Obamacare Has Been Compromised Enough

I have never been the biggest fan of the Affordable Care Act. 

I believe that since the government is already paying over 70% of our nation’s health care bill and we’re paying another 12% out of pocket, this colossal effort to preserve the small share financed by privately-funded private insurance without bankrupting the nation may not have been worth the effort.  Medicare-for-all would have been a much better approach.

But now that an emerging group of at-risk Democratic senators have joined the Republican chorus to delay the individual mandate, I want to offer an opposing view to theirs. 

Obamacare has been compromised enough.

Since it was enacted in 2010, Obamacare has undergone the following significant changes:

• The minimum medical loss ratio requirements were delayed in several states.
• The long-term care insurance program has been repealed.
• The prevention fund has been raided.
• The reductions in payments to providers have been put off.
• The mandatory Medicaid expansion has been made optional.
• The employer mandate has been delayed.

These have all occurred before the program was fully implemented.  And this has had more to do with public pressure than public policy.

Now there are at least three more changes gathering steam – a delay in the individual mandate (favored by conservatives), a delay in the reinsurance pool tax (favored by liberals), and a delay in the 2.3% excise tax on medical equipment (favored by both).

The irony is that members of Congress think these changes will make them more popular with their constituents.  But that isn’t going to happen.  The popularity of Congress is at an all-time low.  Obamacare is at least four to five times more popular than Congress.

So enough already.  How about trying leadership for a change?

Democrats reversing course on the Affordable Care Act’s individual mandate is only today’s news.  Even though they now count on short memories, the Republicans and their conservative allies, who for the most part laid the philosophical foundation of the Affordable Care Act, including its individual mandate in the first place, also used to favor the individual mandate.  They reversed their position on it around the time President Obama embraced it.

So here is the question.  Are any of these people capable of staking out a position on this law as a matter of policy and then actually sticking by it – at least until the law is implemented?

When John Kerry said in the 2004 Presidential campaign that he voted for an appropriation for the Iraq War before he voted against it, it became a national joke and added “flip-flopping” to the political lexicon. 

A decade later, flip-flopping on the Affordable Care Act seems to have replaced leadership as a requirement of public office.

And here’s why a little leadership today could go a long way: because most of what is being argued about doesn’t really affect anyone anyway.

All the news this month about both the non-working federal exchange and the individual mandate affects about seven million people this year.  They are all either uninsured or have really lousy employer-based insurance.  That’s a little over 2 percent of the population.

For the rest of us who are not yet eligible for Medicare, the Obamacare consumer protections are what matter – no lifetime caps on benefits, no denial of coverage based on pre-existing conditions, no cancelling of coverage when people get sick, and mandated minimum medical loss ratios.  And these have all been in place, for the most part, for the last couple of years.

And for Medicare beneficiaries, the closing of the donut hole and the new prevention benefits are pretty much all they need to be concerned about, and they, too, have been in place for a couple of years.

No one objects to these.  And so far as I can tell no one is begging the members of Congress to change them.

So why don’t we just wait and see how the other 2 percent make out?  They have until March 31^stto sign up for insurance through the exchange.   And if in February they cannot because of technical problems, there will still be plenty of time to help them out by delaying the March 31^st “individual mandate” deadline.

In the meantime, let’s stop pretending that members of Congress have our interests in mind when they advocate delaying the individual mandate.  Or that they’re showing any leadership at all.

Because pandering and leadership are not the same thing.

Paul Gionfriddo via email: gionfriddopaul@gmail.com.  Twitter: @pgionfriddo.  Facebook: www.facebook.com/paul.gionfriddo.  LinkedIn:  www.linkedin.com/in/paulgionfriddo/

Uncloaking the Two Percent

Should the Affordable Care Act be repealed so that over a million people making more than $123,000 per year can avoid paying $3,000 in taxes beginning in 2016?  And should they be allowed to pass on the cost of their health care to everyone else?

This week, a local newspaper quoted a lifelong Florida Democrat as saying she might vote for Mitt Romney because she believed ACA offered “a costly giveaway to freeloaders.”

The irony is that the law actually does just the opposite – and Mitt Romney knows this better than most.  It requires nearly all health care “freeloaders” either to get insurance or pay a tax penalty.

Eighty percent of those affected will get insurance.  But the Congressional Budget Office reported last week that it expects 6 million people to owe the tax penalty beginning in 2014.  The $8 billion the penalty will eventually raise will help defray the cost of uncompensated care.

Six million people make up less than 2% of our total population.  Should the Affordable Care Act be repealed because of them?

Like that Florida Democrat, at least half of us seem to think so.

