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Tag: The Supreme Court Challenge

Supreme Court Ruling: States Move Forward with Health Exchanges

Now that the Supreme Court has spoken and upheld the Affordable Care Act (ACA), how exactly does this impact state governments?

One of the biggest ramifications of this decision revolves around the ACA’s individual mandate requiring citizens to purchase some form of health insurance or face a penalty, and the subsequent requirement for each state to establish a health insurance exchange (HIX).

While many states have spent the last two years preparing themselves in some capacity to set up an exchange, the amount of progress made varies greatly from state to state. Some have taken measureable strides to ensure their exchange is up and running to meet the October 2013 enrollments and January 2014 coverage effective deadlines set forth by the ACA, while others have been waiting on the final decision from the Court.  Now that it’s been made, we’re going to see these states in a scramble to build their HIXs in accordance with the ACA’s mandates and timeline.

What we’re hearing from our clients indicates the majority want to make health reform as state-specific as possible. In other words, they want to maintain control over their HIX rather than defaulting to the federal solution. But as the certification deadline looms, it’s increasingly important for states to consider a comprehensive solution that doesn’t require building a product and allows time for customization.

We have formally announced our Health Insurance Exchange solution, which enables us to provide a customizable HIX solution that states can tailor to meet the needs of their residents and small businesses and be sure it’s ready on time. We were recently awarded an ACA-compliant exchange in Nevada and also announced a partnership with Florida Health Choices to build Florida’s insurance marketplace.

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The Devil We Know

Once again, the Supreme Court was unsurprisingly surprising. The conventional wisdom was that at least part of the health reform law would be overturned, but in practice the court blessed the status quo we have known for two years: The reform law will continue to be implemented.

It’s the devil we’ve known. Washington will issue more regulations. Insurers will be buried in requirements on coverage and benefits, driving up costs. Physicians will have more oversight and report to the government. Hospitals will see Medicare cuts. Millions of individuals will either get a new federal subsidy for insurance or be enrolled in Medicaid.

States will have more interference from Washington. While the Supreme Court gave them some flexibility on whether to expand their Medicaid programs, states will still be forced to either build a new insurance exchange, like Expedia for health insurance, or have the federal government build it for them.

By upholding the law, the court also left untouched two huge problems looming on the horizon. First, as the law expands coverage there will be a tremendous increase in demand for medical services, but there will not be an increase in the number of doctors, nurses and other providers to deliver care.

Millions of people may have very generous coverage, but they will struggle to find providers to deliver it.

Second, as businesses face requirements in 2014 to offer federally approved health insurance or pay a fine, many companies will do the math and see that paying the penalty is far less expensive than continuing to provide coverage.

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What Do We Do Now?

Those of you from my generation may recognize the title of this blog as the last line from the movie “The Candidate.”  Robert Redford’s character has just won election to the U.S. Senate and ponders his future.

Supporters of the Affordable Care Act should be asking themselves the same question.  They worked hard to get the bill enacted and then had to sweat out (literally in much of the nation) the Supreme Court decision.  But the bill as it stands will only go so far to cure our nation’s healthcare woes.  Yes it will expand coverage.  And the push for Accountable Care Organizations might reintroduce some of the cost savings incentives enjoyed by HMOs.  But this is legislation that relies on competitive healthcare markets yet does precious little to promote competition. There is a lot more work to be done.

I doubt that the current Congress has the stomach to consider any more healthcare legislation, but here are some recommendations for the next Congress (and for any states that want to make the ACA work for them.)

1)  Limit the tax deduction for health insurance.  Economists have been preaching this for decades and the justification is as valid as ever.  If individuals want insurance that pays for every last dollar of every last medical service, let them buy it with after-tax dollars.  Why should everyone else subsidize their profligacy?  It has been said that Congress can never muster enough votes for legislation limiting the tax deduction.  They said the same thing about comprehensive health reform.  Get this done!

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SCOTUS Ruling An Unappreciated Win for the GOP

The ruling upholding most of Obamacare was an as-yet-unappreciated boon for the GOP. A brilliant move by Roberts, he managed to preserve the remaining integrity of the court — and raise his own stature — while at the same time increasing the odds of a Romney win. How?  By recasting the mandate as that third-rail of politics, a tax.  Let’s dissect both these statements.

