Copyright © 2012 by K&L Gates LLP. All rights reserved. Healthcare Reform: Predictions & Possibilities So what about Jake?Patricia Shea, Esq.

1 Brief Overview  Essentials of PPACA  Legal issues and arguments  Potential outcomes

2 PPACA Building Blocks  Builds upon existing system of employer-based health insurance  Creates health insurance exchanges  Assists individuals with low incomes in obtaining coverage  Regulates insurers to prevent certain practices  Penalizes individuals who do not obtain coverage

3 Perceived “Bad” Insurer Practices  Guaranteed-issue provision  Insurers cannot deny you coverage regardless of any preexisting conditions  Community rating provision  Premiums based on community-wide criteria

4 The Penalty - Individuals  Minimum-coverage provision  New more affordable mechanisms for obtaining coverage  Increased employer sponsorship for coverage  Expansion of Medicaid eligibility  Tax penalty for individuals who do not maintain the minimum essential coverage

5 Exempted Individuals  Individuals who cannot afford coverage  Taxpayers with income below the filing threshold  Members of Indian tribes  During periods of coverage gaps  Hardships

6 Minimum Essential Coverage Satisfied by:  Government-sponsored programs (Medicare, Medicaid, CHIP, Tricare, VA, etc.)  Employer-sponsored plans  Plans in the individual markets  Grandfathered plans  Other coverage (state health benefit risk pools)

7 The Arguments  The minimum coverage provision  A valid exercise of Congress’s commerce or taxing powers?  Regulation of inactivity?  The Medicaid eligibility expansion  Severability

8 Potential Outcomes … 1.Court upholds the law. 2.Court strikes the individual mandate only because it is severable from the remainder of the law. 3.Court strikes the individual mandate and a number of provisions to which it is inextricably linked. 4.Court strikes the entire law.

9 Scenario 1: Court upholds the law  Congress has authority to mandate the individual coverage or pay penalty  Large employers must offer insurance or pay penalty  Health plans must meet requirements in PPACA, including  Dependent coverage up to age 26  Prohibitions against rescissions, annual lifetime benefit limits, pre-existing condition exclusions

10 Scenario 2: Court strikes only individual mandate  Remainder of law remains intact because the individual mandate is severable  Employers and health plans would have to comply with all provisions of the law applicable to them  Without mandate, health plans face issues of adverse selection  Increase costs to health plans

11 Scenario 3: Court strikes individual mandate plus some inextricably linked provisions  Likely candidates  Preexisting conditions  Guaranteed issue  Community rating

12 Scenario 4: Court strikes entire law Effect  Completely nullifies the law  Must “roll back” provisions implemented prior to the Court’s decision and cannot implement future provisions

13 In sum … So what about Jake?