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.
If you have questions about this column or wish to receive an email notifying you when new Our Health Policy Matters columns are published, please email gionfriddopaul@gmail.com.
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