SCOTUS: Individual mandate is a tax, constitutional

By Chris Anderson
12:56 PM

In a stunning blow to opponents of the Affordable Care Act, the Supreme Court today ruled in a 5 to 4 vote that the most reviled portion of the health reform law – the so-called individual mandate requiring all Americans to buy health insurance or face a fine – is constitutional, since it falls within the power of Congress to impose a tax.

In what was a surprise to many court watchers, the deciding vote to uphold the individual mandate came from Chief Justice John Roberts, instead of the more center-leaning Justice Anthony Kennedy. In rendering the decision the court did find the individual mandate to be unconstitutional when viewed through the lens of the Interstate Commerce clause, but that finding became moot once five of the jurists concluded that the fine levied against those individuals who refused to comply is a tax.

"The Affordable Care Act's requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.” Roberts wrote in the court’s majority opinion.

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By upholding one of the core elements of the health reform law, the insurance industry can now set a clear course for the future with a renewed focus on how to adjust to the new realities of a dramatically changed insurance marketplace that will have a much greater focus on consumers.

Equally important for consumer advocates are other portions of the law regulating the insurance industry that also survived the challenge to the law.

“Today we are especially thinking of the seriously ill children who will continue to be able to get critical care, the young adults who can stay on their parent’s insurance, and the seniors who can better afford the prescription drugs they need,” said Jim Guest, president of Consumer Reports, in a prepared statement. “For these people and the millions of Americans with pre-existing conditions, the uncertainty is over.”

As Ron Pollack, executive director of Families USA put it: “This is truly a hallelujah moment for American families… Healthcare will now be something that people can securely feel will be there for them when they need it.”

For insurers, however, the ruling should do little to change the course most are currently pursuing.

“On the payer side of the world, we really didn’t see folks take their foot off the pedal,” said Ray Desrochers,  executive vice president at Health Edge, an IT company serving the insurance industry.

“Regardless of whether (the law) stood, it was struck down or struck down in part, or replaced eventually it really didn't matter. At the end of the day, I think everybody realizes we can’t go back to what was originally. For the payers we are working with they realize they have to move forward in order to play in this new economy.”

America's Health Insurance Plans (AHIP), the dominant industry trade group for private health insurers greeted the ruling as a mixed blessing.

“The law expands coverage to millions of Americans, a goal health plans have long supported, but major provisions, such as the premium tax, will have the unintended consequences of raising costs and disrupting coverage unless they are addressed,” read a statement from Karen Ignagni, president and CEO of AHIP.

Despite the warning, some believe ACA has benefitted the health insurance industry since it was enacted.

“The reserves and fiscal stability of the health plans have actually improved because they have been able to pass through the requirements of the law in the premiums,” said Paul Keckley, executive director of the Deloitte Center for Health Solutions. “I think the real question mark for the industry is the convergence of health exchanges…and health costs to the extent employers even choose to participate in the insurance market."

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