On Thursday, the Supreme Court issued its long-awaited decision concerning the constitutionality of the individual mandate and the Patient Protection and Affordable Care Act.
In a 5-4 decision, the court ruled that the law was constitutional, except that the federal government could not take away current Medicaid funding from states that refused to expand their Medicaid programs.
What does it mean for Idaho?
Individual mandate: This part of the law requires most individuals to carry health insurance or pay a penalty that is a tax.
Insurance provisions: The law prohibits insurers from using preexisting conditions as a basis to deny coverage; severely restricts the range of premiums an insurance company can charge someone based upon their risk factors; requires insurers to provide coverage to children up to age 26 on a parent’s insurance policy; eliminates annual and lifetime limits; requires insurance companies to spend at least 80 or 85 percent of the premium on providing medical coverage or refund the excess back to policyholders, depending upon whether it is an individual or group policy; and eliminates the coverage gap that results in increased costs for prescription medications for seniors on Medicare part D plans.
Health insurance exchanges: The PPACA requires states to establish insurance exchanges by next year or the federal government will put its exchange in place.
The exchange is a web-based list of available insurance plans identified by levels of coverage and cost to facilitate people selecting the plan that is right for them. The exchange will also identify those who qualify for Medicaid and direct them to the state Medicaid agency to be enrolled.
For those who don’t qualify for Medicaid but earn less than 400 percent of the federal poverty level, the exchange will provide a subsidy based on a sliding scale to help cover the cost of the policy.
The Idaho Legislature has not passed enabling legislation, so the state has not begun the work of implementing the insurance exchange. Under the current law, certification of the health insurance exchange is to occur by Jan. 1 or the federal government will implement its exchange, an option that many of us do not think is good for our state.
While there remains hope that the Obama administration might postpone that deadline, our Legislature must act quickly if we are to try to minimize the likelihood of a federal exchange.
Expansion of Medicaid: The aim of the PPACA was to provide insurance coverage to the uninsured. There are about 50 million uninsured people in the United States. The PPACA would provide for 32 million people to become insured, half of them through an expansion of each state’s Medicaid program.
In 2014, under the present law, any person at or below 133 percent of the federal poverty level would become eligible for Medicaid. In the state of Idaho, this means an increase by nearly half of the current number of people on Medicaid. In the early years, the federal government will provide 100 percent of the funding for the Medicaid expansion, but federal support gradually declines to 90 percent and the state portion increases to 10 percent.
Superficially, this sounds like a great deal. The problem is that most states’ Medicaid programs run in the red.
In Idaho, we have a constitutional balanced budget requirement, so Medicaid costs must be paid for. The state has to walk a delicate line between funding for education, health and welfare, including the Medicaid program, and other programs on one hand, and tax revenue on the other.
The pressure of escalating health care costs could mean that the need to support even 10 percent of the expansion costs could be significant additional pressure that would force budget cuts and/or increases in taxes.
Previously under the PPACA, the federal government threatened states with loss of all of their Medicaid funding if they did not participate in the Medicaid expansion. This was the one aspect of the law that the court said was impermissible. Now, each state may make a choice whether to participate in the expansion.
The ruling and St. Luke’s: St. Luke’s Health System did not support the enactment of the PPACA, not because it does not have some very good elements, but because we don’t think it does enough to control costs. That said, St. Luke’s has initiated or accelerated programs that position us well for what’s coming.
The best thing about the health care reform law is that it has focused the national conversation on the health care crisis and fueled a movement toward pay for value instead of fee for service.
Movement toward health care reform now is irreversible. Health care providers and insurers are aligning around this new paradigm of pay for value, which I believe is the only reasonable solution to the health care crisis.
David C. Pate, M.D., J.D., is president and CEO of St. Luke’s Health System.
