The Supreme Court decision on the constitutionality of the
Affordable Care Act is finally in.
Before it was announced, most people seemed to think that the
individual mandate would be overturned.
It did not play out that way. The individual mandate was upheld – not under
the Commerce Clause of the Constitution, but as a tax. Justice Roberts proved to be the swing vote.
Also left intact are the expansions of Medicaid eligibility
and, as a result, the entire law, with all of its consumer protections.
However, there is a major caveat here.
States can opt out of the expansion of the Medicaid program without jeopardizing the rest of its Medicaid funding. In other words, the Court is allowing a state to refuse to expand Medicaid eligibility to 133% of poverty and to refuse to cover all of the ACA-mandated basic benefits in its program. If it does, it will only have to give up the new federal money that pays for these benefits.
The consequences may be devastating for lower income people if a state decides to make them scapegoats for a decision it finds otherwise unpopular, and I will be writing more about this in a couple of days.
However, there is a major caveat here.
States can opt out of the expansion of the Medicaid program without jeopardizing the rest of its Medicaid funding. In other words, the Court is allowing a state to refuse to expand Medicaid eligibility to 133% of poverty and to refuse to cover all of the ACA-mandated basic benefits in its program. If it does, it will only have to give up the new federal money that pays for these benefits.
The consequences may be devastating for lower income people if a state decides to make them scapegoats for a decision it finds otherwise unpopular, and I will be writing more about this in a couple of days.
The Court's decision is considered to be a major political victory for
President Obama. That may or may not prove
to be true in the short term.
And the biggest blow may
be felt by those who still believe that a private health insurance marketplace
– unsubsidized by the government – has a bright future in America.
Here’s why.
While the
individual mandate will affect as little as 2% of the population directly
(because most people who can afford insurance already have it), it was also
government’s the last gasp “carrot and stick” approach to convincing people to
buy a product – health insurance – that few people actually want or like.
“If you buy insurance,” the federal government has said
through ACA, “we’ll subsidize it to the tune of a $9,000 tax credit for a
family of 4 making $60,000. If you
refuse, we’ll impose a tax penalty of $2,085 on you.”
“No deal,” said 61%
percent of Americans in a poll released this week. If insurance were popular, would people have
to be forced to buy it?
That’s why John
Boehner has already announced that he will try to repeal the mandate through
legislation, and this will likely become a major political campaign issue this
year.
The truth is that ACA
is going to have little effect on overall health spending in America, and even
with the individual mandate in place the share of health costs paid by private
insurance is going to go down.
To understand why, take a look at the 2012 health spending
projections made by CMS personnel and reported in the article
entitled National Health Expenditure Projections, published online by Health
Affairs in June 2012 and in the July 2012 print issue.
CMS projects that overall health spending – now at $2.6
trillion a year – will increase by over 62%, or 5.7% annually, through 2021, to
$4.5 trillion per year. The ACA
effect? Under 5% of that, or a
cumulative 3.1%, well within the rounding error!
With two exceptions, ACA won’t change too dramatically who
pays the bill. As is clear from the
chart above, only two categories of payers will see their share shift by even
2%. The first is the Federal share of
the Medicaid program, largely because the federal government was paying 100% of
the cost of the Medicaid expansion. The
second is the out-of-pocket, or self-pay, share, largely because fewer people
would be uninsured.
The biggest
surprise? The share of health
expenditures to be paid by private insurance goes down by 1% over the
next ten years, in spite of the individual mandate that everyone who can afford
it must carry health insurance!
What this means is that even with ACA upheld, we will continue
our excruciatingly slow and tortuous march toward a governmental payer,
Medicare or Medicaid for all, basic health care financing system. But for "Medicare for all" advocates – it probably
won’t happen in your lifetime.
For all the arguments I and others will make in the coming
days that the impact of ACA and the Supreme Court’s ruling on healthcare
financing may now be overstated, another truth is that it remains the most
significant piece of health care financing legislation to pass Congress since
Medicare and Medicaid.
And that the Supreme Court has affirmed this.
This is the first in a
series of five OHPM columns on the impact of the Supreme Court decision on the
Affordable Care Act. Tomorrow: What the
Decision Means for You
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