In a 5-4 split decision, the High Court ruled that the individual mandate in the Patient Protection and Affordable Care Act was constitutional, because it constituted a “tax” on individuals who did not maintain the required insurance (either from their employer, a third party, or by purchasing their own insurance.) The law requires individuals to either obtain the minimum level of insurance or pay the IRS an amount based on household income.

The Court held unconstitutional the Medicaid expansion provision because it threatened the loss of Medicaid funding for States opting out of the law. Instead of invalidating the Medicaid expansion provision entirely, the Court scaled back the PPACA and ruled that the federal government could withhold the new Medicaid funds from States that don’t comply with the expansion. States would have the option of “opting out” of the Medicaid expansion, but still receive their prior funding from the federal government for Medicaid.

Hawaii’s Prepaid Healthcare Act already requires employers to provide employees (who work an average of 20 or more hours per week) with medical insurance. Hawaii enjoys a low uninsured rate of 8 percent compared to a national average of about 20 percent. As a result, the cost of health insurance in Hawaii is also relatively low as compared to most other states.

Regarding the 8 percent of uninsured individuals in Hawaii (or roughly 100,000), Hawaii has already been in the process of setting up an insurance exchange—the Hawaii Health Connector--that is designed to comply with the PPACA. Based on the Court’s decision to uphold (most of) the PPACA, the Hawaii Health Connector has announced that it will continue to work with the U.S. Department of Health and Human Services, the Center for Consumer Information and Insurance Oversight, the Governor’s office, and the Legislature to implement the exchange.

The PHCA previously contained an expiration clause which stated that the PHCA would expire “upon the effective date of federal legislation that provides for voluntary prepaid health care for the people of Hawaii in a manner at least as favorable as the health care provided by the [PHCA.]” At the same time, the PPACA contained a provision that stated that nothing in the PPACA shall be construed to “modify or limit the application of the exemption for Hawaii’s Prepaid Health Care Act . . .” as provided for under the Employee Retirement Income Security Act of 1974. In 2011, the legislature passed a measure which the Governor signed into law as Act 228 which repealed the expiration clause. In passing the measure, the legislature noted that the PHCA “provides superior benefits for the people of Hawaii” as compared to the PPACA. As a result, the legislature hopes the PHCA will remain in place even when the PPACA’s individual mandate takes effect in 2014.

Despite the Supreme Court’s ruling, the future of the PPACA, including its impact on Hawaii, is still somewhat uncertain. As the media has reported, politicians including Presidential candidate Mitt Romney and several prominent members of Congress have vowed to work to repeal the measure. At the local level, several politicians here in Hawaii have stated that any efforts to repeal or amend the PPACA may actually jeopardize the PHCA.

In addition, many of the major provisions of the PPACA do not take effect until 2014 (such as the individual mandate), and therefore, several further lawsuits challenging various provisions of the law may be filed in the future.

At this juncture, based on the Supreme Court’s decision in NFIB v. Sebelius, most of the provisions of the PPACA will appear to remain intact for the time being. The only difference is that the State of Hawaii will now have the option of “opting out” of the expanded Medicaid coverage, if it so chooses. By opting out, the state will not receive any additional federal monies that are designed to cover some of the costs of Medicaid expansion. On the other hand, by opting in, the State of Hawaii will need to pay additional monies to cover some of the costs of Medicaid expansion, but will also receive additional funds from the federal government. NFIB, et. al. v. Kathleen Sebelius, Secretary of Health and Human Services, et. al. (June 28, 2012).