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Affordable Care Act case wraps up in Supreme Court

Wednesday March 28, 2012
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The Supreme Court on Wednesday concluded the landmark case on the legality of the Affordable Care Act, hearing two sets of arguments.

The morning session focused on whether the entire law would have to be overturned if the court rules the individual mandate unconstitutional, while the afternoon included a discussion of whether the federal governmentís requirement for states to significantly expand Medicaid eligibility is permissible.

The lawyer for the 26 states and National Federation of Independent Business, which are challenging the ACA, said the entire law should go without the mandate.

The lawyer for the Obama administration said key provisions, including rules barring insurance companies from denying coverage to those with preexisting conditions or imposing higher premiums on those with worse health histories, would be untenable without the mandate. Unless almost everyone has to buy insurance, the argument went, people would wait until they get sick or injured to obtain coverage and would skew premiums for everybody else.

However, the administration contended, the rest of the law should stand without the mandate. The ACA contains numerous other regulations.

For example, it requires insurance companies to waive co-pays and deductibles for various tests and screenings to encourage a preventive approach to healthcare, and allows young adults to stay on their parentsí insurance plans until age 26. It requires businesses with more than 50 employees to provide affordable coverage, and creates new instruments such as Accountable Care Organizations and Patient-Centered Medical Homes.

Key questions

Hospital groups have filed briefs with the court indicating the ACA would not be sustainable if it remains as currently written but without the mandate. The law includes more than $150 billion in cuts to Medicare and Medicaid provider payments, which would represent a severe financial blow without the mandate in place.

Another issue would be whether the state insurance exchanges, scheduled for implementation in 2014, should remain without the mandate. The exchanges might not be financially stable without a large pool of healthy people in the mix. States thus might back off implementation, forcing the federal government to take over the process. Or the policies in the exchange might deny coverage to people with preexisting conditions, thus essentially maintaining the status quo.

Justice Anthony Kennedy expressed concern that leaving the rest of the law standing would "impose a risk on insurance companies that Congress had never intended," thus perhaps representing an excess of judicial power, according to a transcript of the hearing.

The liberal-leaning justices sounded more sympathetic to leaving the remainder of the law intact. "Itís a choice between a wrecking operation ... or a salvage job," Justice Ruth Bader Ginsburg said. "And the more conservative approach would be salvage rather than throwing out everything."

Medicaid expansion

As a way to make health insurance available to more people, the ACA calls for a major change in Medicaid eligibility. Beginning in 2014, states would have to cover all individuals younger than 65 with incomes of no more than 133% of federal poverty. The federal government will cover the cost of the expansion through 2016, but thereafter states would have to cover 5% of the additional costs. That number rises to 10% by the end of the decade.

The influx of up to 16 million new Medicaid patients would pose a challenge to the healthcare industry, medical groups have said, because of looming shortages of clinicians in areas of practice, such as pediatrics, that would receive many of the new patients.

As with other arguments this week, the court seemed divided along political lines. The justices indicated their decision on this issue could affect the federal governmentís authority to set long-term policy goals applying to states in areas such as education and the environment.

Court timeline

The justices will meet privately Friday to discuss the arguments and take a secret preliminary vote, according to a Reuters report. They will then begin preparing written opinions to be released sometime before the courtís 2011-12 term ends in late June.

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