According to a CNN poll taken just after the June Supreme Court decision upholding the tax penalty, 51% opposed the so-called individual mandate.  According to a Kaiser Family Foundation July tracking poll, 61% opposed collecting the tax penalty.  And according to a Rasmussen poll released this week, 52% still want to repeal the whole Act, largely because of this provision.

Just who are these 2%, for whom our collective hearts bleed?

They are hiding among the 30 million people who will still be uninsured after the Affordable Care Act takes full effect. 

The vast majority of those 30 million are exempt from the mandate, because they are Native Americans, undocumented immigrants, individuals who are so poor that their insurance premiums would exceed 8% of their income, and people who will be granted hardship exemptions.

The remaining 6 million comprise the 2%.  And most are fairly well-off.  In today’s dollars:

• 69% have Adjusted Gross Incomes (AGIs) of at least $46,100 for a family of four, roughly equal to the median household income in America;
• 49% have AGIs of at least $69,150;
• 31% have AGIs of at least $92,200; and
• 20% have AGIs of at least $115,250.

How much will it cost the 6 million to buy health insurance?  Not as much as you might think.

Beginning in 2014, a family with $69,150 in income will get a tax credit of $10,385 if they have to buy their own health insurance, limiting their total net insurance cost to just under $540 per month.

And families with incomes of $46,150 will get tax credits of $14,014.  They’ll pay just $237 per month net for their health insurance.

The 2% is made up almost entirely of these two groups.  The first is people with six figure incomes who can afford to buy insurance.  The second is lower income people who will be offered tax credits so big that their net cost of insurance will be far less than what many people are paying out-of-pocket today.

What these two 2% groups have in common is a sense of entitlement – a belief that if they become seriously ill then the rest of us should pay their health care bills as well as our own.

Or, as Mitt Romney characterized it for Glenn Beck in 2007, they want “free care paid for by you and me.  If that’s not a form of socialism, I don’t know what is.”

Is that fair?

As the Affordable Care Act is written, the free ride ends.  1.2 million wealthier people who today make more than $115,200 per year and choose not to buy health insurance will pay, on average, a tax penalty of around $3,160 per year when the penalty is fully phased-in in 2016 – to help cover health care costs that average more than five times that. 

And the 1.2 million middle-income people making between $46,100 and $69,150 will pay a tax penalty averaging around $583 per year– about the same as what other middle income people will pay for insurance every month or two.

Maybe people who oppose the penalty think it is too small.  I doubt it.

I think they’ve more likely been mesmerized by the wizardry of politicians and pundits, who are using the cloak of repeal to protect an entitled 2% at the expense of everyone else.

Questions or comments?  Post them below, or email gionfriddopaul@gmail.com.

What the ACA Decision Really Means for the Future of Private Health Insurance

Did the Supreme Court save private health insurance, or just drive another nail in its coffin?

Ironically, it might well turn out to be the latter.

Keep in mind that from a consumer perspective, much of the Affordable Care Act was about trying to keep private insurance affordable in America.  But “affordable” is a relative term.  When your employer pays most of the cost, insurance is a lot more affordable than if you’re paying the bill yourself. 

At over $20,000 per year for a typical plan providing family coverage, health insurance now costs around 40% of the median household income of $49,445!

Being mandated to take on that expense – even with the generous subsidies ACA provides – understandably rankles people.  It’s no wonder that millions of healthy people may still choose to roll the dice and go without.

But even though we have spent so much time arguing about the cost of insurance and the private insurance market, the fact is that it pays only a small part of the nation’s health care bill.

An August 2011 article in the New England Journal of Medicine reported that private insurance paid only a little over a third of all health care costs, and even less – one quarter – of mental health care costs.

Even those small numbers are high.  When you take into account (1) the share of private insurance that is subsidized by the government through tax benefits and (2) the share of private insurance that is paid by all levels of government on behalf of public employees, the percentage of care paid for by privately-funded private insurance is only in the teens.

Even if members of the public can’t recite the data, they have a sense that health insurance is simply no bargain.

One of the best illustrations of this is in the Pre-Existing Condition Insurance Program (PCIP), the short term solution devised by the federal government and put into place through ACA to provide guaranteed health insurance to adults with pre-existing conditions.  The program will run from 2010 until 2014, targeted to people with pre-existing conditions who were uninsured and uninsurable.

If you meet the eligibility criteria, then enrolling in PCIP is like winning the lottery.  It almost guarantees that you receive more in benefits than you pay for insurance.  In fact, this was true – in its first year or so, it paid out $1.30 for every dollar it took in.

The government estimated that 4 million people were eligible for the program, and that 375,000 of them would enroll.  As of this April 30, only 67,482 had.

