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Washington Highlights

Supreme Court Upholds Affordable Care Act

June 29, 2012—In a 5 to 4 decision, the U.S. Supreme Court June 28 declared the individual mandate of the Affordable Care Act [ACA, P.L. 111-148 and P.L. 111-152] constitutional.  The majority decision, drafted by Chief Justice John Roberts, held that the individual mandate is constitutional as an exercise of Congress’s taxing power. The Court also ruled, however, that the federal government cannot withdraw all Medicaid support for states that opt not to participate in the ACA’s required Medicaid expansion. 

Although the ACA defined the individual mandate penalty as a “shared responsibility payment” rather than as a “tax,” the Court found it “looks like a tax in many respects” – for example, it is paid into the Treasury by taxpayers when they file their tax returns, it is enforced by the Internal Revenue Service (IRS), and it will be determined “by such familiar factors as taxable income, number of dependents, and joint filing status.”  Because of this holding, the Court did not need to reach the severability question, or whether the entire statute would fall if the individual mandate was determined unconstitutional.

In a statement issued after release of the decision, AAMC President and CEO Darrell G. Kirch, M.D., said, “The AAMC is extremely pleased that the Supreme Court has upheld virtually all of the Affordable Care Act (ACA).  This law is an important step toward an improved health care system that gives all Americans access to the care they need when they need it.”  Dr. Kirch added, “With 32 million newly insured Americans entering the health care system, addressing the nation’s physician shortage—projected to climb to more than 90,000 by 2020—is now more critical than ever,” and urged Congress “to move quickly to provide more federal support for additional doctor training to ensure that Americans have access to care—not just an insurance card.” 

A majority of the Court held that the individual mandate was not constitutional under the Commerce Clause of the Constitution (stating that “the Framers gave Congress the power to regulate commerce, not to compel it”), but this holding does not prevent the mandate from being constitutional as a tax.

The Court also ruled that the ACA’s Medicaid expansion provisions are constitutional, but the penalty for a state’s failure to expand is not.  Under the ACA, states were given federal subsidies and required to accept an expansion in Medicaid recipient eligibility (to cover all individuals under age 65 with incomes below 133 percent of the federal poverty level) and a minimum benefits package or lose all of its existing Medicaid funding. The Court ruled that Congress can offer states the option to accept expansion under the ACA but cannot put their existing Medicaid funding at risk. Congress’s extension of Medicaid remains available to any state that chooses to participate.

Justices Elena Kagan, Ruth Bader Ginsburg, Stephen Breyer, and Sonia Sotomayor joined the chief justice in the decision to uphold the mandate.  Justice Roberts also wrote the majority decision to limit the government’s ability to penalize states for not participating in Medicaid expansion.  Justice Ginsburg wrote a concurring opinion and was joined by Justice Sotomayor and joined in part by Justices Breyer and Kagan.  Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas, and Samuel Alito wrote a dissenting opinion, and Justice Thomas wrote a separate short dissent.

Less than an hour after the decision was released, House Majority Leader Eric Cantor (R-Va.) announced the House will vote on a full repeal of the health care law July 11.

Contact:

Lori K. Mihalich-Levin, J.D.
Director, AAMC Health Care Affairs
Telephone: 202-828-0599
E-mail: lmlevin@aamc.org

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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.


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Dave Moore
Senior Director, Government Relations
Telephone: 202-828-0559
E-mail: dbmoore@aamc.org