News Analysis
The Supreme Court handed down a 5–4 decision on June 28 that found President Barack Obama’s health reform law constitutional. Signed into law in March 2010, it is the singularly most significant piece of legislation passed in President Obama’s term.
The Patient Protection and Affordable Care Act (ACA) mandates a national insurance system that significantly reduces the number of persons without health insurance. Democratic Presidents since Harry S. Truman and Democratic and Republican legislators had tried unsuccessfully to pass some kind of universal health care insurance plan and failed.
Although the legality of the law is settled, the rancor continues.
President Obama said minutes after the Court announced the decision, “In the wealthiest nation on Earth, no illness or accident should lead to any family’s financial ruin.”
House Speaker John Boehner (R-Ohio) said, “The president’s health care law is hurting our economy by driving up health costs and making it harder for small businesses to hire. Today’s ruling underscores the urgency of repealing this harmful law in its entirety.”
The president and the Democratic leadership urged an end to the bickering, suggesting that we put this matter behind us, and move forward with the nation’s other business.
But the Republicans remain determined to repeal Obamacare. Its most outspoken critics, including Republican presidential hopeful Mitt Romney, have vowed to obstruct and repeal it.
At least until the election in November and likely some time after that, the Affordable Care Act will remain the law of the land.
Medicaid Expansion Curbed
Implementing the law—2,700 pages long—has only just begun. Many provisions in the law require specific actions to be taken and deadlines to be met by states in order to implement various provisions of health reform scheduled to take effect in January 2014.
While the court’s ruling was a clear win for the Obama administration, it wasn’t total. The Medicaid expansion in the law that would add millions of uninsured to the program may not be implemented in states that choose not to participate. Seven justices determined that the federal government would be overreaching if it terminated all funding to a state’s existing Medicaid program for choosing not to participate in the expansion.
Chief Justice John Roberts likened the threat as being too coercive, amounting to a “gun to the head.”
Consequently, the Court eliminated this threat of withholding all Medicaid funding. Now only the federal funds allocated to cover Congress’s new eligibility requirements under the ACA can be withheld.
The implications of this ruling for federal funding of other state-federal programs such as education could potentially be immense. Louis Michael Seidman, professor of constitutional law at Georgetown University Law Center, said it was the first time since the New Deal in the 1930s that the Supreme Court struck down the Spending Clause because “it invaded state sovereignty.”
However, the high court treated Medicaid, and the Medicaid expansion under the ACA, as if they were two distinct programs, Seidman said.
“It’s anybody’s guess” what this decision on the Medicaid expansion will ultimately mean for Congress authorizing future spending programs, he said.
Implementing ACA
To be sure, the high court did not strike down the provision allowing Congress to expand Medicaid coverage to millions of persons without health insurance. The ACA requires Medicaid, which traditionally covers the disabled and impoverished, to cover nearly all adults under age 65 with household incomes at or below 133 percent of the federal poverty level (FPL), or about $30,700 for a family of four.
“The ACA’s Medicaid expansion will [provide] health coverage to 17 million more low-income adults and children, according to the Congressional Budget Office(CBO),” said the Center for Budget and Policy Priorities (CBPP) in March.
CBPP states that between 2014 and 2022, the federal government will pay $931 billion of the cost of the Medicaid expansion, while states will pay roughly $73 billion, or 7 percent, according to the CBO. “The $73 billion equals a 2.8 percent increase above the $2.6 trillion that states are projected to spend on Medicaid over the same timeframe in the absence of health reform,” CBPP said.
The CBO also said that when persons who have incomes too high to qualify for Medicaid but who qualify for subsidies that enable them to afford health care coverage are added to those made eligible by the Medicaid expansion, the number of uninsured people covered under the ACA reaches 33 million by 2022.
But the CBO and CBPP predictions were made in March before the Supreme Court changed the rules. How likely is it for states to choose not to participate in the expansion now that the court has made it less onerous to not participate? No one knows how many, if any, states will opt out.
It’s a lot of money, though, that a state would be turning away to pay for these uninsured persons that now are not covered. Even states that filed suit with Florida against the ACA will find it hard to turn away the federal funding.
States will receive federal funds to cover 100 percent of the costs for the Medicaid expansion for the first three years. The percentage gradually diminishes, so that by 2020 and subsequent years, the federal government pays 90 percent, and the states will have to come up with the remainder. With state budgets tight, however, even 10 percent may be perceived as unaffordable.
Exchanges Ready?
The ACA sets up “exchanges” within the states to provide a regulated and competitive marketplace for buying health insurance. States will need to decide the “essential benefits” the insurers must carry in policies to be offered on the exchanges.
“[The exchanges] will offer a choice of different health plans, certifying plans that participate and providing information to help consumers better understand their options,” says the Kaiser Family Foundation.
Beginning in 2014, exchanges will serve primarily individuals buying insurance on their own, or small businesses with up to 100 employees. States are supposed to establish the exchanges, which can be a government agency or a non-profit organization. If states fail to establish insurance exchanges, the federal government will do it for them.
Some states, including California, Connecticut, Maryland, Oregon, Rhode Island, Vermont, and Washington, have made rapid progress toward establishing their health insurance exchanges, according to the NY Times. Other states were waiting for the Court’s decision and now will have to get busy to have their exchanges up and running by 2014.
According to FedWatch, 34 states have received more than $850 million in grants to establish their exchanges. One shouldn’t assume that the majority of the 26 states that joined in the Florida suit against ACA won’t take the money. But Florida and Arizona and other states have refused the money or postponed plans. Some states are likely waiting to see what happens in the fall election.
The Washington Post notes that only 14 states and the District of Columbia have passed legislation authorizing the exchanges.
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