Supreme Court Upholds Health Law but Limits Expansion of Medicaid

Supreme Court Upholds Health Law but Limits Expansion of Medicaid

You might have heard that the Supreme Court ruled Thursday to largely uphold Obama's Patient Protection and Affordable Care Act (ACA) in a 5-4 decision.

The key question in the Supreme Court's decision was whether the government can force individuals to buy health insurance, in what is called the "individual mandate." The Court ruled that the federal government has the power to enforce this provision of the law by taxing those who do not buy insurance.

Chief Justice John Roberts stated in the court's decision:  "We do not consider whether the Act embodies sound policies. That judgment is entrusted to the Nation's elected leaders. We ask only whether Congress has the power under the Constitution to enact the challenged provisions."

How the Individual Mandate Was Upheld

The Supreme Court said that while the government cannot force people to buy a product--in this case, insurance--it can tax those who do not buy the service. Chief Justice Roberts, a conservative judge appointed by George W. Bush, was the deciding vote, effectively saving a law that had been dubbed "Obamacare" from the chopping block.

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"The Affordable Care Act's requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax," Chief Justice John Roberts wrote in the ruling. "Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness."

The provision of the law that taxes individuals who fail to buy insurance will not go into effect until 2014. Other provisions, like the one that forces insurance companies to allow children to stay on their parents' plans until age 26, have already gone into effect. Read about all the provisions and how they will affect you here.

Medicaid Provision Narrowed

The Supreme Court did limit one portion of the ACA: The federal government cannot yank existing Medicaid funds from states who refuse to comply with expansion of Medicaid.

In the original law, if a state refused to comply with the federal government's order to expand Medicaid to cover all households living around the poverty level, it would have lost all its Medicaid funding.

The Court ruled that the government can offer more funds to states so that they can expand their coverage of Medicaid, and can make those funds contingent on whether or not the states actually use them for their intended purpose. However, the federal government cannot take away the funds that are already being sent to cover Medicaid in its current form.

Because states rely so heavily on Medicaid funds, the law as it was written would have effectively left states with no choice but to expand their Medicaid programs. This was seen as coercion by the Federal government, and the Supreme Court struck it down as unconstitutional.

Some states that will probably refuse the funds, based on which states challenged the Medicaid provision in a lawsuit, include Alabama, Alaska, Arizona, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Pennsylvania, South Carolina, South Dakota, Texas, Utah, Washington, Ohio, Kansas, Wisconsin and Wyoming.

If you live in one of these states, probably nothing will change for you--whether you currently qualify for Medicaid or not. But if you live in another state which decides to take federal funds to expand Medicaid and you don't currently qualify for Medicaid and live around the poverty level, you might qualify starting in 2014. If all states expand coverage, an estimated 16 million Americans would be newly covered.

To read more about how the Affordable Care Act will affect you, read our breakdown.

Image credit: angela n./Flickr

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