Published 4/1/2011
Ashlen Anderson

The future of the healthcare reform law

By Ashlen Anderson

States take constitutionality of PPACA to the courts

Following the enactment of the Patient Protection and Affordable Care Act (PPACA), 28 states filed lawsuits in federal court challenging the constitutionality of the law (Fig. 1). Although many of the lawsuits were thrown out of court for various procedural issues, three district court judges have now ruled that the law is constitutional and two others have ruled it unconstitutional.

The individual mandate
Congress expressly stated that its authority to enact the individual mandate provision came under its power to regulate interstate commerce. Most of the lawsuits challenge that provision, claiming that Congress does not have authority to regulate economic inactivity under the commerce clause. In other words, Congress may be able to regulate the purchase of health insurance, but not the failure to purchase insurance.

The three judges who found the law to be constitutional offered similar reasoning. Essentially, they agreed with the federal government that an individual who fails to purchase health insurance is not choosing to pay for his or her personal health care out-of-pocket, but is deciding to shift the cost of that care to other payers in the market.

The government’s argument is that, without the individual mandate, a system exists in which people have incentives to pass on the burden of their healthcare expenses to those who have prepaid for insurance. This argument rests on the assumption that everyone, at some point in their lifetimes, will need health care that they cannot afford to pay for out-of-pocket.

The first judge to rule the law unconstitutional focused on the individual mandate provision and did not discuss the other parts of the law. This practice is referred to as “severing” the problematic provision from the rest of the law. Congress, however, failed to include a severability clause in the language of the statute, which could be interpreted as meaning that the constitutionality of any part of the law would affect the entire law.

The omission of a severability clause was the basis of a subsequent ruling in Florida. In this case, the entire law was deemed unconstitutional on the grounds that the individual mandate was unconstitutional and could not be severed from the rest of the law. Earlier this year, however, the judge who wrote the opinion issued a follow-up opinion directing governments to continue to uphold the PPACA until the U.S. Supreme Court has an opportunity to rule on the legitimacy of the law.

What’s next?
To date, all of the decisions have come at the district court level, which means that appeals still have to be decided in the circuit courts (federal appellate courts) before the case can come before the Supreme Court. Interestingly, two of the decisions—one upholding the law and one deeming it unconstitutional—came from different district courts in Virginia. This means that both appeals will be heard by the Fourth Circuit Court of Appeals, located in Richmond, Va., which has jurisdiction over federal courts in Maryland, Virginia, West Virginia, North Carolina, and South Carolina. Oral arguments on both appeals are scheduled for May.

States are reacting differently to the recent rulings. Many of the 26 states that were part of the Florida lawsuit have expressed their intent to refrain from implementing any part of the law. These states are concerned about putting resources into developing systems that would become moot if the Supreme Court strikes down the law.

Most states, however, are continuing efforts to implement PPACA and meet its statutorily imposed deadlines. For example, if states do not have health insurance exchanges in place by Jan. 1, 2013, the federal government can step in and develop the exchanges for them.

When the case comes before the U.S. Supreme Court, the Court may exercise several options. It may agree that only the individual mandate is unconstitutional—severing the provision from the rest of the law. In that case, all of the requirements imposed on insurance companies (such as the prohibition on denying claims for pre-existing conditions or the requirement to insure children until age 26) would still stand. Or, the Court might uphold the entire law, giving advocates the opportunity to modify different parts of it legislatively. If, however, the Court declares the entire law unconstitutional, policymakers will begin the reform process again.

Ashlen Anderson is the manager of state legislative affairs in the AAOS office of government relations. She can be reached at aanderson@aaos.org

One year later: Has anything changed?

It’s been a year since President Barack Obama signed the Patient Protection and Affordable Care Act (PPACA) into law. Although some provisions of the law went into effect immediately, others are still years away from implementation.

Provisions that are in effect include the following:

  1. Children with pre-existing conditions cannot be denied coverage.
  2. Insurers cannot impose lifetime caps on coverage.
  3. Group health plans and individual coverage plans must provide coverage for preventive services with no deductible.
  4. Young people can stay on their parents’ policies until age 26.
  5. Medicare beneficiaries whose initial prescription drug benefits run out are eligible for a $250 rebate.
  6. The nation—like Congress—remains divided on the bill. The most recent (March 2011) poll by the Kaiser Family Foundation finds that 42 percent of Americans hold a favorable view of the law while 46 percent view it unfavorably. This is an almost complete turnaround from April 2010, when, immediately after passage, 46 percent viewed it favorably and 40 percent viewed it unfavorably.

Other divisons are also notable. Polls have shown that Americans like the idea of state flexibility, provided that the plans offered are of equal quality and cover just as many people, but are opposed to the idea of defunding health reform. When it comes to views on personal medical care, about half of Democrats say it will improve their medical care or leave it unchanged. About 6 in 10 Republicans say the law will worsen their medical care, while nearly half of independents agree.