What the Supreme Court’s decision means for Ohio CPAs

Jun 28, 2012

Unless you are living under a rock without Internet, you’ve heard about the ruling by the Supreme Court of the United States on the constitutionality of the federal Patient Protection and Affordable Care Act.

What exactly happened and what does it mean for you? Two issues were at stake:

  1. Can the bill legally require taxpayers to buy health insurance or face penalties?
  2. Can the Federal government withdraw federal funding of Medicaid for states that don’t expand Medicaid coverage as mandated by the law?

The prevailing opinion was that the Act was like a house of cards. If any part was ruled unconstitutional, the whole intent would be at risk, causing collapse and rendering the whole Act null and void.

For the most part, the opinions issued by the Supreme Court judges lined up with their conservative and liberal stances. The wild card was Chief Justice John Roberts. He agreed with the dissenting justices that Congress doesn’t have power under the Commerce Clause to compel economic activity. However, he ruled it permissible under the Tax and Spending clause.

As for Medicaid, Roberts ruled that it was burdensomely punitive to withdraw funding from states that don’t expand Medicaid coverage.

That creates a gap that will need to be addressed.
“Don’t expect any changes before the election though,” said Scott Sinder, partner at Steptoe & Johnson in Washington, D.C. Sinder explained the implications of the decision in a webinar Thursday afternoon with OSCPA affinity partner Oswald Companies.

“After election, regardless of outcome, will have to reopen the law,” Sinder said. Which party is in control will dictate the changes. 

In the meantime, the law stands and companies should continue with implementation.

The decision is being heralded as a win for the Obama administration. However, the decision also galvanizes those opposed to the bill, likely aligning them in the Republican camp when it comes time to vote this November.

Ohio Gov. John Kasich and Lt. Gov. Mary Taylor released a joint statement expressing their frustration:
“We’re very disappointed that this flawed law has been allowed to stand. The Supreme Court has confirmed what everyone knew all along — but that the White House tried to deny: this is a massive new tax on the middle class. Hopefully Congress will eventually repeal the law altogether and replace it with improvements that actually address the most pressing needs in health care, especially the need to reduce costs in order to improve access. Until then, Ohio taxpayers could be saddled with dramatically higher costs. The Administration will carefully analyze the decision to determine the appropriate next steps. We are very concerned that a sudden, dramatic increase in Medicaid spending could threaten Ohio’s ability to pursue needed reforms in other areas, such as education. Going forward, we remain committed to minimizing the law’s drag on the economic growth Ohio is beginning to experience, protecting the inviolate relationship between doctors and patients, and preserving as much free market competition in health care as possible.”

They also released some facts about how the Patient Protection and Affordable Care Act impacts Ohio:

  • Currently, 2.2 million Ohioans receive their health care from Medicaid at a cost of $18.8 billion per year.
  • Under the Affordable Care Act, Ohio’s Medicaid enrollment has been projected to increase by 1.1 million people by 2018, with additional federal and state costs totaling $27 billion during that time and $940 million in state funds alone in the first two years. State costs will only increase over time as federal funds phase down. [Mercer, June 2012, review of Milliman, June 2011, impacts to Ohio Medicaid from ACA].
  • Ohio has taken significant steps to improve Medicaid program performance and reduce costs, and these savings would be wiped out by the ACA’s mandatory cost increases on the state.
  • Under the Affordable Care Act, health insurance rates have been projected to increase by as much as 55 percent to 85% in 2014 [pg. 34 of Milliman Report]
  • In 2010, 57.4% of working-aged adults received their health insurance from their employer [as reported by 2010 Ohio Family Health Survey, key findings document, pg. 2].