By expanding Medicaid, the state-federal partnership that offers health insurance to low-income Americans, the Affordable Care Act set out to cover some 17 million uninsured – or roughly half of the 34 million who are expected to gain coverage under reform. But when the Supreme Court ruled on the Affordable Care Act in June, it struck down a key provision which threatened that if a state refused to co-operate in extending Medicaid to more of its citizens, it could lose the federal funding it now receives for its current Medicaid enrollees.
In a 7-to-2 decision, the justices ruled that this punishment was too coercive: “withholding of ‘existing Medicaid funds’ is ‘a gun to the head’” – that would force states to acquiesce.
As a result, states can, if they choose, opt out of the Medicaid expansion, and some governors are threatening to do just that – even though the federal government has committed to pay 100 percent of the cost from 2014 to 2017. After that, the federal share would gradually decline to 90 percent in 2020, and remain there. This is a generous offer; today the federal government now picks up just 57 percent of the Medicaid tab.
Nevertheless, some states claim that the 10 percent that they would have to ante up after 2020 is more than they can afford. A few go further and admit that this isn’t just about money: by rejecting the federal funds, they are voicing their objection to “Obamacare.”
Despite its complexities and its politics, I support the Affordable Care Act (aka “Obamacare”). As I’ve written elsewhere, I think it would be both morally and economically wrong for Governor Fallin and the Oklahoma legislature to opt out of the ACA’s vast Medicaid expansion – a position shared by Oklahoma Policy Institute. So if Oklahoma does the right thing and opts to expand Medicaid for adults with incomes at or below 133 percent of the federal poverty level, what will happen?
Oklahoma faces a serious shortage of primary care access. The Oklahoma Health Care Authority, the agency in charge of administering Medicaid, recently compiled county-by-county maps, color-coded to classify areas of severe physician shortage based on presumptive levels of Medicaid expansion. At a glance, these maps reveal something we already know: rural areas are hurting for physicians and populous counties seem to have more capacity. In my opinion, however, the maps don’t paint a full picture of the eventual shortfall.Continue reading…
The big health care story in Washington, D.C this week comes down to three letters: CBO. The Congressional Budget Office released its latest projections about the Affordable Care Act’s cost and coverage, concluding that the Supreme Court’s changes to the ACA will lead to some states to opt out of its Medicaid reform. As a result, the ACA’s cost would fall by $84 billion over 11 years but lead to about three million fewer people receiving health insurance.
The CBO numbers are incredibly important in one sense: They reframe the debate over the ACA yet again. As I noted last week, more than two-thirds of states are waffling on whether to participate in the law’s Medicaid expansion, and the new CBO numbers will offer new targets for supporters and opponents of ObamaCare to make their case.
But the CBO score is also more of a political story than policy news. And as both parties continue to haggle over the ACA’s price and impact, keep in mind that the CBO’s projections about health law costs are often wrong.
So rather than focus on estimates of future reforms, we’ll focus on results from a current one: the Alternative Quality Contract. It’s an important payment pilot developed by Blue Cross Blue Shield of Massachusetts — and a key forerunner of the ACA’s accountable care organizations.
AQC Offers Template for ACO
Under the AQC, which Blue Cross launched in January 2009, a hospital or physician group negotiates a budget — or global payment — that covers the cost of care for all patients in their practice. If participating providers stay under budget, they receive bonuses; if they overspend, they pay the difference.
Personally, I am delighted that Chief Justice Roberts voted to uphold the Affordable Care Act. But, I am troubled that the fate of U.S. healthcare turned on one man’s opinion. This is not how things are supposed to work in a democracy.
Healthcare represents 16 percent of our economy. It touches all of our lives. If we don’t like the laws our elected representatives pass, we can vote them out of office. The Supreme Court, on the other hand, doesn’t have to worry whether its decisions reflect the will of the people. The Justices are appointed for life. This is why they are not charged with setting public policy.
How then, did the Court wind up with the power to affirm or overturn the ACA?
The media shapes our expectations
As I suggested when oral arguments began back in March, a “media narrative” drove the case to the Court – a fiction that caught on, in the press, on television, and in the blogosphere, where it began to take on a reality of its own. A handful of “state attorneys general and governors” saw “a political opportunity” and floated the idea that the law might be unconstitutional. The media picked up the story, repeated the heated rhetoric, and “fanned the flames … Before long, what constitutional experts thought was a non-story became a Supreme Court case.”
With over a dozen conservative states leaning against expanding Medicaid to cover poor workers without health insurance, perhaps it is time to resuscitate an idea embraced by President Ronald Reagan. Let the federal government take over Medicaid lock, stock and barrel.
In 1982 the president who ushered in the modern conservative era offered to assume federal responsibility for the program that now consumes over 22 percent of state government budgets in exchange for states taking over welfare. His offer built on a series of recommendations going back to 1969 by the U.S. Advisory Commission on Intergovernmental Relations, which called for a federal takeover of all public assistance programs.
President Obama’s health care reform law, if it survives the final hurdle of next November’s election, could give that idea new life. Under the Affordable Care Act, states are responsible for creating insurance exchanges where individuals and businesses can buy individual or group health plans.
After a four month “death watch” in the mainstream media for President Obama’s health reforms (following an ineffectual defense in March’s Supreme Court hearings), instant analysts were quick to characterize last week’s Supreme court decision as a ringing vindication of the Affordable Care Act and a big political victory for a struggling President Obama.
