Health care reform: What will the court do?

It took two years for the constitutional challenge by 26 states, the National Federation of Independent Business and several individuals to work its way through the appeals process to reach the nation's highest court. Once it did, the Supreme Court allotted an extraordinary six hours over three days for arguments for and against President Barack Obama's landmark 2010 overhaul of America's health care system.

On Day One of the hearings, the court seemed inclined to rule this summer on challenges to the Affordable Care Act, despite an arcane 1867 law. It holds that judges cannot rule on challenges to federal taxes until the taxes have actually been levied.

Given the combative hearing on mandatory insurance during Day Two, the issue of "severability" took on new meaning on Day Three as observers tried to imagine what health care reform might look like with its centerpiece individual mandate removed. Unlike many laws, the Affordable Care Act does not include a severability clause.

"If the individual mandate doesn't stand, then the whole issue of pre-existing condition exemption has to go away and that kind of pulls the pillars out of the (state health) exchange programs as well, so it may be that basically what survives are the Medicaid expansions," says Michael Morrisey, professor of health economics and health insurance at the University of Alabama at Birmingham.

Medicaid expansion ruling could be major

In Wednesday's final session of the hearings, the court heard the states' objections to the expansion of Medicaid, the joint federal-state program for low-income people.

Under the law, states that had previously been required to offer Medicaid to certain groups of low-income people, such as families with dependent children, pregnant women, the elderly and the blind, would have to extend coverage to all individuals under age 65 with qualifying incomes. The states claim that health care reform coerces them into going along with the expansion.

Parmet says that while the Medicaid expansion has not garnered much media attention, if the court strikes it down the potential ramifications could extend far beyond that of the individual mandate.

"That would be the true constitutional revolution," Parmet says. "It would put into jeopardy and raise constitutional challenges to almost every federal-state program: unemployment compensation, all of Medicaid, support for children with disabilities in school, federal funding for prisons, you name it. If all of those suddenly face constitutional challenges, we really would start to go back to (the) early 20th century -- where there would be no federal support for pretty much any local problem."

Still, with the court seemingly focused on preventing the Affordable Care Act from setting dangerous precedents rather than letting it cause one, Parmet says she's optimistic.

"I don't think they're going to strike the Medicaid expansion. I think that would be going too far. But I don't think you can take that for granted," she says.

The court is expected to deliver its ruling on the Affordable Care Act by late June.


Show Bankrate's community sharing policy

Connect with us