The healthcare case: What might happen

A number of legal challenges to the health care reform law were filed in federal court almost immediately after the law was passed in March 2010. Nearly all of the lawsuits were based on constitutional grounds, challenging the constitutionality of the law's individual mandate. The U.S. Courts of Appeals that reviewed the cases were split in their decisions.

The U.S. Supreme Court heard oral arguments regarding the health care reform law March 26-28, 2012. The justices heard six hours of oral argument on the law's constitutionality and related issues. This is an extraordinary amount of time for oral argument most modern court cases only receive one hour of oral argument and is indicative of the importance of the health care reform law challenges.

Legal challenges:

Individual mandate

The main legal controversy surrounding the health care reform law has been whether Congress had the authority under the Constitution's Commerce Clause to pass the health care reform law's individual mandate. The Commerce Clause gives Congress the power to regulate multi-state, economic activity.

Beginning in 2014, the individual mandate generally requires individuals to purchase health insurance or pay a penalty. Opponents of the health care reform law argue that the Commerce Clause does not give Congress the power to regulate economic inactivity (that is, the decision not to purchase health insurance). Proponents of the law point to the health care costs associated with the uninsured to demonstrate the economic effect of not purchasing health coverage.

Medicaid expansion

The Supreme Court also heard a challenge to the health care reform law's expansion of Medicaid. The law requires states to expand eligibility for Medicaid to cover additional individuals beginning in 2014. However, this portion of the case is not expected to have the same impact as a ruling on the constitutionality of the individual mandate.

Tax Anti-Injunction Act

The initial question for the court is whether it can even make a decision on the merits of the lawsuit. An 1867 law the Tax Anti-Injunction Act could put a procedural roadblock in the way of a resolution. This law states that a tax must be effective before a lawsuit can challenge it. This law could affect the health care reform case because the penalty associated with the individual mandate is collected in the same way as a tax. If the Court finds that the Tax Anti-Injunction Act applies to this situation, a ruling could be delayed until 2015 or later.

Despite the potential application of this law, the Court heard arguments on all issues related to the case. However, it remains to be seen whether the Court will decide it has the authority to decide the case's merits.

Possible outcomes

Although the justices seemed to indicate their positions on the health care reform law through their questions, it is difficult to predict how the Supreme Court will rule on the health care reform law. However, it is possible to identify possible outcomes of court's review related to the individual mandate:

* Decline to review the law. The court might decide that the challenge is premature, based on the fact that no individual has yet been required to purchase insurance or pay a penalty. This would simply delay what are likely inevitable further challenges to the law. The court seems unlikely to take this approach. However, if it does, implementation of the health care reform law would continue as currently required until a future challenge is ripe for review.

* Uphold the entire law. The court could agree with the 6th and D.C. Circuits and rule that Congress acted within its constitutional authority when enacting the individual mandate. If so, the implementation of the law would continue as scheduled. However, this ruling would leave the door open for Congress to attempt to change the law.

* Strike down the entire law. The individual mandate is a key component of the health care reform law. If the court determines that the individual mandate is unconstitutional, it could also find that the rest of the law cannot stand without it. Health care policy experts have suggested that, without the individual mandate, health care reform's other insurance market reforms would be difficult to implement. This approach would likely affect popular provisions of the law that are already effective.

* Strike down only the individual mandate. Despite these concerns, it is possible that the Court could strike down only the individual mandate, leaving the remainder of the law intact. If the individual mandate is ruled invalid and health insurers are still required to comply with other rules like the guaranteed issue, preexisting condition exclusion and underwriting restrictions, it is speculated that health insurance costs would skyrocket because people would tend to buy coverage only when they actually need it.

* Strike down the individual mandate and related provisions. Because of the potential impact on the health insurance market, the court could strike down provisions related to the individual mandate if it finds they cannot be separated. This would avoid potential drastic effects on premiums, but would also interfere with increasing the number of covered individuals, which was a main purpose of the law.

Waiting for the decision

The Justices have likely already made their decisions on the issues being reviewed. According to the court's standard procedure, the Justices met on March 30 to cast their votes, which will remain confidential until the court's formal opinion is released. The next part of the process involves drafting the official opinions the majority opinion along with any concurring or dissenting opinions. The court's decision is expected to be released sometime this month. If the law should be upheld or struck down, we advise that you continue with any current compliance efforts and plans to comply with upcoming provisions.

Dawn Hamm is with Clark Insurance Solutions, a Reno-based employee benefits insurance agency and a partner with Solutions At Work, a human resources consulting company. Contact her through www.mysolutionsatwork.com or at 775-827-9675.