Consumer IQ

What the Health Care Decision Law Means for You

supreme court

In a 5-4 decision, the Supreme Court upheld all key provisions of the Patient Protection and Affordable Care Act (PPACA) passed in 2010.

Individual Mandate

One major aspect of the PPACA is the individual mandate. This requires individuals to have some form of health insurance, whether they get it through their employer or by purchasing it on their own, or pay a penalty. The court upheld the general substance of the individual mandate.

However, the Supreme Court did make one slight change: the penalty for not having health insurance must be classified as a tax, as it falls under Congress’ taxing authority, or the Constitutional right to “lay and collect taxes.”

Medicaid Expansion

The PPACA originally stated that families earning as much as 133 percent of the federal poverty line are now eligible for Medicaid.

The court upheld the expansion of Medicaid but with one crucial caveat: The federal government may not withhold all Medicaid funds to states that fail to comply with the expansion of Medicaid, instead only permitting the federal government to withhold new Medicaid funding from noncompliant states. This essentially means the Medicaid expansion is now optional for states.

Upheld Provisions

The rest of the law largely remains intact after the Supreme Court’s ruling this morning. Upheld provisions of PPACA include:

  • Pre-Existing Conditions: Insurers may not deny coverage based on pre-existing conditions, one of the key planks of the overall insurance industry reform outlined in the bill.
  • Slacker Mandate: The so-called “slacker mandate” requires insurance companies to offer coverage for the children of policyholders under the age of 26.
  • Donut Hole Closed: PPACA attempts to address the so-called “donut hole” in Medicare Part D coverage. This is the gap between the catastrophic coverage threshold and the initial coverage limit. Put simply, Medicare recipients are responsible for all costs above the initial coverage limit but under the catastrophic coverage threshold. The gap will gradually close until 2020, when it is eliminated entirely.
  • Cadillac Insurance Tax: A 40 percent excise tax will be levied on so-called “Cadillac” insurance plans beginning in 2018. The tax applies to individual coverage costs in excess of $10,200 and family costs above $27,500. The threshold is higher for individuals and families in high-risk professions.
  • Indoor Tanning Tax: The 10 percent tax on indoor tanning that took effect on July 1, 2010 is still in effect.
  • Other Insurance Industry Reforms: Your insurer may not drop coverage because you get sick. The industry must have an appeals process in place for claims and coverage determination.

Fight Not Over Yet

While this is certainly a landmark decision with far-reaching consequences, the fight over PPACA isn’t over yet.

Some political candidates have reoriented their 2012 electoral campaigns toward repealing the bill after the 2012 elections. Further, the National Federation of Independent Businesses v. Sebelius is only one of multiple suits challenging the bill.

No matter which side you fall on, PPACA is an undeniably contentious issue, which is surely going to be a hot topic this election year.

Nicholas Pell is a freelance writer based in Hollywood, CA. He has followed the fight over PPACA closely for the last three years.