Supreme Court Upholds Much of the Affordable Care Act

Today the Supreme Court upheld nearly all provisions of the Affordable Care Act, the health care reform legislation also referred to as Obamacare. This is what the crowd looked like in front of the Supreme Court this morning before the ruling was announced:




The most controversial part of the law — the individual mandate requiring all Americans to purchase health insurance — was upheld. One part of the law was struck down: The Court found that Congress cannot pull existing Medicaid funding from states that refuse to comply with the law's expansion of Medicaid eligibility.

As I wrote here last week, this decision had big implications for the federal budget. That's because health care costs have been increasing sharply for decades, and federal health care programs — such as Medicare and Medicaid — account for an increasingly large share of the federal budget. Federal spending on health care has increased from around 7 percent of the federal budget in 1976 to a projected 24 percent in fiscal 2013. The Affordable Care Act was intended to drive down health care costs.

The Congressional Budget Office (CBO) estimated that repealing the Affordable Care Act in its entirety would have added $119 billion to federal budget deficits through 2019. Though the legislation would increase federal spending by expanding Medicaid and subsidizing the purchase of private health insurance for many Americans, the legislation also will bring in new revenues with an excise tax on high-cost health insurance plans and through penalties levied on Americans who choose not to purchase health coverage. On balance, the legislation is projected to reduce deficits.

The Court's decision also means that people with pre-existing medical conditions cannot be denied health insurance, and that young adults will be able to stay on their parents' health insurance until they are 26 years old.