is the Individual Mandate Severable?"
Day three saw arguments related to whether the individual mandate could be separated from the other provisions of PPACA. To hear this argument, the Court had to presume the mandate was unconstitutional and then looked to see what, if any, part of PPACA might survive. Opponents argued that if the mandate falls, the whole act must fall, while the White House argued that many other new rules should remain. Day three also brought arguments related to the constitutionality of the expansion of Medicaid, with states arguing the required expansion (which makes them extend Medicaid to more participants in order to get federal funding) was unconstitutional "coercion" by the Federal government. The White House argued that the "Spending Clause" of the constitution means Washington can set whatever rules it wants for states to get federal funds.
Despite everyone saying they know, nobody really knows how the Court will rule. It is anticipated that a decision will be issued before the end of the current Court term, which is in June of this year. Regardless of the outcome, the decision will have significant impact on employers, insurers and plans. However, because compliance is still required until a ruling is issued, and may still be required after a decision is issued, employers and plan sponsors should continue to prepare for compliance and not gamble on the outcome.