Healthcare: Health Reform Bill Attacked

06.01.10

TThe Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010, and amended by the Health Care and Education Reconciliation Act of 2010. PPACA has many parts. The first part is insurance reform. This includes many popular items such as the inability of health insurance companies to rescind a policy when someone becomes ill, the mandatory inclusion of a child until he or she reaches 26 and the prohibition against denying insurance because of pre-existing conditions. Since the law will bar insurers from excluding people with pre-existing conditions, the sick and elderly could be vastly over-represented in the insurance pool if other people are held back from purchasing insurance. Consequently, the law includes a mandate that effective in 2014 everyone must have health insurance through an employer plan or independently acquired. To make this happen, PPACA creates health insurance exchanges where individual s without employer-sponsored health insurance or those who cannot afford the employer's insurance can purchase insurance through exchanges administered by the State or a nonprofit organization. One of the many ways of paying for the expanded coverage described above is charging a penalty to individuals who do not have health insurance. This penalty will be paid as part of the individual's taxes.

At least a dozen lawsuits have been filed in federal court to challenge this law. The case that could carry the most weight has been filed in Pensacola, Florida. The primary issue in the lawsuit is whether the PPACA penalty for non-acquisition of insurance is a tax which exceeds the federal government's constitutional authority. Basically, the states bringing the lawsuit claim the federal government has no authority for the PPACA. But the federal government's response is that it has the authority to regulate health care under Article 1 Section 8 of the Constitution that allows Congress to regulate interstate commerce. The drafters of PPACA asserted in the text that the insurance mandate affects interstate commerce and labeled the penalty an "excise tax" which is typically protected by the Constitution. Further, there are many instances of the federal government regulating health care and issuing fines or penalties for failure of compliance.

There are other very significant parts of PPACA which include alterations to the health care delivery system, such as payment bundling, coordinated care, evidenced-based medicine, accountable care organizations, value-based purchasing and collaborative care organizations. These are ideas to improve care and cut costs that will slowly be phased in under PPACA. These types of health care system changes have always been within the federal government's jurisdiction.

The judge in Florida has scheduled oral arguments in the case for September 14, 2010 on the government's motion to dismiss the case. With no real facts to try, the arguments on the motion to dismiss may be the only "trial". In the meantime, Oklahoma has passed a law to opt out of the mandate. This will appear on the ballot as a constitutional amendment in November 2010. Most legal experts believe States do not have power to opt out of the federal mandate. Obviously, a lot more to come on this!

The author, Elise D. Brennan, may be contacted at ebrennan@dsda.com

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Rebecca D. Bullard

Rebecca D. Bullard

Rebecca represents clients primarily in labor and employment litigation and counsels clients regarding everyday employment matters. 

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