The constitutionality of the Patient Protection and Affordable Care Act (ACA) was challenged in two cases before the Supreme Court.
The two rulings focused on the individual mandate and the expansion of the Medicaid program.
On June 28, 2012, the Court handed down a 5 -4 decision that upheld the law, but struck down one of its key provisions in part. l.
One case challenged the constitutionality of the so-called “Individual Mandate
,” the requirement for all individuals to obtain insurance coverage, by 2014 or face a penalty. The case asserted the requirement is a wrongful use of Congress’s taxation and commerce powers.
The Court upheld the tax penalty as constitutionally within Congress's legislative powers to require.
The other case, filed by 26 states, challenged the required Medicaid Expansion
in each state to 133% of FPL.
The Court declared that although the law requiring the states to expand the Medicaid program was valid, the Federal government cannot force participation in the expansion, by removing all federal funding for those states that do not comply.
The Court’s decision effectively left states with the ability to opt-in or opt-out of the proposed expansion of the Medicaid program.
In 2011, guidance from HHS was issued clarifying that states would have the option of taking up the Medicaid Expansion at any time in the future.
States will also receive available federal funding for the Expansion, included in the law when they do so. However, states may not expand the program only in part, as they choose.
Under the law, as it was originally passed, the Medicaid Expansion should have made coverage available to every citizen in a state, up to 133% of the federal poverty level (FPL). Those with incomes higher than that amount who still lacked coverage, would have to purchase insurance in the State Insurance Exchanges. However, the law provided for tax subsidies for those up to 400% FPL.
In states that forgo the Medicaid expansion, many low-income persons who are not eligible for the government subsidies for purchasing insurance, but who would have otherwise qualified for the expanded Medicaid will be left with a requirement to obtain coverage, but no assistance to do so. .