A: To quote the Supreme Court’s ruling, the Affordable Care Act is
designed to “increase the number of Americans covered by health insurance and
decrease the cost of health care.”1
Why? Because according to the US
Census Bureau, 49.9 million Americans were uninsured in 20102, and a
2009 study found that almost 45,000 people die every year due to a lack of
coverage.3 The number is
disputable, but no matter what political party you belong to, everyone agrees
that it’s easier to pay for health care if you have insurance than if you’ve got none. Where people disagree, however, is over what role, if any, the government should
have in tackling the issue.
Another argument for the bill was because some estimates suggest that
overhauling the nation’s health care could reduce the national deficit by $210
billion over the next 10 years. The
thinking here is that the government would spend about $1 trillion to provide
subsidized insurance to low- and middle-income families during the next decade.
But the law has a combination of
cost-cutting measures as well as tax increases (we’ll cover those in a minute),
that proponents believe will result in a lower deficit.4
Q: So what exactly does the
Affordable Care Act do?
A: There are far too many provisions in the law to list here, but a few of
the most talked-about aspects are as follows: 5
-
The individual mandate. This is a requirement that all Americans have or buy health
insurance. In effect it means that
anyone without health insurance will have to pay a fine. However, there are exceptions for people who
belong to certain religions, or fall in specific income levels. Starts
in 2014.
-
The employer mandate. This will require all businesses with over 50 full-time employees
provide health insurance. Starts in 2014.
-
Guaranteed coverage for children with
pre-existing conditions. This means that no insurance company can deny
coverage to a child who has a pre-existing medical condition. Basically, this ensures that all children in
the United States will have health care coverage. Starts
now.
-
Children can stay on their parent’s plans
until age 26. Starts
now.
-
Expansion of Medicaid. This involves broadening the eligibility requirements for people on
Medicaid. It also stipulates that states
opting out of this expansion will be denied Medicaid funding from the Federal
government. However, the Supreme Court
found this last part unconstitutional.
More in a moment.
Q: So
why is the bill so divisive?
A: There are a number of things that have stirred up debate, but the
single most contested part of the bill has been the individual mandate. To put
it simply, opponents of the mandate claim that it is unconstitutional for the
federal government to force its citizens to buy anything, including health
insurance. On the other side, those who
back the mandate argue that people who do not have insurance actually
contribute to higher premium prices.
This is because sick people without insurance can still be treated at some
hospitals and care centers. This care
may be provided free of charge for the sick person, but it still costs money—and
the costs are “often shifted to insured populations in the form of higher
charges by providers, which in turn leads to higher premiums.”6
Q: So what happened on Thursday,
June 28th? What does the
Supreme Court have to do with anything?
A: First, a little bit of background.
Before the bill became a law, it was voted on in Congress along strict
party lines. Almost every Democrat voted
for the bill; almost every Republican voted against it. In the end, the bill passed due to the
Democrats holding a slim majority in Congress.
The bill had been controversial from the start, so it was all but
guaranteed that it would be challenged in court. That’s exactly what happened. According to the Supreme Court ruling,
“Twenty-six States, several individuals, and the National Federation of
Independent Business”1 filed a lawsuit in Federal District Court,
“challenging the constitutionality of the individual mandate and the Medicaid
expansion.”1 Eventually, the case came before the Supreme Court, who
agreed to review it late last year.
Since
then, the case has been watched closely.
The Supreme Court consists of nine justices, headed by Chief Justice
John Roberts. Four of the Justices,
including Roberts, are generally considered to have conservative leanings,
while another four are usually thought of as more liberal. The ninth Justice, Anthony Kennedy, is often
referred to as a swing vote, meaning he has no concrete political ideology.7 Because of this, many experts thought the
final decision would be a close one.
They were right.
On
Thursday, the Supreme Court finally released its ruling. The individual mandate was affirmed to be constitutional,
while the portion of the Medicaid expansion threatening states with a denial of
funding was stricken down as unconstitutional. The final vote ended up being a 5-4 decision,
with Chief Justice Roberts surprising many by ruling in favor of the mandate.
Q: What was the thinking behind
the Supreme Court’s ruling?
A: The Supreme Court’s job was to determine whether Congress has the right
under the Constitution to impose a legal mandate and expand Medicaid. According to the ruling, the law was
“affirmed in part and reversed in part.”1 The individual mandate was found to be
constitutional because Congress planned to enforce it by levying a financial
penalty on all those who do not have health insurance. According to Chief Justice Roberts, this
penalty is the same as a tax. Said
Roberts, “The individual mandate must be construed as imposing a tax on those
who do not have health insurance.”1
As the Constitution specifically grants Congress the power to “lay and
collect” taxes, the individual mandate is therefore constitutional.
The provision for expanding Medicaid, however, is partly
unconstitutional. While Congress could
expand Medicaid in general, they could not “[threaten] States with the loss of
their existing Medicaid funding if they [the States] decline to comply with the
expansion.”1 This is because
the Constitution gives Congress the power to “establish cooperative
state-federal programs” but “a
State [must] voluntarily and knowingly
accept the terms of such programs.”1
Since the Constitution does not give Congress the authority to require states accept the terms of such
programs, they could not withdraw state funding.
Q: So how does this news affect my
finances?
A: There are two basic ways:8
Individual mandate: First off is the requirement to have health insurance. If you already have insurance, then you don’t
need to worry about this part of the law.
But if you don’t, you will need to either buy it or pay a penalty. In 2014, the penalty will be $285 per family
or 1% of income, whichever is greater.
In 2015, the penalty increases to $965 or 2% of income. By 2016, the number rises to $2,085 per
family, or 2.5% of income, whichever is greater. The only exemptions are for members of
certain religious groups, or those with very low incomes.
Medicaid payments: To
help pay for the expansion of Medicaid, individuals making more than $200,000 a
year (or $250,000 if married) will start having to pay an extra 0.9% of their
income towards Medicaid taxes.
(Currently, all workers in the US pay 1.45% of their wages into Medicaid.) In addition, a new 3.8% tax will be levied on
investors. Starting next year, 3.8% of
investment income, whether from capital gains or dividends, will be paid into
the Medicaid program.
Sources:
