Supreme Court upholds healthcare reform

In a 5-4 ruling, Justices say Congress has authority to levy taxes under individual mandate

The individual mandate--which requires virtually everyone in the United States to buy health insurance or pay a penalty on their tax returns--is constitutional, the U.S. Supreme Court ruled today.

In its decision, released shortly after 10 a.m. EDT, the Court said that the individual mandate is within Congress' constitutional authority to levy taxes.

The decision was five to four, with Justices Sonia Sotomayor, Stephen Breyer, Ruth Bader Ginsburg and Elena Kagan voting with the majority that the Act is constitutional; Chief Justice John Roberts' fifth vote tipped the decision in favor of the Obama administration.

Dissenting were Justices Anthony Kennedy, Samuel Alito, Antonin Scalia and Clarence Thomas. "The federal government does not have the power to order people to buy health insurance," they wrote in the dissenting opinion.

The Court said that the penalty for those who do not have health insurance is indeed a tax but said it does not fall under the Anti-Injunction Act, an 1867 federal law that says in order to file a lawsuit to challenge a government tax, you must first pay it, request a refund and only later file a lawsuit to challenge the tax. The tax takes effect in 2014.  

The Court would not have ruled either way if the tax fell under the Anti-Injunction Act.

Today's decision will have a tremendous impact on the healthcare industry and the patients they serve.


"This is a victory for the American people--that's my gut reaction."

--Kenneth Davis, M.D., president and CEO of Mt. Sinai Medical Center

"This is a victory for the American people--that's my gut reaction," Kenneth Davis, M.D., president and CEO of Mt. Sinai Medical Center in New York City told FierceHealthcare in a phone interview immediately following the ruling. "Healthcare in this country should be a right, not a privilege. And the Supreme Court upholding this law goes far toward making that a reality."

Because the mandate survives, the Court did not need to decide what other parts of the statute were constitutional. The exception: a provision that required states to comply with new eligibility requirements for Medicaid or risk losing their funding. The Court limited the federal government's ability to penalize states by withholding Medicaid funds. The provision is constitutional, they ruled, as long as states would only lose new funds if they didn't comply with the new requirements, rather than all of their funding.

Davis said that in "generous" states, such as New York, that's good news, but he added that it will hurt healthcare organizations and their patients in states that buck the federal government by eschewing healthcare reform.