HHS and Treasury Issue PPACA Rules and Grants as the Constitutionality of the Health Reform Individual Mandate Ripens for the Supreme Court

HHS and Treasury continue issuing guidelines and handing out establishment grants for PPACA health insurance exchanges even as the constitutionality of PPACA's individual mandate requiring U.S. residents to purchase health insurance seems to be on the fast track to the Supreme Court.
The Department of Health and Human Services (“HHS”) and the Treasury Department are pushing forward the establishment of the health insurance exchanges mandated by the Patient Protection and Affordable Care Act (“PPACA”), despite the recent challenges to the constitutionality of parts of PPACA, according to an article from Reuters. In recently released guidelines, the HHS and the Treasury Department said that "states need to provide a 'one-stop shop' system" that will provide consumers with information regarding the insurance programs and tax credits for which they are eligible, including Medicaid. [1]

HHS awarded $185 million in grants to 13 states and the District of Columbia to establish exchanges.
Additionally, the HHS awarded $185 million in grants to 13 states and the District of Columbia to help establish the exchanges. HHS already awarded $35 million in these "establishment grants" to three other states in May. Additionally, more than $50 million in planning grants went to most states last year, and another $241 million in grants were paid to help seven states establish exchanges that others could use as a model.[2]

PPACA requires the individual state governments to establish health insurance exchanges, or open marketplaces where competing insurance companies can offer health insurance plans with certain minimum requirements to consumers. If the states haven’t submitted detailed plans of their health insurance exchanges by January 1, 2013, the HHS will move in and begin establishing the exchanges to ensure they are established by 2014.[3]

Meanwhile, a U.S Court of Appeals has ruled PPACA's health insurance mandate unconstitutional.
Meanwhile, the United States Court of Appeals for the 11th Circuit ruled on Friday that PPACA’s mandate requiring U.S. residents to purchase and maintain health insurance was unconstitutional. The decision contradicts the ruling of the 6th Circuit Court of Appeals in June, setting the stage for the U.S. Supreme Court to settle the matter in 2012.[4]

The 11th Circuit decision stated that, while Congress has broad power under the Commerce Clause of the U.S. Constitution to regulate interstate commerce, Congress cannot "mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die."[5]

Additionally, the 11th Circuit "raised federalism concerns, saying the mandate intruded on health-insurance matters traditionally a concern for the states."[6]

The Politico has pointed out two strong reasons to believe that the Supreme Court will weigh in on the constitutionality of the PPACA mandate:
First, there are two circuit courts that have ruled in opposite directions on the constitutionality of the law's individual mandate. And second, because the Obama administration lost in the latest ruling, it is going to be the one filing the appeal. The Supreme Court rarely turns down such requests from the federal government, especially on an issue with the scope of the health reform law. [7]
Thus, the issue of the constitutionality of the PPACA mandate appears to be on the fast track to the Supreme Court, and it may be before the Court in the 2012 term.


1Government lays out health insurance exchange details, Alina Selyukh and Anna Yukhananov, Reuters, August 12, 2011.
2Government lays out… , Id.
3Government lays out… , Id.
4Health Overhaul is Dealt Setback, Brent Kendall, Wall Street Journal, August 13, 2011.
5Health Overhaul…, Id.
6Health Overhaul…, Id.
7Lawsuits hit faster track to Supreme Court, Jennifer Haberkorn, Politico, August 15, 2011.

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