What does it say about the future of private insurance when people won’t even buy it when they know it will pay out more than it costs?

It shouldn’t come as a surprise to anyone that so many people – up to 67% - wanted the individual mandate to be overturned by the Court, according to a NY Times/CBS poll taken in March.

Even people who support universal coverage find fault with a system so stacked against the consumer – in which the cost of insurance bureaucracy alone is twice what we pay for our entire system of public health, and more than we pay for all nursing home care, home care, dental care, or veterans services in America. 

It’s not like insurers are highly regarded.

For all the good they’ve done in this country – and they have often done the hard negotiating work of keeping prices of health care under control (for evidence of this I need only look at the statement for my most recent blood tests.  The lab accepted $8.57 as payment in full from the insurer for tests it for which it would have charged me $57.85 if I were paying the bill on my own), insurers have lost touch with the desires of their customers, and are now seen more as obstacles to health than facilitators of care.

And the $1.1 billion in bureaucratic overcharges ACA is forcing them to pay back this year doesn’t help their reputations at all.

The only strategy ACA proponents could come up with to shore up insurance was to mandate people to have it.

Organizations like the Heritage Foundation introduced the individual mandate to our healthcare debate twenty years ago as an alternative to “Medicare for all” proposals.  They understood that Congress was going to have to drag people kicking and screaming into the insurance marketplace.

In the aftermath of the Supreme Court decision, that’s even more obvious.

This is the third in a series of five OHPM columns on the impact of the Supreme Court decision on the Affordable Care Act. Monday: the impact of the ACA decision on Medicare and Medicaid.

The ACA Decision Is In

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. 

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  

Holding Your Breath

Here’s why you don’t need to be holding your breath while awaiting the announcement of the Supreme Court’s decision on the Affordable Care Act.

Its immediate impact on you may be a whole lot less than you think.

And here’s why you should be holding your breath.

How the Court rules could ultimately determine whether private health insurance or public health insurance is the way we finance health care in the future.

The reason is this.  ACA expanded both the role of private insurance and public insurance in providing healthcare coverage in the future.  It added a projected 13 million people to the private insurance rolls and 17 million to Medicaid. 

The 13 million were added to private insurance primarily through a mandate that individuals who can afford it buy insurance.  The 17 million were added to Medicaid through a mandate that the states expand the Medicaid-eligible population.

The Supreme Court was asked to rule on the constitutionality of both mandates at the same time. 

If it chooses one over the other – by finding one expansion constitutional and the other unconstitutional – it may well determine just how health financing unfolds for decades to come.

Here are a few things to keep in mind as you listen to the result.

• Despite all the rhetoric, ACA will have little long term effect on overall health spending.  The cost of health care services is projected to rise by an average of 5.7% per year over the next ten years, from $2.6 trillion to $4.5 trillion.  The amount that the entire Affordable Care Act will contribute to this increase is not 100%, or even 50%.  It is around 5% – or an average of three-tenths of 1% per year.

• The share of the nation’s health care bill that private insurance will pay in 2011 is 34 percent, much of which is either paid or subsidized by government.  If all the provisions of the Affordable Care Act – including the individual mandate – remain in place through 2021, then private insurance will pay 33% of the bill, one percent less than it pays today.

One reason – the individual mandate, at the crux of the rest of the legal challenge to ACA, will affect fewer than one in 50 Americans.

• States have claimed that the Medicaid expansion is the real budget back-breaker of the Affordable Care Act.  But a majority of the new Medicaid costs that states attribute to the Affordable Care Act are actually the costs of enrolling currently eligible people.  The Medicaid bill is going up either way; the only question is how big a share of new costs the federal government will pay.

The ACA decision may well be a momentous one politically, but I’m not really convinced about this. 

The only truly “politically framed” issue in the whole debate has been about the fairness of the individual mandate.  Presidential candidates Obama and Romney both opposed it, while public officials President Obama and Governor Romney both supported it.  Maybe one of them will get a lasting boost from the decision about its constitutionality; maybe not.

What will matter more for public policy in the near term is this:  whether either of the provisions, if ruled unconstitutional, is found to be severable from other parts of the law.  That’s because many other parts of the law, such as the consumer protections and the Medicare expansions, are popular and affect most of the voting public.

But neither of these things will matter most in the long term.  What will matter down the road is what we learn from the ruling about the fundamental health financing policy choice of at least the last fifty years – public or private?    

I’ll be looking at this question and more in a series of five OHPM columns that will be published over the next few days. 

The first column will be out tomorrow, shortly after the decision is announced. 

The second, on Friday, will be entitled What the ACA Decision Means for You.

The third, on Saturday, will discuss the implications of the ACA decision for the future of private health insurance.

