Health Care Law Upheld

Today, in a 5-4 decision, the Supreme Court ruled the Patient Protection and Affordable Care Act (Affordable Care Act) is constitutional including its individual mandate requiring virtually all Americans to buy health insurance. Chief Justice Roberts provided the deciding vote in the case titled National Federation of Independent Business v. Sebelius.

Rejecting the argument that Congress can use its power to regulate commerce between the states to require everyone to buy health insurance, the majority agreed instead that the penalty required if someone refuses to buy insurance is a type of tax that Congress can impose using its taxing power.

“In this case", Chief Justice Roberts opined, "it is reasonable to con­strue what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance. Such legislation is within Con­gress’s power to tax.”

Surprisingly and paradoxically, the Obama Administration had defended the constitutionality of the individual mandate as a constitutional exercise of congressional power to regulate interstate commerce rather than arguing that the individual mandate was a tax. Although four Justices would have upheld the individual mandate under the Commerce Clause, their agreement does not control because Chief Justice Roberts did not agree with this interpretation.

Because the individual mandate survives, the Court did not need to decide whether other parts of the Affordable Care Act are constitutional, except for a provision that requires states to comply with new Medicaid eligibility requirements or risk losing their Federal Medicaid funding. On that issue, the Court held the provision to be constitutional so long as states would only lose new funds if they did not comply with the new Medicaid requirements, rather than all of their federal Medicaid funding.

Chief Justice Roberts stated: "Nothing in our opinion precludes Congress from offering funds under the Affordable Care Act to expand the availability of health care, and requiring that states accepting such funds comply with the conditions on their use. What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding."

How will the Affordable Care Act impact settlement planning - and what resources are available for settlement planners to better understand the 2,700-page health-care law?

To date, there has been a glaring lack of educational inquiry at national structured settlement and settlement planning conferences about how the Affordable Care Act impacts their customers, their products and their traditional business models. Arguably the justification for this educational omission has been the constitutional uncertainty which no longer exists.

Fortunately for settlement planners, neither Academy of Special Needs Planners (ASNP) nor the National Academy of Elder Law Attorneys (NAELA) has been similarly paralyzed educationally and/or intellectually by this constitutional uncertainty.

At the ASNP 2011 Annual Meeting, Cynthia Barrett offered her introductory analysis of how Health Care Reform impacts persons with disabilities. Also in 2011, the NAELA Journal devoted its Spring issue to the Affordable Care Act. S2KM summarized Barrett's analysis and listed the NAELA Journal articles in a prior blog post titled "Health Care Reform".

At the ASNP 2012 Annual Meeting, David Lillesand discussed how the prohibition against "pre-existing condition" exclusions mandated by the Affordable Care Act (already in effect in 22 states) impact special needs legal practice generally and self-settled (first party) special needs trusts specifically.

In summary, based upon his experience in Florida, where the Affordable Care Act (ACA) prohibition against pre-existing exclusions currently exists, Lillesand believes:

• The need for self-settled (first party) special needs trusts has decreased (except when a beneficiary requires long term institutional care) because the ACA provides better insurance options than Medicaid for many persons with pre-existing medical conditions including personal injury victims.
• Existing self-settled (first party) special needs trusts should be reviewed, in the context of the ACA's prohibition against pre-existing condition exclusions and available medical insurance options, and in many cases terminated.
• Damages for future medical costs in personal injury lawsuits could be reduced assuming the premium costs of newly available insurance premiums become admissible in proving and/or defending damages.

Although the Affordable Care Act is controversial and complex, the necessary Federal and State administrative rules to implement the new health care law promise to be even more so. For a helpful and definitive resource, see "Health Care Rule Making Guide" edited by Professor James T. O'Reilly.

For additional information about settlement planning and government benefits, see the structured settlement wiki.