The Supreme Court has Ruled on the Accountable Care Act – Now What? Tim Hartin General Counsel Shannon Medical Center

Supreme Court Decision Upholds individual mandate as a tax, rather than as a penalty under the Commerce Clause (a “penaltax”). 5 Justices opined that the law exceeded the Commerce Clause. 4 Justices would have struck entire law Justice Roberts saved the mandate by concluding that it would have been permissible as a tax His reasoning was joined by no other Justice

Supreme Court Decision Allows states to opt out of Medicaid expansion CMS argued that opting out of Medicaid expansion would cost all of the Medicaid match money – “all or nothing” Where the amount of federal funding is so large that it is a “gun to the head” of states, the federal government is limited in the conditions it can put on that funding Future challenges of other conditions imposed states?

Medicaid Opt-Out Budget Issues 1.2MM newly eligible Texas residents Federal subsidy– 100% 2014 – 2016, 90% thereafter (over first 10 years, $100 - $112BB) Texas costs – estimated at $15 - $16BB over first ten years Opt-out costs are imposed on hospitals and health care

Health Insurance Exchange The clearinghouse for uninsured individuals to buy policies Currently, around 15 states are pushing forward with exchanges A federal exchange will be created for states without a state exchange Serious doubts about whether state, and especially the federal, exchange will be on-line by 01/01/14

Health Insurance Exchange Low-Income Tax Credits? Statute provides that low-income individuals purchasing insurance may qualify for tax credits As drafted, it appears those credits are available only to persons who purchase through a state exchange IRS has published rules to extend credits to both state and federal exchanges Expect litigation on the IRS rules and the provision of credits through the federal exchange

Health Insurance Exchange Employer Penalties? Statute provides that certain employers who do not provide qualifying insurance to employees are subject to a penalty Penalties are triggered if an employee gets a tax credit Establishing a state exchange may expose state employers to penalties.