The fourth, next Monday, will discuss the implications of the ACA decision for the future of Medicare and Medicaid.

The fifth, next Tuesday, will take a look at the post-ACA world for health, public health, and mental health policy.

Of course, if the Court delays its announcement at the last minute, then the columns' publication will be postponed as well. 

In the meantime, let’s just take a deep breath and see what the Court has decided.

If you have questions about this column, please contact gionfriddopaul@gmail.com.  Paul  Gionfriddo will be presenting on the implications of the Supreme Court's ACA decision on Friday, June 29, at noon, at the Mental Health Association of Palm Beach County.  For more information, click here.

How We Really Hope the Supreme Court Will Rule on the Affordable Care Act

The Affordable Care Act has finally had its days in court this week.

And commentators who were certain on Monday that the Supreme Court would uphold the individual mandate were just as certain on Tuesday that it would not.  Perhaps they have some special insight into the thinking of the Justices. I don’t.  I’ll just wait for the decision. 

In the meantime, I’m wondering not how each of us thinks the Court will rule, but how we hope it will rule.

The answer isn’t so simple, because we divide into – and often move among – three competing minority camps about health reform in general:

• The Affordable Care Act represents the best compromise for insuring more people while preserving most of our current public/private payer system.
• Expanding reform to a single payer system like those favored by other developed nations would be better. 
• Replacing ACA with a private market-based system is at least worth a try.

If we’re as uncertain as polls cited by the Kaiser Family Foundation suggest, I suppose we all could just close our eyes, vote for Mitt Romney, and assume from his record and rhetoric that we’ll get all three.

But the Court will decide first, so let’s consider the rooting interests of several interested and sometimes overlapping groups.    

If you favor a single payer, “Medicare-for-all” program:

You want the Court to find the individual mandate unconstitutional, but severable from the rest of the bill. 

Why?  The individual mandate was originally the alternative to “single payer,” so you would like to get the individual mandate out of the way.  Then single payer becomes an option again, but only if the rest of the law, including the Medicaid expansion and the consumer protections, remain in effect.  This is because our private insurance market will become too expensive if people use those consumer protections to wait to buy insurance until they are sick.

If you want to reduce the size and scope of the state Medicaid programs:

You want the Court to rule the Medicaid expansion unconstitutional, but the individual mandate constitutional. 

Why?  This combination will most constrain Medicaid growth because lower income people will have to purchase health insurance in the private market.  They’ll qualify for a subsidy, but not for Medicaid.

If you want more universal coverage, but don’t care whether it’s private or public:

You want the Court to uphold the entire law.

Why?  Although philosophically impure, the combination of Medicaid expansions, Medicare cost containment strategies, Medicare tax increases for the wealthy, and subsidized private insurance for the middle class will lead to more coverage, and fewer uninsured.

If you or a child of yours has a chronic condition, such as diabetes, mental illness, or cancer:

You may not care whether the individual mandate is constitutional or not, but if it isn’t, you want it to be severable from the pre-existing condition coverage and community rating portions of the law.

Why?  If the PCIP experience is any indication, you may not want to be forced to buy insurance.  But when you do try to buy it, you don’t want to be denied affordable coverage because of your pre-existing condition.

If you are an early retiree on your former employer’s health insurance:

You want any provisions found to be (1) unconstitutional and (2) not severable from the pre-existing condition and community rating portions of the law to be severable from the rest of the law.

Why?  This could gut much of the law, but not the provisions that subsidize your coverage.  You won’t have to worry that you could either lose your health insurance or be forced to pay a lot more for it.

If you are a Medicare recipient:

You want any provisions found to be unconstitutional to be severable from Medicare expansions.

Why? If they aren’t, you’ll need an immediate bipartisan agreement in Congress to keep your donut hole prescription drug coverage and your free annual check-up in place.

If you want insurance that will cover long term care needs:

You’re already out of luck. 

Why? That provision was axed from the law before it was ever implemented – and you don’t hear anyone talking about restoring it.

And, if you’re okay with denying or capping coverage for pre-existing conditions, allowing insurers to make as much profit on insurance as they can, having gaps in prescription drug coverage for elders, and paying for the sick and uninsured through increased premiums on people who have insurance:

You want the Court to find the whole law unconstitutional.

Why?  That’s where we were when all this began.

Note: Click here for simple explanations about some of the Supreme Court issues that are discussed in this week's column.

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.

The Disintegration of Health and Mental Health Care

How will the Supreme Court respond to an argument next week that might lead to the disintegration of health care in America?

