As the first ruling in federal court to declare a portion of the Patient Protection and Affordable Care Act unconstitutional, Virginia Judge Henry Hudson’s Dec. 13 finding that the individual mandate provision falls outside “constitutional boundaries” puts a kink in the armor of President Barack Obama’s health reform package — but the battle over PPACA is just beginning.

Supporters of PPACA were quick to point out that Hudson’s decision is one among many (more than two dozen cases have been filed across the U.S.) and only applies to the requirement that all Americans buy health insurance or pay a penalty by 2014.

Because PPACA lacks a severability clause that would separate the remainder of the legislation if one portion of it is found to be unlawful, Hudson had the opportunity to stop implementation of PPACA as a whole, says Peter Marathas, a partner in the employee benefits and executive compensation group at Proskauer Rose. “Hudson showed some restraint,” says Marathas. “He really could have flexed his muscle and said, ‘By the way, because there’s no severability clause, the government can’t move forward at all.’ If he had done that this would be a huge story, but he refrained.”

Even so, Marathas says don’t downplay the individual mandate provision, even though it is not slated to go into effect for nearly three years. “The concern that the federal government has about the individual mandate is it’s really the Achilles’ heel of this massive piece of legislation,” he says.

“Welcome to the long journey of health care reform implementation. In all likelihood this legal challenge will at some point end up at the doors of the Supreme Court,” says Andrew Webber, president and CEO of the National Business Coalition on Health.

If PPACA goes to the Supreme Court, which many experts believe is likely in the next year or two, legal grounds to invalidate the entire law are present, says Marathas. “If they’re inclined, they could find a way to invalidate the whole thing” because the severability clause is missing, he says. “It really is the link. So that’s what’s so interesting about these cases.”

At the Council of Insurance Agents and Brokers, Joel Wood, senior vice president of government affairs, expects CIAB members to generally welcome Hudson’s decision due to its potential broader ramifications for PPACA, which he calls “fatally flawed.”

“I say that with two qualifiers, though,” Wood adds. “First, we certainly don't think anyone should put all their eggs in the basket of the constitutionality question; we all know this will ultimately be resolved by the Supreme Court. Political efforts to scale back the Act are what's on our mind. The second point is one on which we agree with the critical mass of health plans: you can't have market reforms (such as elimination of pre-existing conditions restrictions) in the absence of an individual or employer mandate. It just doesn't work.”

America’s Health Insurance Plans is still reviewing the opinion, but Robert Zirkelbach, press secretary, says, “Throughout the health care reform debate there was broad agreement that enacting guarantee issue and community rating would cause significant disruption and skyrocketing costs unless all Americans have coverage.”

Mike Powers of Corporate Benefit Advisers in Delray Beach, Fla., agrees that the individual mandate is necessary and “at the core of how the country might begin to pay for health care reform,” he says. “Without everyone’s participation, many will just move into the system when they need it and move out when they don’t. We’ve all been watching for this major misfire to happen.”

At the same time, Rhett Cleverly, chief underwriter with WMI Mutual Insurance in Salt Lake City, is “very happy” with the ruling. “I hope this is the first of many defeats for this legislation not just in the courts but hopefully in Congress as well,” says Cleverly. “I agree that the federal government has over stepped its authority and responsibility to the citizens of this great country.”

If not resolved, Pat Carpenter, vice president of business development with Ohio’s Sequent Retirement & Benefits Group, expects the multiple lawsuits challenging the constitutionality of PPACA to “create uncertainty for years” — a bad proposition for business owners needing to plan ahead on expenses. Without a stable business climate, “they hold back — from hiring, from investing in the business, and from expanding —because they don’t know what the business or tax climate will be. PPACA is depressing economic activity, and will continue to do so until it is killed,” says Carpenter.

Cyndy Nayer, president of the Center for Health Value Innovation, agrees that U.S. businesses must be able to budget for health expenses. But, she finds the challenges of illegality against PPACA “clumsy at best,” and maintains that “the attempt to dismantle the legislation for apparent partisan viewpoints is beneath the level and dignity of our courts.

“Let's use our courts to be sure no one is denied coverage, health resources are applied equitably, and evidence-based guidelines are applied using both academic models and real-world experiences. The only other alternative is to spend even more unpredictable monies and withhold care until the resolution of the partisan debate.”

While Tom Schuetz, co-president of Iowa’s Group Services, believes Hudson’s decision may speed up the process of bringing PPACA to the Supreme Court, “the more interesting developments to watch will be the battle over funding the different provisions of the bill once we have the new Congress in place in January,” he says.

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