Amanda SchippKevin Woodhouse

Editor’s Note: The 2012 Indiana CEO Survey shows that corporate executives continue to express concern regarding health insurance expenses and the uncertainty surrounding the Patient Protection and Affordable Care Act. However, some clarity should come soon as a decision from the United States Supreme Court is expected this month on the constitutionality of the act. The following opinion piece was provided by Amanda Schipp and Kevin Woodhouse, attorney and partner, respectively, with Ice Miller LP’s Health Care Practice Group and appeared on the Inside Edge e-newsletter.

After months of litigation, in March 2012, the Court heard a historic three days of oral argument addressing the following four issues: (1) the proper timing of the appeal under the Anti-Injunction Act; (2) the constitutionality of the provision requiring almost every individual in the United States, beginning in 2014, to maintain minimum health insurance coverage (the Individual Mandate); (3) the severability of the Individual Mandate from the rest of the Act should it be held unconstitutional; and (4) the constitutionality of the Medicaid expansion.

Perhaps, the most significant and contentious of the provisions is the Individual Mandate, under which a penalty can be assessed for every month in which certain required minimum health care coverage is not maintained. The Act’s challengers, which include 26 states, four individuals and the National Federation of Independent Business (collectively, the Petitioners) argued to the Court that the Individual Mandate is not a valid exercise of Congress’ legislative powers. Specifically, the Petitioners argued that the Act exceeds the bounds of the Commerce Clause, as it attempts to regulate the health care market by requiring participation in a separate insurance market. The Government defended the action on the grounds that the two markets are interconnected, explaining that uninsured participation in health care market causes cost shifting and significant distortion in the insurance market.

Some of the justices expressed concern that the Individual Mandate “changes the relationship of the federal government to the individual in a very fundamental way” as it imposes an affirmative duty upon the individual to participate in commerce. Ultimately, the Court’s decision may depend on whether the Government was able to convince the Court that the Individual Mandate would not lead to a slippery slope of a federal government with unlimited power to regulate individual conduct, or as many pundits have posited, a federal government that can require everyone to buy broccoli.

In the event that the Individual Mandate is found to be unconstitutional, the Court will need to decide whether the rest of the Act is severable, or if the entire Act, including the many reforms which have already been in effect since 2010, must be struck down. The Petitioners argued that if the Individual Mandate is held unconstitutional, the entire Act should be invalidated as the Individual Mandate is the heart of the Act which supports the other insurance reforms. They argued that removing the Individual Mandate while affirming the other reforms would cause a significant increase in the cost of health insurance, as the Individual Mandate struck an essential fiscal balance in the Act. The Government countered that the entire Act should stand (with the exception of the guarantee issue and community rating provisions) as the “lion’s share of the Act” has nothing to do with the Individual Mandate and many of the provisions are already in effect. One justice characterized the Court’s decision in this regard as a choice between “a wrecking operation” or a “salvage job.”

While it remains to be seen how the Court will come out on these issues, it is clear that the decision will greatly impact the health care industry. The Court’s decision likely will not finally resolve the uncertainty as to the long-term future of health care, but the decision, regardless of the specific outcome, will provide Indiana’s corporate leaders more clarity over the short-term.

Please contact Kevin Woodhouse at (317) 236-2154 or [email protected] or Amanda Schipp at (317) 236-2426 or [email protected] or any other member of Ice Miller’s health care practice group if you have any questions.

Note: This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.