In recent years, we have been making slow policy progress in better coordinating and integrating primary and specialty care, and health and mental health care.  Two milestones were the passage of the federal Mental Health Parity Act in 2008 and the Affordable Care Act provisions in 2010 that prohibit insurance discrimination against people with pre-existing conditions, both in coverage and in cost.

These are opening more primary care doors to people with mental illnesses. 

80% of all mental health problems are first seen in a primary care office.  And it now pays for a primary care clinician to screen for mental health problems.  According to one recent projection completed by the Mental Health Association of Palm Beach County (available on request from that organization), a primary care practitioner can generate in excess of $100,000 in insurance payments for every 2,500 behavioral health screenings he or she completes.

Integration also appears to pay off for patients in earlier and more effective care.  Between 2006 and 2009, the number of primary diagnoses of mental illness in general hospitals dropped from 2.4 million to 1.6 million, as more clinicians recognized the need to treat health and mental health symptoms – which are often indistinguishable – together.

Now the Supreme Court is being asked to weigh in on the question of integration.

Next Wednesday, on its third day of oral arguments about ACA, the Court will hear arguments about whether the individual mandate is “severable” from the rest of the Act.  How it responds may well determine whether the recent progress we’ve made to integrate care will stall.

Here’s why. 

The Obama Administration is arguing that the individual mandate is intertwined with two other provisions – the mandate to provide coverage without regard to pre-existing conditions and the mandate to provide coverage at no additional cost to those with chronic conditions.

These are important consumer protections, but the Administration’s view is that without the individual 

mandate healthy people will choose not to purchase insurance that covers expensive chronic conditions.  Instead, they will just wait until they get sick and then buy the coverage that will still be guaranteed to them if the other mandates remain.  This will in turn force up the price of insurance for everyone. 

The Administration supports ACA, but most ACA opponents also agree with the Administration on this point, as have some judges who have already ruled on the law.

If the Supreme Court finds the individual mandate unconstitutional, and then also agrees that it is not severable from the other provisions, it would overturn these two additional mandates.  This would result in a worst-case scenario for people with mental illnesses – a return to the private insurance market we’re just now leaving behind, where premiums are too high for them to afford, and coverage is too low for them to obtain effective treatment.

It won’t help people with other chronic conditions, either, as they head back out of primary care settings and into hospitals for treatment.  We’ll all lose out, because properly diagnosing and treating chronic conditions early means less cost down the road, more effective care, and better patient outcomes.

The historical pressure against integration in the health care delivery system isn’t philosophical or constitutional, but is often the product of increasing specialization among health care providers.  In 1960, there were approximately 7.5 primary care physicians and 7.5 specialty care physicians in the United States for every 10,000 citizens.  Fifty years later, in 2010, there were just under 7 primary care physicians per 10,000 citizens, but over 13 specialists. 

Specialists by training know a narrow area of medicine well.  As a result, we have grown to think about chronic diseases one at a time, and we often treat them this way, too. 

But this isn’t very efficient or effective, because patients usually bring more than one problem at a time to their primary care clinicians.  And by the time they are in care, almost two-thirds of patients with at least one chronic condition have at least one more.

That’s why we need integrated health and mental health services, and fair coverage for chronic diseases.  And that’s also why – if policymakers aren’t ready with an alternative – the disintegration of health and mental health care could result from the Supreme Court’s decision about severability.

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.

Is Medicare for All on the Horizon?

We’re now just a little more than a month away from the day the Supreme Court will hear the arguments that determine the fate of the Affordable Care Act.  

The fight will be narrow – about the constitutionality of the individual mandate and Medicaid expansions.  

The consequences for health care financing, however, will be widespread.

And, ironically, both states rights conservatives and pro-national health insurance progressives may end up rooting against their own positions.

To understand why, consider the four ACA Supreme Court issues that will be argued. 

The first is the constitutionality of the individual mandate under the Commerce Clause of the Constitution. 

To be constitutional under the Commerce Clause, a law has to regulate economic activity that “has a substantial effect” on interstate commerce. 

While it may seem that all the activity under ACA will have a substantial effect on interstate commerce, Judge Vinson in Florida disagreed.  In considering the individual mandate, he found that the failure to purchase insurance by an individual is economic “inactivity,” not “activity.” For Judge Vinson, there’s no distinction between economic inactivity and non-economic activity. (I’m not so sure.)

Two times – in 1995 and again in 2000 – the Supreme Court held that non-economic activity wasn’t covered under the Commerce Clause.  So if the Supreme Court agrees with Judge Vinson, then the individual mandate won’t be constitutional under the Commerce Clause, and the Court will have to consider the second issue.

Is the individual mandate constitutional under the taxing authority of Congress?