First, how can we be sure it wasn’t a major victory for Obama, pundits notwithstanding?  There is a “market” in presidential election predictions, www.intrade.com.  One may place bets on candidates and while, like the stock market, it is wrong sometimes, the “price” of each candidate does react to events. So, for instance, Rick Perry’s price fell 75% within seconds of his forgetting the name of the third cabinet department he was going to eliminate.  And yet, a full day after Obama’s “victory” the “price” his re-election chances still has not budged. It bumped briefly and has since fallen back to the same $5.40 (to win $10 if he wins—a 54% probability) that it’s been hovering at for weeks.

Second, was Roberts accurate, or just politically astute, in re-casting the mandate as a tax?   Answer:  The latter.

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The Beginning of the Next Healthcare

What a cliffhanger! It is an historic decision, found on the narrowest possible grounds, with a majority agreeing on the result, but not broadly on the reasoning.

Effects: The principal effects of the finding, from the point of view of the system: They have just avoided enormous chaos over the coming years. The system is chaotic enough already, at a tipping point into an unclear future, with the huge shift in underlying economic factors. These factors include especially the various ways of shifting some economic risk from the payers and employers to the providers and the patients/customers.

Stabilizing: The Supreme Court finding stabilizes the future of the system. The affirmation, combined with the fact that a gridlocked polity in Washington is unlikely to come up with any major change or repeal of the law, and that the major parts of the law are self-funding, means that everyone now knows at least the general outline of what the rules are for the foreseeable future.

Permanent: The law is now likely permanent. To overturn it, you would need President Romney with a filibuster-proof majority in the Senate and a majority in the House. The major parts of the law are self-funding and not dependent on Congressional outlays. By 2016, most people will have experienced the results of the law, and found its benefits far outweigh its costs. Business owners will find that it is not as burdensome as some have feared. It will have become obvious that the experience of the actual law is far different and more benign than the fears that have been drummed up about it politically. Once people experience its benefits for themselves, it will be very hard to gin up a campaign to take it away from them.

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SCOTUS Surprise

Today a majority of the Court upheld the constitutionality of the Affordable Care Act, otherwise known as Obamacare in recognition of its importance as a key initiative of the Obama administration. The big surprise, for many, was the vote by the Chief Justice of the Court, John Roberts, to join with the Court’s four liberals.

Roberts’ decision is not without precedent. Seventy-five years ago, another Justice Roberts – no relation to the current Chief Justice – made a similar switch. Justice Owen Roberts had voted with the Court’s conservative majority in a host of 5-4 decisions invalidating New Deal legislation, but in March of 1937 he suddenly switched sides and began joining with the Court’s four liberals.  In popular lore, Roberts’ switch saved the Court – not only from Franklin D. Roosevelt’s threat to pack it with justices more amenable to the New Deal but, more importantly, from the public’s increasing perception of the Court as a partisan, political branch of government.

Chief Justice John Roberts isn’t related to his namesake but the current Roberts’ move today marks a close parallel. By joining with the Court’s four liberals who have been in the minority in many important cases – including the 2010 decision, Citizen’s United vs. Federal Election Commission, which struck down constraints on corporate political spending as being in violation of the Constitution’s First Amendment guaranteeing freedom of speech – the current Justice Roberts may have, like his earlier namesake, saved the Court from a growing reputation for political partisanship.

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The Return of the Public Option

Any day now the Supreme Court will issue its opinion on the constitutionality of the Accountable Care Act, which even the White House now calls Obamacare.

Most high-court observers think it will strike down the individual mandate in the Act that requires almost everyone to buy health insurance, as violating the Commerce Clause of the Constitution — but will leave the rest of the new healthcare law intact.

But the individual mandate is so essential to spreading the risk and cost of health care over the whole population, including younger and healthier people, that some analysts believe a Court decision that nixes the mandate will effectively spell the end of the Act anyway.

Yet it could have exactly the opposite effect. If the Court strikes down the individual mandate, health insurance company lobbyists and executives will swarm Capitol Hill seeking to have the Act amended to remove the requirement that they insure people with pre-existing medical conditions.They’ll argue that without the mandate they can’t afford to cover pre-existing conditions.

