What’s to come from the recent Supreme Court decision on Healthcare Reform?


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Bruce-HowellI am writing this piece on the plane coming back from the American Bar Association’s Health Law Section presentation on the United States Supreme Court’s decision in NFIB v. Sibelius, commonly known as the “healthcare reform” cases.

While you might expect our panel of lawyers to revel in the fine analysis of the decision, the more interesting discussion centers around the practical effects of the Patient Protection and Affordable Care Act of 2010 (“PPACA”) now that it is the law of the land, and will stay so unless there are massive changes in the control of the federal government in the next election.

First, Washington is ahead of the curve with the formation of its insurance exchange over the past couple of years. There will be issues with those states that opt not to have such an exchange. As of today, only 14 states have created exchanges or have authority to do so, and 15 more states have said that they will not do so. This leaves the exchanges in the latter states up to the federal government to create. And, due to some wording in PPACA, there may not be authority for a federal exchange to employ the system of tax credits that help to fund the exchanges. Legal battles are being mounted.

Secondly, the reaction to the provisions of PPACA as of recent comes from employers who have not provided insurance to their employees. As you will remember, if an employer has more than 50 “full time equivalent” employees, the choice is to provide insurance or pay a “tax” of $2,000 per employee on an annual basis. Since this requirement goes into effect on January 1, 2014, employers are putting their strategies into place now.

Finally, the striking down of the Medicaid “cram down” provision of PPACA has created precedent for states to challenge Federal programs, not just the Medicaid program. Educational, health and other programs that require the states to participate will potentially be the subject of resistance by the states that do not want to participate. The problem is that the Supreme Court deemed the Medicaid “cram down” in PPACA to be coercive without providing any guidance as to what is or is not coercive for future cases. In the prior case of South Dakota v. Dole, the Supreme Court let stand the requirement in the Federal Highway Safety Act that all states raise their drinking age to 21 without deeming such a requirement to be coercive. The rationale in the healthcare reform case that distinguished South Dakota is that the federal funds in that state were only 0.5 percent of its overall budget while, with respect to Medicaid, the number is closer to 10 percent. Where the truth lies in the middle has not been articulated.

There are many steps to be taken for the full implementation of PPACA, which stretches to 2018. Amendments, challenges and changes will be made and interpretive regulations will be promulgated. What PPACA will look like in a couple of years is hard to predict. However, one thing is for certain – the American healthcare landscape has been changed forever.

Bruce Howell is an attorney in the Portland office of the law firm Schwabe, Williamson & Wyatt, where he focuses his practice on health care law. He can be reached at (503) 796-2997 or at bhowell@schwabe.com.  

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