Introduction to Health Care Reform Series: The Patient Protection and Affordable Care Act

In 2010 Congress enacted the Federal “Patient Protection and Affordable Care Act” (“Act”) setting the stage for sweeping reform of the U.S. health care system. The most controversial provision in the Act is the “Individual Mandate” which requires every American to have a minimum level of health insurance by 2014 or face certain financial penalties. Congress used the Commerce Clause found within Article I, Section 8, Clause 3 of the United States Constitution as the legal basis for the Individual Mandate.

Supporters of the Individual Mandate argued that the act of not purchasing health care is economic activity in and of itself because consuming health care services without health insurance impacts the costs of health care services for all consumers, thus bringing the Act within the scope of the Commerce Clause. They further argued that since Congress has the Constitutional power to regulate economic activity, it could require citizens to participate in economic activity. In this case, it was argued that Congress could require people to engage in the economic activity of purchasing health insurance and if citizens chose to not purchase health insurance, they would face a financial penalty.

This controversial interpretation of the Commerce Clause resulted in a number of legal challenges to the Individual Mandate. Opponents argued that Congress overstepped its authority and that such a broad interpretation of Congress’ powers under the Commerce Clause was never intended by the drafters of the Constitution. Ultimately, the Supreme Court of the United States was asked to weigh in. To the surprise of many, when the Supreme Court issued its ruling in June of 2012, the Individual Mandate provision included within the Act was upheld by a vote of 5-4. National Federation of Independent Business v. Sebelius (2012) 132 S.Ct. 2566. What made the ruling so interesting was that Chief Justice Roberts opined that the Individual Mandate, and the financial penalties associated therewith, was not proper exercise of Congress’ power under the Commerce Clause. However, Chief Justice Roberts did not rule to strike down the Individual Mandate because he, along with four other justices, concluded that the financial penalties for violating the Individual Mandate were taxes. Because Congress has the power to tax individuals pursuant to Article I, Section 8, Clause 1, of the Constitution, it could legally impose a tax on an individual who fails to comply with the Individual Mandate.

As a result of the Supreme Court’s ruling, all of the provisions of the Act remain the law of the land and have already begun to take effect and will continue to take effect over the next several years. The most significant provision of the Act, the Individual Mandate, will take effect on January 1, 2014. Consequently, California K-12 districts and community college districts need to begin immediately taking steps to ensure they are in compliance with their obligations under the Act before the Individual Mandate takes effect.

There was speculation that Congress would repeal the Act if the results of the November election had been different. However, because President Obama was reelected and because Congress remains split between Republican majorities in the House of Representatives and Democratic majorities in the Senate, it is unlikely that the Act will be repealed.

Over the next several months, this blog will feature a series of posts intended to familiarize community college and K-12 district employers with some of the terminology of the Act. We will also discuss any new developments resulting from regulations issued by the various agencies responsible for implementing the Act. Finally, we will provide updates to any urgent issues that may directly impact community college and K-12 district employers.


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