Opponents of the Affordable Care Act (ACA) are now looking
to the Supreme Court to overturn the 2010 law before time runs out on them.
After ACA became law eighteen months ago, they were
optimistic that they could beat back several of its key provisions. These included the minimum medical loss
ratios, the expansion of Medicaid, the health insurance exchanges, and the individual
mandate.
A brief review of the
current status of each shows why the individual mandate is the last one
standing. But as the arguments for and
against it have crystallized in the Courts, they show how the Supreme Court could
open a Pandora’s Box best left closed.
Minimum loss ratios
ACA mandates that all private insurance plans will have to
pay at least 80 to 85 cents in benefits for every premium dollar collected, or
rebate the difference to policy holders beginning in 2012. Opponents argued that many existing plans
would be forced out of the market because of high administrative costs.
However, the federal government has approved several
short-term waivers from the requirement, deflating opposition. Also the Center for Medicare and Medicaid
Services has told Florida that it must meet the 85% minimum loss ratio in its public
Medicaid program, too. Once private
insurance rebates start to flow to consumers in 2012, the remaining opposition
will likely melt away.
Medicaid Expansion
Beginning in 2014, everyone below 133% of poverty will be
eligible for Medicaid. The 26-state
lawsuit against the ACA – the one most likely to be taken up by the Supreme
Court this term – argued that the Medicaid expansion imposed an
unconstitutional financial burden on the states.
But the Courts have already ruled against the states on this
one, and so the Medicaid expansions will go forward in two years unless
Congress changes the law.
Health Insurance
Exchanges
Beginning in 2014 states will have to have exchanges through
which consumers will purchase health insurance.
Only plans offering the minimum benefits mandated by ACA can be offered
on the exchanges. Some state regulators
argued that they did not have the authority to enforce the “minimum benefit
provisions” mandated by ACA. Florida decided
to establish its own exchange that will not meet the ACA requirements.
However, a dozen other states are already moving forward
with their approved exchanges, undercutting “lack of state authority” argument
and putting Florida out on a limb.
The Individual
Mandate
Beginning in 2014, a system of subsidies and penalties will
go into effect to encourage people to purchase health insurance. Those making up to 400% of poverty will
receive subsidies for health insurance, but all those above 133% of poverty who
refuse to purchase insurance will have to pay a federal income tax penalty.
The crux of the legal
argument against the individual mandate is that it is unconstitutional for the Federal
government to impose a tax penalty on an individual for refusing to purchase a
consumer product. However, opponents
have conceded that it would be Constitutional to impose such a mandate at the
time of service.
Judge Stanley Marcus, one of the judges who heard the
appeal that may now go before the Supreme Court, made this clear in his dissent.
He wrote that “the plaintiffs and, indeed, the
majority have conceded, as they must, that Congress has the commerce power to
impose precisely the same mandate compelling the same class of uninsured
individuals to obtain the same kind of insurance, or otherwise pay a penalty,
as a necessary condition to receiving health care services, at the time the
uninsured seek these services.”
So what the Supreme
Court is being asked to decide is not “if” the individual mandate is constitutional,
but “when.”
Some legal experts don’t think that there is much of a
distinction in this.
But if the Supreme Court feels differently, and ultimately
decides that it is Constitutional to impose the tax at the time of service, but
not in advance, then this may well open up a Pandora’s Box that we would all
rather stay tightly closed and locked.
Even a narrow ruling against the “pre-tax” could have a
far-reaching unintended consequence for indigent, uninsured people. These people include many of the over 50
million uninsured people today and the 22 million who will still be uninsured
after ACA implementation. A Supreme Court ruling that holds that people
could be forced to pay at the time of service could also be construed as
permitting providers to deny care to those who cannot afford it.
Opponents hope that a Supreme Court ruling against “pre-taxing”
will result in a political unraveling of the law. It could well happen, but not
in the way they intended.
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