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Top Court to Eye Pieces of Healthcare

November 15 2011

The U.S. Supreme Court reported Monday it will take up portions of several legal challenges to the healthcare reform law, known formally as the Patient Protection and Affordable Care Act. The legislation has raised concerns in the staffing industry over possible employer financial penalties starting in 2014 against firms that do not provide healthcare insurance to their workers or whose healthcare is deemed not affordable.

George Reardon, special counsel at employment law firm Littler Mendelson, said the Supreme Court agreed to hear some, but not all, of the issues presented. However, it did not deny review to the other issues, suggesting that it might address those other issues in subsequent rounds. 

The issues that it will address first are:

  • Whether the court has jurisdiction to review the law now. Under the Anti-Injunction Act, courts can’t stop tax laws from taking effect prior to the taxes going into force. If the law’s penalties are deemed to be taxes subject to this protection, review may have to wait until 2015.
  • Whether the individual mandate portion of healthcare reform is constitutional. This mandate requires all individuals in the U.S. to have healthcare coverage in 2014 or pay a penalty.
  • Severability — whether other portions of the healthcare reform law — such as the employer mandates — will be able to remain in place even if the individual mandate is not allowed.
  • Whether the federal government can threaten to withhold funding to compel a state to act in a way that the federal government is not empowered to directly force it to act. While this issue does not affect the staffing industry, it is of great general importance, even beyond the context of healthcare reform.

Reardon cited three possibilities for the court’s rulings on the three issues affecting the staffing industry:

  • It could decide to hold off on rulings until 2015 because of the Anti-Injunction Act. In this case, staffing firms would have to prepare for healthcare reform taking effect in 2014, but a ruling on the act wouldn’t take place until the next year.
  • It could throw out the individual mandate only, leaving other portions of healthcare reform intact such as the employer mandate. This would not have a great impact on staffing firms’ situation under the act.
  • It could throw out the entire healthcare reform act, which would also do away with the employer mandates that pose concerns to the staffing industry.

Ed Lenz, senior vice president, legal and public affairs, at the American Staffing Association, said legal scholars believe it is unlikely the entire law will be stricken.

However, if the court rules against the individual mandate, it could call into question the viability of the law, Lenz said. Insurance companies had been relying on getting more customers and revenue in order to pay for other portions of healthcare reform such as insuring people without regard to pre-existing conditions. However, the impact won’t be unique to the staffing industry.

Lenz said the court could hear arguments in March and then make a decision in June.

For a recent SI Review article on healthcare reform, click here.


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