But the requirement to cover pre-existing conditions has proven to be so popular with the public that Congress will be reluctant to scrap it.

This opens the way to a political bargain. Insurers might be let off the hook, for example, only if they support allowing every American, including those with pre-existing conditions, to choose Medicare, or something very much like Medicare. In effect, what was known during the debate over the bill as the “public option.”

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Conservative Supremes Can Overturn ACA With “All Deliberate Speed”

If conservative Supreme Court justices are determined to overturn the Patient Protection and Affordable Care Act (ACA), then why not look to the Court’s famous ruling on school desegregation for what comes next? Couple the declaration that the signature legislative achievement of the nation’s first black president is unconstitutional with the enforcement urgency that followed Brown v. Board of Education in 1954.

In other words, tell the federal government to dismantle the ACA with “all deliberate speed.” Given the history of how putatively law-and-order Southerners responded, that should give health reform breathing room until at least the middle of the 21st century.

There are similarities between Brown and the ACA case. Both are rooted in controversies over state versus federal power and both, coincidentally, involve Kansas. In Brown, it was the Topeka Board of Education that said the Constitution allowed it to maintain separate schools for whites and blacks. In the ACA, it’s the Kansas state attorney general who has joined with 25 others to say that the Constitution protects state from having to expand the Medicaid program for the poor.

Brown was a landmark ruling that initially prompted little concrete change. When civil rights advocates returned to the Supreme Court in 1955 seeking better enforcement, the Court set a standard of “all deliberate speed” that in effect winked at much deliberate disregard. It wasn’t until 1969, in Alexander vs. Holmes County Board of Education, that the Court ruled that desegregation had to proceed immediately.

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Why Reform Will Survive Mandate’s Fall

The Supreme Court’s imminent decision on the Affordable Care Act will trigger a political firestorm whether they accept the legislation in its entirety, throw out every page of the 906-page bill or do something in between, which is the most likely outcome.

If the high court follows the polls, it probably will rule the requirement that individuals purchase insurance – the mandate – is unconstitutional but leave the rest of “Obamacare” intact. A CBS/New York Times poll released earlier this month showed that 41 percent wanted the entire law overturned, 24 percent supported it fully and 27 percent supported it but wanted the mandate eliminated.

Pooling the latter two groups suggests there is majority support for the coverage expansion, insurance protections and delivery system reforms contained in the bill – as long as there is no mandate. It was only the Obama administration’s decision to include the requirement that individuals purchase health coverage – something done to win insurance industry backing for the law – that gave opponents the cudgel they needed to stoke widespread opposition to reform.

The insurance industry, recognizing many of the reforms are popular, is already preparing for a thumbs-down ruling on the mandate. Three major carriers, UnitedHealth, Aetna and Cigna, said last week they would continue to allow young adults to stay on their parents’ plans until age 26, pay for 100 percent of preventive services and eliminate lifetime caps on coverage, reforms from the ACA that are already in place.

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The Case For the Exchanges


The Federal government will push forward to establish health insurance exchanges regardless of how the Supreme Court rules on the Affordable Care Act in the weeks to come, argues THCB contributor Maggie Mahar.  The only sensible conclusion?  The states should accept Washington’s help and open up the market for insurance online.

The Affordable Care Act (ACA) calls on the states to create health insurance exchanges – marketplaces where individuals and small businesses can shop for and compare health insurance plans. Beginning in 2014, insurers peddling policies on an exchange will have to meet the ACA’s standards by covering “essential benefits,” capping out-of-pocket expenses for individuals, and offering more transparent information about costs and benefits.

Best of all, insurers will not be able to turn down customers suffering from chronic diseases, or charge them higher premiums.

So far so good.

But some states are attempting to derail “Obamacare.” Florida, Louisiana and Alaska have openly declared that they will have nothing to do with setting up exchanges. Last week, Politico.com reported that many others are stalling. The post quoted one consultant predicting that “between five and 10 states” will meet the 2014 deadline. The American Prospect confirmed the news, adding that some states that had begun making plans “have slowed down while awaiting the Supreme Court ruling on the health law.”

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