Health Care Reform On Trial

This week, the Supreme Court heard arguments over the constitutionality of the Affordable Care Act (ACA, or health care reform).  As we wrote last week, ACA helps millions of American families by extending health care to those who are either uninsured or underinsured.[1] As the arguments before the Court have revealed, the path to health care reform has been tortuous and contentious.[2] This Alert outlines several of the key elements and concerns that are in play. 

What Might be Lost

If the entire law is found unconstitutional, with no parts severable (able to continue individually), it will set back a variety of important gains – for example, a finding that the whole law fails would eliminate a variety of protections and directions of import to an improved healthcare system, such as:[3]

• Pre-existing condition exclusions;
• The loss of the opportunity to buy insurance in insurance pools;
• Waste, fraud, and abuse protections;
• Medicaid expansions;
• Development of Best Practice standards for health care delivery;
• A focus on quality measures;
• Expanded data collection activities designed to achieve health equity for racial and ethnic minorities (as well as Lesbian, Gay, Bisexual, and Transgender (LGBT) people);
• Shared savings programs designed to hold down healthcare costs;
• Integration of the delivery of services for MMEs (people eligible for Medicare & Medicaid);
• Greater emphasis on care coordination;
• Health exchanges (allowing people to shop for healthcare coverage options);
• Insurance market reforms requiring insurers to provide more information about coverage and claims and pay-out history.

Importance to Low-Income People

Expanding services, particularly ACA's expansion of access to the Medicaid program, is very important.  This expansion will allow more people to have access to health insurance by requiring states that choose to participate in the Medicaid program to cover nearly all non-disabled adults under age 65 with household incomes at or below 133% of the federal poverty level (FPL) as of January, 2014.   Further, as shown below, states that take advantage of this expansion will receive significant increases in their Federal Medical Assistance Percentage (FMAP) toward the cost of providing expanded Medicaid coverage.

The Anti-Injunction Act

The key question here is whether a court has jurisdiction to hear a challenge to a federal law that is essentially a tax raising vehicle or instrument. Whether the ACA-prescribed penalties for not having insurance is a tax, given that the penalties are enforced through the tax code, is of major concern.   If the Tax Anti-Injunction ACT (AIA)[4] does apply, it would mean that the Supreme Court doesn’t have jurisdiction to hear the case, and that challenges to the law would have to wait until after 2014, when someone would first experience a tax penalty because of the mandate.  

People on both sides of the constitutionality of the ACA, would prefer that the Court find that the AIA does not apply.  There needs to be clarity and continuity in program and system development for ACA implementation.   Planners at the state and federal level need to feel that they are on solid ground in going forward with implementing the ACA's complicated rules for health exchanges.  Likewise, insurance companies need clarity and certainty in building products and markets based on rules that are reasonably reliable and relatively certain.

Severability

Those in favor of the ACA are hopeful the Supreme Court will find that the several major provisions of the Act are severable.  This means that if one or more parts of the law are found to be unconstitutional, the whole law is not struck down, allowing the unaffected portions to go forward.

The Individual Responsibility Provision

The individual responsibility provision or "the individual mandate" is the heart of the ACA.  The law is predicated on the notion that everyone must have some level of health insurance or there will not be a sufficient number of people in the healthcare systems created by the ACA to make the law's delivery systems sustainable.  Further, those who are uninsured and suffer a health incident add to the costs for society as a whole. Our notions of a civil society and our sense of good public policy is that we want a healthy population.  Since few can afford to self-insure or set aside sufficient resources to cover a health crisis on their own, requiring that everyone enter the insurance pool is the best way to ensure coverage at reasonable cost, relative to health care costs in general.

Expanding Medicaid

States will get an increase in their Federal medical assistance percentage (FMAP) as follows: 100% of costs from 2014-2016, 95% in 2017, 94% in 2018, 93% in 2019 and 90% in 2020 and beyond.[5]  Plus, states generally understand the Medicaid program and have the infrastructure on which to build and expand.  Moreover, Medicaid participation is optional, but if a state decides to participate, it has to follow federal rules and standards.

Acknowledging the Cost of Reform

There are always unforeseen costs to implementing major programs involving health and social services.  States and private entities stand to gain billions of dollars through ACA, which will help the overall economy.  The general embrace of best practice paradigms in the ACA helps the government to be a "smarter payer" by paying for care and services that have some proven merit.  In addition, ACA's focus on such goals as care coordination, physician and practitioner engagement, and registration and accountability add to bringing down the general costs of health care.  Moreover, the timeline for program implementation will allow for greater individual participation in the system which will increase revenues and resources by expanding the pool of people using and paying into the healthcare system.

Making the Case for Congressional Action

The major issue is one of whether the Congress has laid out sufficient and factual groundwork to support its claims that it is acting within its powers. An affirmative answer to this central question by the Supreme Court is necessary in order to find that the ACA is a valid exercise of Congressional power under the Commerce clause, which would then allow it to take the "necessary and proper" steps to effectuate its intent with respect to the Commerce clause.

Conclusion

Those who have studied court arguments over the years know that it is folly to use the "ups and downs" of oral argument as an indication of how a court will in fact rule on an issue. Advocates on all sides remain vigilant.  Access to healthcare for millions of Americans and their families is at stake.  We at the Center for Medicare Advocacy continue to stand by the Affordable Care Act and the many innovative and patient-centered reforms that the law brings to the Medicare and Medicaid programs, and to the healthcare industry as a whole.  ACA is already bringing much-needed relief to families.  It will continue to do so if allowed to go forward.