If the Commerce Clause doesn’t make the mandate constitutional, then the Anti-Injunction Act might.  It prevents anyone from challenging the right of Congress to collect taxes. 

But even though ACA forces people who don’t buy insurance to pay higher income taxes, Congress specifically referred to these as “regulatory penalties.”  So is a tax by another name still a tax?  If it is – as the Fourth Circuit Court ruled – then the individual mandate is probably constitutional. 

But let’s say it isn’t.

Then the third issue becomes important – whether the individual mandate can be “severed” from the rest of the law. 

Some laws state explicitly that if one section of the law falls, the rest still stand.  But ACA doesn’t.  So it’s up to the Court to decide what happens to ACA as a whole if it finds the individual mandate unconstitutional.

So far judges who have ruled the mandate unconstitutional have disagreed about its severability.

One judge (Hudson) said it was severable, citing a 2010 Supreme Court ruling. When portions of a law are unconstitutional, all that should be thrown out were “problematic portions while leaving the remainder intact.” 

Another judge (Connor) also found it severable, but not from the entire law.  He said that the sections of the law that prevent insurance companies from denying coverage based on pre-existing conditions and prevent higher rates based on health condition, geography, or gender are intertwined with it.  So he found these unconstitutional, too.

A third judge (Vinson) ruled that the individual mandate wasn’t severable, but essential to ACA’s overarching goal.  He therefore decided that the whole law was unconstitutional.

The individual mandate was originally developed as an alternative to single-payer, government-funded, universal health care coverage.  But the fourth issue – whether ACA’s Medicaid expansion is constitutional – may now glue the two together.

The 26 states opposing the Medicaid expansion aren’t arguing against it per se, but against the federal government “coercing” them into implementing it.  In other words, government health care is fine, but not if states have to pay. 

This year, these and other states are proposing disturbing cuts to safety net health services.  Florida is considering a proposal to turn most state health services over to counties .  The Governor of Maine wants to remove 65,000 adults from the Medicaid program.  Louisiana just announced a new round of cuts to local mental health providers.  And Connecticut has begun denying some Medicaid coverage to kids with disabilities.

It’s as if they collectively believe that any problem can be solved by taking money away from it.

Here’s what they’re ignoring.  When you oppose requiring either individuals or states to pay for health care, you’re left with only one viable future option – federally-financed Medicare-for-all.

On the other hand, when you defend ACA as it is, you’re arguing that a two-tiered system of government-subsidized private health insurance for those who can afford it and public insurance for the poor and elderly is the solution to our health care financing crisis.

So when the Supreme Court decides, who wins?

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

A Dime's Worth of Difference in 2012

With the Iowa caucuses finally behind us, the Presidential campaign of 2012 now begins in earnest, and will dominate our news and lives for the next year.  I predict we will hear words like "Obamacare," “Romneycare,” “government takeover,” and “individual mandate” (usually in sentences following the word “repeal”) until we can’t stand it anymore.

If this is to be our fate in the New Year, then perhaps we can take some comfort in knowing that the debate probably won’t make a dime’s worth of difference about where most of us get our health care over the next few years or how we pay for it.

This is because the 2010 Affordable Care Act and the individual mandate were not really health reform.  They were efforts to preserve health insurance as we know it, by getting more people who can afford it to purchase private insurance, and more who cannot onto the Medicaid public insurance program.

So maybe we should take a minute between caucuses, primaries, and the general election to imagine what real health reform in America would look like in 2012.

It isn’t hard.  We just have to keep in mind a few facts.

First, governments already pay approximately $1.8 trillion of our roughly $2.5 trillion annual national health care bill.  Individuals pay another $300 billion out-of-pocket.  These numbers aren’t going down, whether the Affordable Care Act is upheld or repealed by the Supreme Court in June.

Second, there is plenty of money in our health system to delivery high quality health care to everyone who needs it.  We just need to target it to prevention as well as treatment.

Third, for the relatively small amount of money they put into the system, insurance companies have been given an outsized role in determining when, where, and how our health care is delivered.

Fourth, we woefully underfund our most important health services.  Public health and prevention activities have accounted for half of the gains in life expectancy during the last century, but receive far less than 5% of health care funding. 

And fifth, we criminalize instead of preventing and treating much of mental illness, and have made jails our nation’s largest mental health institutions.

With those facts in mind, we should acknowledge what real health reform isn’t.

It is not Romney’s or Obama’s “individual mandate” to buy private health insurance people don’t want and won’t trust.

It is also not Ron Paul’s notion of leaving people to fend for themselves in some non-existent “health care marketplace.”  No civilized nation does this and we are not going to be the first.

Here’s what a true American health reform – one that would result in healthier citizens, better access to care when it is needed, lower long term costs of care, and better quality – would look like.

