Employers: “Full Speed Ahead” on Healthcare Reform

By Douglas R. Chamberlain
Sulloway & Hollis, P.L.L.C.

The U.S. Supreme Court’s historic decision on healthcare reform (also known as the Affordable Care Act, or ACA) will be dissected and argued about for many years to come. The Court essentially upheld all the key elements of the healthcare reform law — most notably the so-called “individual mandate,” which will require that individuals purchase health insurance or else pay a penalty (or “tax”). There are two surprising elements to the Court’s decision:

1. The fact that the mandate — and essentially the entire law — was upheld, contrary to the conventional wisdom and betting of late; and
2. Even more shocking, it was Chief Justice John Roberts’ willingness to characterize the penalty for violating the mandate as a “tax” and to uphold it on those grounds that carried the day for the proreform forces — albeit by a single vote.

It is also interesting to note that the tax argument was strictly a backup position advanced by the government in its proreform arguments before the Court. The Obama administration would have much rather seen the mandate upheld on the grounds that it involved the federal government’s constitutional powers to regulate interstate commerce. If the mandate had been upheld on that ground, the way would have been clear for the federal government to intervene much more aggressively in regulating all sorts of behavior (and nonbehavior, as in this case) on the part of individual citizens under the rubric of regulating interstate commerce.

Justice Roberts, however, apparently declined to go that far. From the constitutional perspective, this limits the scope and probable future impact of this case somewhat. Still, the case will undeniably stand as a landmark in Court history, purely from the standpoint of its implications for healthcare reform per se.

Keep up with the latest developments in health care reform and how it affects employers with  Benefits Complete Compliance

Employer Implications
What does the decision mean for employers in particular? In essence, it means “full speed ahead.” All the disparate provisions of health care reform that commentators — pro, con, and neutral–have been writing and talking about for the past two-plus years remain in full force and effect. Additionally, the provisions that have yet to take effect, such as the individual mandate itself, will — in the absence of future action by Congress and the President — take effect between now and the end of the decade, as originally scheduled.

Thus, employers need to remember the following:

• Your group health plans will still need to cover dependent children of plan members up to age 26;
• Limits on annual and lifetime benefits are still prohibited;
• The current and future rules barring limitations on coverage due to preexisting conditions remain in force;
• Next year, employers must begin limiting benefits under health flexible spending account plans; and
• Larger employers at least will eventually be required to offer health coverage to their employees or pay a penalty.

Of course, if the ACA is repealed or amended significantly through the political process, all bets are off. While legislation to repeal the Act will be introduced immediately, its chances for passage (in the U.S. Senate at least) are slim, and the prospects for enactment are virtually nil in the face of an almost certain presidential veto — until January 20, 2013, at least. Thereafter, the fate of reform will ultimately lie in the hands of the new U.S. Congress, depending on its composition, and of the occupant of the White House, whoever that may be. Hang on — it could still prove to be a very bumpy ride.

Douglas R. Chamberlain is a senior member of the New England law firm Sulloway & Hollis, P.L.L.C. in Concord, New Hampshire, and a frequent contributor to New Hampshire Employment Law Letter and Benefits Compliance Advisor. He has followed the healthcare reform process closely and advises business and professional groups, particularly in the healthcare field, on matters such as formation and governance, contracts, and mergers and acquisitions. He also practices extensively in the employee-benefits field, assisting clients with tax and ERISA issues involving their 401(k) and other retirement plans as well as fringe benefit programs of all types.