Many businesses are uncertain as to whether they should start preparing for health care reform in light of numerous court challenges. Since the start of 2011, several federal district courts have either upheld or struck down the Patient Protection and Affordable Care Act (PPACA). More courts are expected to issue decisions in coming months. Health care reform may ultimately be decided by the U.S. Supreme Court. In the meantime, businesses are confronted with mixed decisions.
Beginning in 2014, most individuals must make a shared responsibility payment if they do not carry minimum essential health insurance. Individuals covered by employer-provided health insurance generally will be exempt as will individuals covered by government programs, such as Medicare. Additionally, the PPACA imposes a play-or-pay requirement on employers. Generally, employers can offer health insurance or pay a penalty. The employer penalty also begins in 2014.
In Bryant v. U.S. (February 2, 2011), a federal district court in Mississippi upheld the PPACA. The taxpayers argued, among other things, that the minimum essential coverage provision in the PPACA is an unconstitutional direct tax and exceeds Congressional power. The court found that the taxpayers lacked standing; that is, that they have or will suffer an injury and there is a connection between the injury and the conduct of the defendant. The taxpayers’ allegations were insufficient to show that they would certainly be subject to the shared responsibility payment.
The government also scored a victory in Mead v. U.S. (February 22, 2011). The federal district court for the District of Columbia found that the health care reform package fell within Congress’s power to regulate interstate commerce. The court also found that the PPACA did not violate freedom of religion guarantees in the Constitution.
In Florida v. U.S. (January 31, 2011), several states argued, among other things, that the minimum essential coverage provision in the PPACA exceeds direct tax and exceeds Congressional authority. A federal district court in Florida agreed.
The court found that Congress may regulate economic activity under the Constitution’s commerce clause. However, the minimum essential coverage provision sought to regulate economic inactivity, rather than economic activity. Since the minimum essential coverage provision was unconstitutional, the entire PPACA must be declared void, the court concluded. The Obama administration has asked the court to clarify its decision.
The attorney general of Virginia recently asked the Supreme Court to quickly rule on health care litigation. The court may decide to act soon or it may wait for the cases to make their way through the federal appeals process. The latter course could take years, well beyond 2014.
If you have any questions about the health care court cases or the employer requirements in the PPACA, please contact our office.