1.       We would rebuild our health care delivery system around the federalized funding that already dominates health financing.  Medicare would be our basic national health insurance program, and be available to everyone.

2.       Medicaid would become a federal program like Medicare, and cover only long term care needs including chronic mental illnesses.  There would be no means-tested eligibility. States would not have to pay for it or administer it, so they could lower their state taxes accordingly.

3.       Private insurers, which are already such a small part of the overall health financing market, would play a role to which they are more suited.  They could offer supplemental insurance products covering first-dollar deductibles, co-pays, and additional, discretionary consumer services (like private hospital rooms and gourmet meals) at whatever prices they could get, for whatever profit they could make. 

4.       The Medicaid program could still require that people spend down a considerable portion of their own resources before it covered the remainder of long term care costs.  But we should allow everyone to set up tax-deferred long term care savings accounts to use for themselves, members of their families, or anyone else they designate.

5.       We would double the percentage of health dollars in public health and prevention over the next ten years.

How could we finance such as system of care?  The reality is that this system probably wouldn’t cost us any more than the current one does, and would probably cost less.

Of course, we won’t get this reform, but we can dream.  And I’d much prefer such a real policy debate about health reform in 2012 to the one we’re scheduled to receive – Mitt Romney attacking the individual mandate he invented and Barack Obama defending the individual mandate he opposed. 

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.

Supreme Court Ruling Against Individual Mandate Could Result in Care Denial to Poor

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.

A Different Kind of Individual Health Mandate

According to a recent report in Health Affairs, health spending in the United States is projected to rise by 5.8% per year over the next decade.

source: CT OPM

Rising health care costs are a problem that must be brought under control.  One approach is to do what Florida's doing.  It is forcing state employees into a single HMO, removing all competition from the market while praying that the HMO won't be motivated by making a profit. 

Another is to look at what the State of Connecticut is doing.

It is betting over $100 million that its employees and retirees will respond to a different kind of “individual mandate” from the one under fire in the Affordable Care Act.  Connecticut has decided to give financial incentives to employees and retirees to manage their health.  It will also penalize financially those who do not. 

State workers overwhelmingly voted to accept the new deal earlier this month.  If the plan works, then it may signal a new path for every state hoping to cut its future health care spending.

Connecticut was motivated to undertake this challenge by its mind-boggling budget deficit.  The deficit in the coming two years was projected to be 50% higher than the entire annual state budget was just a little more than 30 years ago.

To avoid thousands of layoffs, it entered into negotiations with its unions to change salary and benefit packages.

At the bargaining table, negotiators decided not just to employ the old, failed cost-containment strategies of reducing benefits to workers and squeezing payments to providers.  They took a different approach by promoting the participation of employees and retirees in disease management and health maintenance programs. 

They created a new “Health Enhancement Program” for all Connecticut state employees and all future retirees. Those who choose to participate in the “voluntary” program will benefit financially.  Those who do not will pay higher insurance rates as a penalty.

Participants in the Health Enhancement Program will receive some excellent chronic disease management services, including free health care and drugs.  They will not have to pay any co-pays for office visits related to diabetes, asthma, heart disease, hyperlipidemia, or hypertension, as long as they adhere to the schedule of visits recommended by their health care provider.

Participants in the program will also pay reduced co-pays for drugs needed to treat these conditions.  The co-pays will be as low as zero for all diabetes prescriptions and for generic drugs used to treat the other conditions.

In return, participants will have to agree to focus on staying healthy.  They must get regular physicals, eye exams, and dental cleanings.  If they and their dependents do all these things, they will receive a cash award of $100 per year for their efforts.    

On the other side, those who choose not to participate will pay more for health insurance and health care.  They will pay an additional $100 per month for their insurance.  They will pay higher drug co-pays.  They will also pay a new $350 deductible per individual, with a $1,400 family cap, for health care services not covered by co-payments.

Connecticut is betting heavily that its employees, retirees, and their dependents will want to manage their health – and, most importantly, that it will pay off in reduced costs to the state.

In June, the Office of Policy and Management estimated that the Health Enhancement Program will save the state over $100 million annually in health care costs.  OPM believes that 50% of those eligible will choose to participate, and that this will result in a 10% reduction in health insurance claims – even though some participants will be required to visit health and dental health professionals far more often than they do now.

The penalty provisions save the state another $18 million, which the non-participants will pay out-of-pocket in higher premiums and deductibles.

There may be two big holes in the Connecticut plan that will reduce the savings to the state.  While mental health and chronic pain services are still included in health plans just as before, the Health Enhancement Program does not include them among the conditions managed in the program.

