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

2. 1 Brief Overview  Essentials of PPACA  Legal issues and arguments  Potential outcomes

3. 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

4. 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

5. 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

6. 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

7. 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)

8. 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

9. 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.

10. 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

11. 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

12. 11 Scenario 3: Court strikes individual mandate plus some inextricably linked provisions  Likely candidates  Preexisting conditions  Guaranteed issue  Community rating

13. 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

14. 13 In sum … So what about Jake?