Affordable Healthcare Act Designated as a Tax
Introduction
During the reign of President Barrack Obama of the United States, health reform was developed. It was on March 23, 2010, when the president, with his accorded power by the constitution, signed the reform into law. This reform was the Affordable Care Act (ACA) with the primary objective to ensure patient protection, and focusing on the expansion of coverage, controlling the costs of health care, and overly improve the quality of health. Primarily, this paper aims to discuss issues concerning taxation and the impacts of the impact on decision-making concerning the ACA reform. More importantly, the paper highlights how the affordable healthcare act is designated into the U.S. Federal Tax Law, with a deep examination of the landmark National Federal of Independent v. Sebelius case.
More precisely, the ACA was to provide comprehensive health insurance reforms. These reforms were intended to include tax provisions that influence individuals, families, insurers, tax attempt organizations, businesses, and business entities. Additionally, there was great concern about the tax provisions. They also contained critical changes, targeting the families and individuals who file taxes, highlighting employers and other organizations (Goodman & Flaherty, 2017). The law demands that the ACA projects the requirements of the employers on health coverage; also, the same law requires that individuals and families have health coverage that can be purchased on the insurance marketplace, making individuals eligible for the premium tax credit.
In the U.S., the “Patient Protection and Affordable Care Act (P.L. 111-148)” highlights that every citizen and legal citizens require to have health insurance. Based on this law, the states created state-oriented “American Health Benefit Exchanges” through which individuals could purchase coverage, using premium and cost-sharing credits. These were to be made available for families or individuals ranging between 133-400 percent of the federal poverty level, intending to create a separate exchange, targeting the small business and thus making them capable of purchasing the coverages (Goodman & Flaherty, 2017). It was also a requirement that employers pay penalties for the employees receiving tax credits for health insurance through the same Exchange. However, this one was done excluding the small employers while creating regulations that would regulate the health plans in the Exchanges in the personal or small group markets and expanding the Medicaid up to 133% of the federal poverty.
Additionally, the ACA aimed at addressing the challenges on American healthcare systems that the poor citizens hard felt. With this goodwill, Congress passed it in and become a law, whose target was the high cost of the insurance covers, the high cost of health care, and the increased population of the U.S. citizens who lacked a form of medical insurance (Barakat et al., 2017). Although millions of the population would benefit from this plan, the court imposed a challenge to the ACA. The opposition was immense from the Republicans with the arguments on overreach by the federal government. The challenge was on the reasons for imposing penalties on individuals who were not enrolled into a minimum form of health insurance and secondly on the law requirement to expand the Medicaid program, to offer coverage to the poor. The worst part of the act was that states that did not expand the plan would be subject to lose their federal funds for Medicaid.
Later in the year 2014, the ACA was subject to amendment, especially on the tax code. The amendment was based on minimum coverage provisions, providing a mandate on individual stipulations, especially those that did not purchase and maintain a minimum level of health insurance cover. These people were thus entitled to a tax penalty, which was payable in scheduled phases. However, this was faced by much opposition from the lawmakers; for instance, according to Chief Justice Roberts, “The Affordable Care Act does not require that the penalty for failing to comply with the individual mandate be treated as a tax for purposes of the Anti-Injunction Act (Banister, 2021).” This statement imposed much controversy, creating an anti-injunction act, seeking to explain the individual mandate on tax and whether this would be deemed tax. Besides, the ACA highlights the expansion of Medicaid and the employers' mandate to provide coverage to their employees, which was the only way to receive funds from the federal government.
Contrary, after the enactment of the ACA, Florida, with other states, rose against the program. They proceeded and brought actions in the United States District Court of Florida, seeking a declaration that the act was unconstitutional in various aspects. According to Roberts, “If a statute has two possible meanings, one of which violates the Constitution, courts should adopt the meaning that does not do so (Banister, 2021).” Not long, these states were also backed up by the support of thirteen more states, from the National Federation of Independent Businesses and individual plaintiffs Mary Brown and Kaj Ahburg. According to the latter plaintiffs, the ACA aspect of the individual mandate was beyond Congress's powers as stipulated by the Commerce Clause. Secondly, they argued that the expansion of Medicaid was unconstitutionally coercive, and lastly, the mandate on the employers interfered with the state sovereignty. This triggered the District Court to examine whether the plaintiffs had a strong stand that could be presented in the lawsuit (Cox et al., 2017). This was followed by determining Brown's stand to challenge the minimum coverage provision, which was purported due to her lack of health insurance. This meant that she had to seek financial arrangements, keeping compliance with the provision, which was to become effective from 2014.
Moreover, addressing the constitutional questions on the individual mandate, its ruling was that this was not a valid exercise of the Congress’ commerce or the taxing powers. Therefore, the act was held invalid, and that the mandate could not be served. Also, the District Court dismissed the state's challenge that focused on employers' mandates and judgments granted by the federal government on the expansion of Medicaid (Liang, 2020). This was after finding insufficient support for the contention and lack of constitutional coercion. However, this did not mean that the ACA would stop working altogether; instead, a panel of United States Courts of Appeal, specifically for the Eleventh Circuit, reached an affirmation on 2-to-1 the District Court’s holdings (DiMaggio, 2019). The holding was concerning the individual mandate and Medicaid expansion, reversing the District Court holdings. They finally agreed that individual mandate could be served simultaneously without invalidating the remaining part of the Affordable Care Act. Later, the American Health Care Act (AHCA) would be a perfect replacement for the ACA, an integration and correction of the flaws evident in the ACA of 2010.
References
Banister, J. (2021). The dissociations of John Roberts: National Federation of Independent Business v. Sebelius and the discontents of judicial supremacy. Argumentation and Advocacy, 57(2), 123-139.
Barakat, M. T., Mithal, A., Huang, R. J., Mithal, A., Sehgal, A., Banerjee, S., & Singh, G. (2017). Affordable Care Act and healthcare delivery: A comparison of California and Florida hospitals and emergency departments. PloS one, 12(8), e0182346.
Cox, C., Claxton, G., & Levitt, L. (2017). How affordable care act repeal and replace plans might shift health insurance tax credits. Health Reform.
DiMaggio, A. R. (2019). Political Power in America: Class Conflict and the Subversion of Democracy. SUNY Press.
Goodman, D., & Flaherty, S. (2017). Federal Subsidization of Health Insurance: The “Cadillac Tax” and Tax Credits in the Affordable Care Act and Beyond (Doctoral dissertation).
Liang, A. (2020). The 2014 Medicaid Expansion, Access to Care, and Heart Attack Mortality (Doctoral dissertation).