Both affect a large number of people, lead to many expensive and preventable health care encounters, and often co-occur in a patient with the covered chronic conditions.  If a patient’s unmanaged mental illness leads to a failure to comply with a diabetes disease management program, both the patient and the state will lose.

Still, the Connecticut plan goes beyond what most other states have attempted, and is well worth a try. Changing the trajectory of increasing health care costs isn’t easy.  It will be interesting to see if Connecticut’s health “mandate” proves more popular and effective than the alternatives.    

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

How Did We Let This Happen to Our Children?

The late comedian Jack Benny made himself the butt of a running gag about how cheap he was.  A crook would come up to him and demand “your money or your life!”  After a long pause, Benny would deadpan to the increasingly impatient crook, “I’m thinking about it.”

It’s funny to think about someone who would hold onto his own money so tightly that he would put his own life at risk.  It’s not funny to think about people who would do the same and put their children’s lives at risk.

At the beginning of the 21^st century, we could feel good about the progress we were making to improve the health of our children.  While child poverty rates were doggedly high, other key indicators, including infant mortality rates, low birthweight rates, immunization rates, and violence rates, were all improving.  We had reason to believe that even the “compassionate, conservative” approach to policymaking would continue to get results.

It didn’t happen.  Some data from the Annie E. Casey Foundation’s KidsCount program tracking children from birth to adulthood show just how poorly we've been doing these last few years:

• After dropping from 38,351 in 1990 to 28,035 in 2000, the number of infant deaths increased to 29,138 in 2007;
• The number of low birthweight babies increased from 289,418 in 1990 to 354,333 in 2007, and the percentage increased from 7% to 8.2% of all births during the same time period;
• 75.7% of children age 2 are properly immunized, up from 72.5% in 2003 but down from 77.4% in 2005; 
• 52% of children age 6-17 do not engage in exercise at least five days a week, and 32% of 10-17 year olds are overweight;
• 14,140,000 children in 2007 had special health care needs, up from 9,360,356 in 2001;
• There were 10,198 teen deaths from accident, homicide, and suicide in 2007, age 15-19, a number that has remained steady over the decade.

When some political leaders hold up a mirror to these facts, they see them backwards.  They see decline and call it exceptionalism; they see investment in our children and call it waste.

In the early part of the past decade, we cut our taxes and got involved in two wars.  We paid less attention to the health of our children than we should have.  We put too little money into their well-being, and the trend line is still going in the wrong direction.  

Where children are concerned, American exceptionalism has become American “except-ionalism.”  We’re taking care of everyone “except” our children.

Governors have asked the federal government to let them cut children’s health programs this year, when they should be expanding them.  Twenty-six of them even went to court over the Medicaid expansion mandate, arguing that they were being “coerced” into providing needed services for families and children (see below).

There was a time when we invested in programs for our children because we understood that letting any children go hungry, be homeless, or become sick and not be able to get care was unacceptable in the greatest nation in the world.

We created mandatory immunization programs to protect them from deadly diseases.  I've still got the polio immunization card my mother was given by the public health department when I received my vaccine.  No one argued that we didn't have the resources to pay for this.

We didn't always need a crisis to take care of our children.  We built playgrounds and sports fields to give them plenty of opportunities to exercise.  We protected them from weapons and violence to keep them safe.  We invented Medicaid and Children’s Health Insurance Programs in part to make sure they had health care when they needed it. 

Today, we have elected officials saying we can’t afford all these things.  It’s not really because the money’s not there.  It is.  It’s because they think we’re too cheap to part with it.  They have us playing Jack Benny's old role, except no one's laughing.    

The decline in the health status of our children is where the political fantasy that we can cut and do no harm is introduced to reality.  Children get sick, and some even die, when we stop investing in their health.

Some brave political leader needs to step up and ask: What's more important, your money or your children's lives?  Will we really need to think about it for long?

A note about the Florida court ruling on health reform:  A short version of what the judge decided on Monday was that the individual mandate is unconstitutional, but that the Medicaid expansions are not.

The Supreme Court will have the final word on the individual mandate, probably in 2012 or 2013, but before it takes effect in 2014.  The judge's ruling in that area will have no effect for now.  States that don't want to implement the provisions that are already part of the law probably will not be let off the hook.

Though it wasn’t part of the headline, the judge also found that states are not being “coerced” into participating in the Medicaid program and providing the expanded coverage mandated under the law.  This finding means that the 26 states battling against the law have been defeated on one of the two main fronts on which they joined the battle. 

The Medicaid expansions will cover over 15 million Americans by 2016, and will be paid for almost entirely by the federal government.  How the states respond will be a test of their support for children, elders, and low income families.