This is the last of our three part series on the Affordable Care Act (“ACA” or “Act”), commonly known as “ObamaCare.” This post discusses upcoming requirements under the ACA and judicial decisions that have impacted or may impact future requirements of the Act.
As we previously reported, the Employer Mandate for employers with 100 or more full-time employees became effective on January 1, 2015. The Employer Mandate will also go into effect for employers with 50 to 99 full-time employees as of January 1, 2016.
Judicial Challenges to the ACA
To date, opponents of the ACA have made a number of legal challenges to the Act, which have made their way to the United States Supreme Court. Those cases are discussed below.
NIFIB v. Seleblius
The first significant challenge to the ACA was National Federation of Independent Business v. Seleblius, in which the NIFIB challenged the constitutionality of the individual mandate under the ACA (which requires most Americans obtain health insurance or pay a tax penalty) and the expansion of Medicaid programs (which required State Medicaid programs cover most individuals below 133% of the federal poverty level or lose their federal funding).
On June 28, 2012, the Court upheld the majority of the ACA in a 5-4 decision. Specifically, the Court affirmed Congress’ power to enact the individual mandate, finding that although the individual mandate was not authorized under the Commerce Clause (which grants Congress the power to regulate interstate commerce), was a proper exercise of Congress’ power under the Taxing and Spending Clause (which grants Congress the power to levy taxes and spend federal funds). On the challenge to the Medicaid programs, the Court found that the Medicaid expansion violated the Constitution by threatening States with the loss of their existing Medicaid funding if they did not comply with the expansion. A copy of the full opinion can be found here.
Burwell v. Hobby Lobby
In June 2014, the Supreme Court tackled another major issue arising from the ACA – whether closely-held corporations with religious owners could be required to pay for insurance coverage of contraception under the Act, when contraception conflicted with the owners genuinely held religious beliefs. In a closely divided opinion, the Court ruled that in such circumstances, closely-held corporations could not be required to pay for contraception under the ACA. The “Hobby Lobby” decision, named for the chain of stores that initiated the action, has been said to constrict the ACA and expand the right of some corporations to be treated more like people with a wide range of constitutional protections.
King v. Burwell
Currently, the greatest challenge to the ACA comes in King v. Burwell, otherwise known as the Obamacare subsidy lawsuit, where the plaintiffs challenge the ACA subsidies issued by the IRS in States that use the federal exchange (www.HealthCare.gov) to offer health insurance rather than their own State-run exchanges.
The challenge in King v. Burwell is based on 3 specific sections of the ACA – Section 1311, Section 1321, and Section 1401 – none of which expressly provide that individuals using the federal exchange, as opposed to a State exchange, are entitled to the federal tax subsidy. As a result, the IRS issued a clarification and confirmed that the ACA provides tax credits to taxpayers who obtain coverage through a State exchange, regional exchange, subsidiary exchange, and the federally-facilitated exchange. The King Plaintiffs, therefore, essentially argue that the subsidy provision of the ACA was intended to pressure the States into setting up exchanges, but when it became clear that the States would reject exchanges, the IRS and federal government claimed the intention always was for the IRS to issue subsidies to those using federal exchanges even though such subsidies are allegedly not authorized by the ACA.
The Supreme Court heard oral argument in this case on March 4, 2015 and is expected to issue its decision by mid-June. The challengers reportedly hope that a ruling in the favor would dismantle the ACA by causing its financial collapse. Because only 13 States have created exchanges, the majority of individuals that obtain health insurance through an exchange do so through the federal exchange. Without subsidies, individuals obtaining insurance through the federal exchange might be unable to purchase insurance, resulting in lower enrollment, and thus, less healthy people paying insurance premiums that offset the increased insurance coverage required under the ACA.
The Court’s decision could also open the door for regulatory agencies, Congress, and future lawsuits to have more freedom in interpreting laws with vague wording. Look for our next blog post on the Court’s decision in King v. Burwell sometime this summer.