This was the heart of the Supreme Court's decision -- does the Constitution allow the Federal government to mandate a commercial enterprise such as health care insurance? The Court said no, but the mandate was approved nevertheless because it was considered a tax, which is within the constitutional right of Congress. This decision caused hospital stocks to immediately rise, since their emergency room costs will be transferred to health insurance companies. (Source: Fox Business News, Varney & Co)The Supreme Court's decision means that existing benefits will remain, and changes will be implemented on schedule. Estimates are that 30 million currently uninsured people will be mandated to buy insurance in 2014 or face a penalty or tax. To find out more about these benefits, see Patient Protection and Affordable Care Act.
Health insurance costs should be lower, since more healthy people will be paying premiums but not drawing down services. It will also help hospitals, which will be able to shift the burden of paying for emergency services to the mandated insurance companies.
The Court struck down the portion of the Act that mandated states to add people to Medicaid. It ruled that it was outside of Congress's constitutional powers to require states to do so. However, the Federal government will pick up the tab for the additional enrollees, so many states may decide to take advantage of the additional benefit. In fact, five states already have tested a pilot program, enrolling 500,000. It's estimated 16-20 million people would be added to Medicaid. This would help companies that provide third-party services. (Source: WHNT, Court Issues Ruling; NPR, Medicaid Expansion; MarketWatch, How to Trade the Obamacare Ruling, June 22, 2012; (Source: Ezra Klein, Wonkbook, Obamacare Medicaid Expansion, July 3, 2012))
Now, two other issues that are mandated to occur by January 2014 must be resolved. First, Health and Human Services (HHS) must write the regulations so employers know what type of insurance to provide. Second, states must set up insurance exchanges. HHS is not yet set up to fill in for states that refuse to set up exchanges. (Source: Bill Murphy, CNBC, Inside the Supreme Court Health Care Decision, June 21, 2012; PBS Newshour, Julie Appleby, Kaiser Health News, What's at Stake for Your Insurance, June 22, 2012)
Many people expected the Court to strike some or all of the Act. If this had happened, insurers could have withdrawn benefits that have already been implemented. They could have:
- Cancelled the policies of those who became really ill with too-expensive conditions.
- Raised rates to any level, simply to boost profits.
- Paid lower taxes.
TimelineMarch 28, 2012 - The Supreme Court held hearings on the constitutionality of the Affordable Care Act. At issue was whether the Act's mandate that people either have insurance, or pay a fine, violates the Constitution. On Day Three, the justices considered whether the entire Act could stand if this statute was struck down. On Day Two, the justices questioned whether the Federal government had the right to compel people to buy health insurance from a private company. On Day One, the justices argued whether they had the authority to review the Act at this time, or needed to wait until someone paid the penalty in 2014.
September 2011 - The Justice Department petitioned the Supreme Court to decide whether the Affordable Care Act was constitutional. The 11th Circuit Court of Appeals found that the mandate did not fall within Congress' power to regulate interstate commerce, but that the rest of the Act was fine. Two other federal courts of appeal, the Sixth Circuit and the Fourth Circuit, ruled that the Act was constitutional.
January 2011 - The House voted to repeal the law. This was largely symbolic, since the Senate rejected the repeal. However, 22% of Americans thought the act had been repealed, anyway.
June 17, 2010 - Federal regulations allowed some health plans that were in existence on March 23, 2010 to be "grandfathered in." This meant they were exempt from some provisions in the Affordable Care Act.
March 23, 2010 - President Obama signed the Affordable Care Act, making health care reform the law of the land.
March 22, 2010 - The House of Representatives passed the Reconciliation Act, which amended the Senate Health Care Reform Bill by including elements of the health care plan put forth by President Obama on February 22.
February 22, 2010 - Obama launched a new health care plan that combined the best elements of the Senate and the 2009 House health care reform bills. Obama 2010 Health Care Reform proposal regulated the health insurance industry under a seven-member Health Insurance Rate Authority that could deny or limit substantial premium increases. This was traditionally a state responsibility. Like the Senate Bill, it created an exchange that allowed families and small businesses to shop for insurance plans. It kept restrictions on federal funding for abortion, but cut back taxes on the high end health plans.
January 28, 2010 - Obama supported health care reform in the 2010 State of the Union Address.
January 27, 2010 - House Democrats protested the excise tax on high value insurance plans in the Senate plan, which adversely affected union households. However, this created a $300 billion deficit over 10 years. The other option was to create a smaller health care reform bill with the best features of both the Senate and House plans.
January 26, 2010 - Republican Scott Brown won the key Democratic seat in Massachusetts, destroying the Democrats’ filibuster-proof 60-vote majority in the Senate. Many thought this ended hopes of passing any health care reform bill at all.
December 24, 2009 - The Senate passed the 2009 Senate Health Care Reform Bill. Its programs would cost $871 billion over 10 years. However, it would actually lower the budget deficit by $132 billion during that same time period by increasing taxes on health care providers. It offered subsidies to families and small businesses to shop for insurance on an exchange. It fined companies for not providing insurance, but gave them a tax break for small businesses if they simply couldn't afford to offer health insurance to their employees. For more details, see 2009 Senate Health Care Reform Bill.
November 8, 2009 - The House of Representatives passed the 2009 House Health Care Reform Bill. Its programs would cost $894 billion over 10 years. However, it proposed a surtax on high income earners thereby reducing the deficit by $104 billion. Like Obama's 2009 bill, the House bill proposed a government-run health insurance program, known as the public option. It offered direct subsidies to uninsured people to help them buy insurance through exchanges. For more details, see 2009 House Health Care Reform Bill.
January 2009 - Soon after Obama was elected, he announced the Health Care for America Plan. The most controversial element was known as the "public option," which was a government-run program like Medicare -- only it would not be restricted by age. This was a critical way to reduce health care costs by 1.5% per year, since the federal government had the ability to bargain for lower prices and reduce inefficiencies. However, opponents said it was socialized medicine, and took power away from the states and from individuals. For more detail, see Obama's 2009 Health Care Reform Plan. Article updated July 3, 2012
For a detailed timeline of when benefits roll out, see Healthcare.gov, Key Features of the Affordable Care Act by Year.