Supreme Court holds hearings on the constitutionality of health care reform law

Decisions regarding the individual mandate and Medicaid expansion could impact professional psychology

By Government Relations staff

April 12, 2012—In March 2010, the Patient Protection and Affordable Care Act (ACA), became law after months of intense congressional debate. Since its passage, various states and business groups have filed lawsuits in federal courts challenging certain aspects of the law, particularly the individual mandate and Medicaid expansion provisions. In the cases heard, some courts ruled in favor of the federal government while others ruled in the plaintiffs’ favor. In November 2011, the Supreme Court agreed to consider the constitutional issues that arose from two cases in the 11th Circuit Court of Appeals.

The Supreme Court heard three days of oral arguments beginning March 26 and following is the essence of the issues that were debated.

Is the individual mandate constitutional?

Under ACA, almost all Americans are required to obtain health insurance by 2014, or be subject to a penalty. The question before the Court is: Is it within the federal government’s powers to assess that penalty?

Citing the power of Congress to regulate commerce and levy taxes, the defendant (the federal government) opined that the individual mandate is constitutional. The plaintiffs (opponents of the law) countered that not buying something doesn’t constitute commerce and thus there is nothing to regulate.

The following day, lawyers debated whether the individual mandate was “severable” from the rest of the law; that is, if the justices strike down the individual mandate, will the law hold?

What’s at stake

The Congressional Budget Office (CBO) calculated (PDF, 408KB) that without the mandate, insurance premiums on the individual market would be 15-20 percent higher than with it.

Also according to the CBO, ACA expands coverage to 16 million more Americans through health insurance exchanges, where health plans will be offered primarily to individuals and small businesses. Employers will have new requirements to cover their employees or allow them to participate in exchange plans.

Psychologists and other providers will negotiate payment rates with exchange plans, just as payments are negotiated with plans in the private market. Mental health parity is mandated in the plans included in the exchanges.

If the individual mandate is found unconstitutional but the remainder of the law is upheld, state governments will be left to devise ways to structure their insurance exchanges to gather enough healthy enrollees to offset the anticipated cost of covering enrollees who are less healthy.

Is Medicaid expansion constitutional?

ACA expands eligibility for Medicaid. Although state participation in Medicaid is voluntary in order to receive federal matching funds, if states pull out they forfeit a huge amount of federal money. The Court heard arguments over whether this setup unconstitutionally coerces states to spend scarce revenues on Medicaid.

What’s at stake

Since the ACA will provide insurance coverage to an estimated 16 million currently uninsured Americans through Medicaid expansion, psychologists have a greater ability to reach and provide care for a larger pool of Americans. However, 17 states do not reimburse for psychological services under Medicaid.

Of the states that do, some place limitations on the services and venues in which psychologists can be reimbursed. For example, in Washington state psychologists can get reimbursed from Medicaid when they work in a community mental health center, but not when they are working in private practices. APA Executive Director for Professional Practice Katherine C. Nordal, PhD, has urged leaders of state psychological associations to advocate for full inclusion of psychologists as Medicaid providers in order to serve this new population.

Can the Court rule on the issue now?

The Court opened its 6 hours of hearings with the question of whether it is premature to make a ruling. Both the defendant and the plaintiff say it can — and should — so the Court appointed a lawyer to argue that an obscure 1867 law prevents a ruling at this time.

The Anti-Injunction Act long-ago determined that a tax can’t be challenged until someone actually has to pay it. The Court heard arguments about whether the penalty that would be required of those who don’t buy health insurance actually constitutes a tax. ACA is slated to take full effect in 2014 and payment of penalties incurred by those who choose not to purchase health insurance would come due in 2015.

What happens next?

Although a ruling could come at any time, it is widely expected that the Court will give its decision in late June of 2012, shortly before adjourning for the year. The justices could uphold the law in its entirety or in part, or, finding it wholly or in part in violation of the Constitution, strike down provisions or the entire law. The Court could also decide to hold its ruling until after the law takes full effect in 2014.