Posted: June 29, 2012
The drama’s there on Obama’s health care
In the wake of the Supreme Court ruling, Colorado's health exchange stands it in good steadBy Patricia Dean
This morning, the Supreme Court issued a dramatic, narrowly-reasoned 5-4 opinion upholding the Patient Protection and Affordable Care Act (ACA).
The Court’s opinion focuses on the two most controversial aspects of the law: the provision requiring most individuals to purchase health insurance or pay a penalty – the so-called ‘individual mandate;” and the expansion of Medicaid.
Chief Justice Roberts began his summary of the opinion by explaining that the basis on which President Obama pressed the individual mandate, the Commerce Clause of the Constitution, could not support the individual mandate and was therefore unconstitutional on those grounds. This opening appeared to signal that the controversial key provision of the President’s signature legislation would not stand; however, Justice Roberts immediately followed that the mandate was constitutional on the basis of Congress’s taxing authority.
Many commentators and critics of the ACA had questioned whether Congress could legitimately force individuals to purchase health insurance or face a penalty. During oral arguments in March, Justice Scalia famously challenged the legislation by surmising that if individuals could be forced to buy insurance, they could also be forced to buy broccoli.
The Court side-stepped the hot-button issue of how far the Commerce Clause extends by determining that the Commerce Clause allows Congress to regulate commerce, but not compel it. Alternatively, the Court held that Congress could permissibly require individuals to buy insurance or face a “tax” under the Constitution’s Taxing Clause.
The surprises didn’t stop there. Justice Kennedy was widely considered to be the swing-vote who would ultimately determine the mandate’s constitutionality. Justice Kennedy, however, sided with the minority of justices who voted to invalidate the mandate. Instead, it was Chief Justice Roberts, appointed by President George W. Bush and considered a conservative voice on the court, who swung the decision to uphold the law.
The other heavily challenged provision of the law was the expansion of Medicaid. Again, the Court offered an unanticipated twist by holding that the Medicaid expansion violates the Constitution by threatening states with the loss of their existing Medicaid funding if they decline to comply with the expansion.
The Court, however, provided careful guidance to remedy the violation by finding that the Medicaid expansion is constitutional so long as the Secretary of Health and Human Services is precluded from withdrawing existing Medicaid funds for failure to comply with the requirements set out in the expansion.
What It Means
Based on today’s ruling, the ACA remains the law of the land, and the following provisions that have already gone into effect will stay in place:
• Children may remain on their parents’ health insurance until age 26;
• Insurers are prohibited from dropping coverage if an individual gets sick or makes an unintentional mistake on his/her application for insurance coverage;
• Insurers are prohibited from denying children, up to age 19, with pre-existing conditions access to health insurance;
• Insurers are required to establish a simplified appeals process for coverage and denials of claims;
• States are to begin laying the groundwork for health insurance exchanges. The exchanges will make available to everyone, including individuals purchasing insurance on their own and those working for small businesses, the same economies of scale of administration, marketing, and risk pooling available to workers in large businesses, thereby making insurance more affordable to all;
• States are required to create a temporary “high-risk pool” to provide coverage until 2014, when the exchanges become operational, for eligible individuals who have been denied health care coverage on the basis of pre-existing conditions;
• Medicaid beneficiaries will receive free preventative services;
• Insurance providers are required to cover some preventative services and eliminate co-pays;
• Insurers will be required to limit the ratio of premiums spent on administrative costs compared to medical costs (called the medical loss ratios, or MLRs); and
• Small businesses may be entitled to tax credits that make it easier to provide coverage to workers, while also reducing premiums.
Additionally, the provisions of the ACA that are scheduled to be implemented in the future will go forward as planned, unless Congress moves to eliminate or delay those provisions. The major expansion and reform provisions include:
• Individuals must purchase insurance or pay a tax penalty;
• States must have operational health insurance exchanges by 2014;
• Insurers will be prohibited from denying coverage for pre-existing conditions, regardless of age, and will be prohibited from charging higher premiums without adequate justification;
• Insurance companies will be prohibited from imposing lifetime dollar limits on essential benefits;
• State Medicaid programs will be required to expand coverage to all eligible non-pregnant, non-elderly legal residents with incomes up to 133% of federal poverty guidelines. The federal government will initially cover all costs for this group, with the federal matching percentage decreasing to 90% by 2020;
• States will be required to maintain current Children’s Health Insurance Program (CHIP) structure through 2019, and provide federal CHIP payments through 2015 (a two-year extension on CHIP funding).
While the Supreme Court has resolved the constitutionality of the ACA, it remains highly controversial. Mitt Romney has vowed, if elected, to repeal the ACA on the first day of his term by sending out waivers to all 50 states to keep them from having to pursue the law.
The Court’s decision will undoubtedly galvanize both parties and further fuel the debate over health care reform. With only 132 days to the election, the Supreme Court’s decision is only the first challenge the ACA will likely face. But for now, Colorado’s significant efforts to prepare for the implementation of the ACA place our state in good stead.
Colorado was among a handful of states to pass legislation on a bi-partisan basis to authorize the creation of the Colorado Health Benefit Exchange (COHBE). The Board of Directors for COHBE and its numerous committees have been working diligently to implement the provisions of the ACA and are on schedule to meet the requirements for an operational exchange in 2014. Officials estimate that provisions of the law are already improving the lives of many Coloradoans, including:
• 1,331 people with pre-existing conditions have received coverage through a new high risk pool, GettingUsCovered;
• 3,997 young adults in Colorado have gained insurance coverage;
• More than 380,000 seniors have taken advantage of preventative services – such as mammograms and colonoscopies – or a free annual wellness visit with their doctors;
• Nearly 1 million individuals in Colorado with private health insurance have gained preventive service coverage;
• Almost 2 million residents, including 696,000 women and 521,000 children, are free from worrying about lifetime limits on coverage;
• 40,000 people with Medicare in Colorado have received a $250 rebate and discounts to help cover the cost of their prescription drugs when they reach the Medicare coverage gap.
Given the enormous impact of the lives of nearly every American citizen, we will be hearing more in the debate. As they say, stay tuned.
Patricia Dean is a partner with Holland & Hart. She has more than 20 years experience representing a wide variety of clients in the health care arena. She can be reached at 303-295-8464 or PDean@Hollandhart.com