However, on closer reading, the instant analysts were wrong. The Roberts Court actually punched a huge hole in the law, potentially reducing its historic coverage expansion by as much as a third. In addition, the Court’s ruling will set off serious political conflict in southern and mid-western states that will ripple through those states’ health care markets, and fracture hospitals’ and health plans’ support for health reform.
Unlike the Act itself, which was almost unreadable, the Court’s opinions were written in English and will reward readers with fresh understanding of this complex law. They reveal two incommensurable philosophical positions eloquently argued and improbably bridged. There were two big surprises: Justice Robert’s apparent last minute support of the Court’s liberal wing in preserving the mandate and the remarkable decision to render the Medicaid coverage expansion optional! (Justice Kennedy, the presumed swing vote, actually supported killing the entire law).
I’m reading a lot of articles, and seeing lots of tweets, that detail a running total of governors threatening to opt out of the Medicaid expansion. First of all, those are threats. They are very different than actual action. It’s also in the best interests of states to take this position as a negotiating tactic. In the end, though, I think it will be very hard for states to opt out. Here are some of the reasons why:
- This is a pretty good deal for states. They’re getting most of the tab picked up by the feds.
- It’s one thing to turn down high speed rail. It’s another to tell your constituents that they can’t have insurance entirely paid for by the federal government in 2014.
- As more and more states take the money, those that don’t will be more easily marginalized.
- History. States threatened not to join Medicaid the first time as well. All did, eventually. Now the program is so American that threatening to remove it is “coercive”.
- There will be enormous pressure from doctors, hospitals,pharma, etc. who potentially will lose a lot of money in uncompensated care. They have pretty good lobbying groups.
The Affordable Care Act envisions a major expansion of health insurance in America, with some 30 million Americans gaining coverage. That figure includes some 17 million people with low incomes who were to get health insurance via an expansion of Medicaid eligibility. With eligibility raised—from 100 percent of the poverty level to 133 percent—many states will enlarge their Medicaid rolls and pay for it with federal funds, at least for a few years.
But the Supreme Court clouded that part of the vision last week, ruling that states cannot be penalized for refusing the federal money—thus leaving in doubt how many of the projected 17 million poor or near poor citizens will actually get coverage.
In short, the Supreme Court allowed the federal carrot to remain, but took away the stick. Matt Salo, the executive director for the National Association of Medicaid Directors, an organization for those who run state programs, summed it up for The Washington Post: “Prior to the court’s decision, failure to implement this expansion meant you [the states] lost all your Medicaid funding. Now you have a political and financial decision to make: Do you do this?”
The Supreme Court has upheld the Affordable Care Act (ACA), a frustrating situation in which conservatives won the policy battle, but lost the war over the Act. In particular, the Court held that Congress cannot use the Commerce clause to compel commerce. The individual mandate qua mandate is unconstitutional. However, the Congress has the right to impose taxes (if not punitive and excessive), which permits the Obama administration to add a tax on millions of uninsured Americans in addition to the ACA’s already-massive tax burden on the middle class.
The Court ruled that a Medicaid expansion could be an unconstitutional federal coercion of the states, but this expansion does not have a penalty large enough to pass that threshold. Interestingly, the Court opened up the possibility that governors could refuse the Medicaid expansion. Those same individuals would then be eligible for subsidies in the exchanges. If all the governors refused the expansion, and if individuals take up subsidized insurance the federal cost heads even farther north.
In a bit of a pyrrhic victory, the Forum’s amicus briefs, signed by over 200 economists, were cited twice in the Court’s dissenting opinion. (See my amicus brief.)
The field of play now shifts from a legal battle to a policy debate. In addition to the Court’s endorsement of the policy foundations of the challenge to the ACA, the fundamental policy flaws remain.
The ACA remains a damaging, anti-growth vehicle for taxation. The so-called Medicare surtax increases marginal tax rates on the return to saving, investment, and innovation. The medical device tax will hurt innovation and cost jobs. A bill to repeal it is gathering dust in the Senate. Also, the insurers fee – the “premium tax” – will roil insurance markets, disrupt patient-provider relationships, and the vast majority of the burden will fall on the middle class.
On November 14, 2011, the Supreme Court decided to review a decision of the Eleventh Circuit Court of Appeals striking down the minimum coverage requirement of the Affordable Care Act (ACA) as unconstitutional. The case will probably be argued before the Court in March and decided in the early summer.
Procedurally, the Court “granted certiorari.” This means that it agreed to review certain questions raised by the certiorari petitions presented by the various parties in the Florida case, including the plaintiffs who challenged the constitutionality of the Affordable Care Act — 26 states, the National Federation of Independent Business, and two private individuals — and the federal government, which defended the Act’s constitutionality. The Eleventh Circuit had ruled against the federal government on the question of whether the minimum coverage requirement of the ACA is constitutional, but had ruled against the plaintiffs on all other issues.
The Supreme Court did not rule on certiorari petitions pending before it from the Virginia, Liberty University, and Thomas More cases, two of which rejected a challenge to the ACA on jurisdictional grounds and the other of which held the minimum coverage requirement to be constitutional. (The Virginia petition was not yet before the Court, as it was filed later than the others). The fact that the Court only granted petitions in the Florida case probably signals nothing about the Court’s ultimate decision, as the Florida case raises all of the issues raised by the other cases and reviewing additional cases would have merely made the case more complex administratively.