As you may have read, the second major decision on the Affordable Care Act’s (ACA)
survival occurred late last week. On a 6-3 vote, the Court upheld the ability of
the federal government to grant subsidies to citizens in states that have not set
up independent state Exchanges. The last major decision occurred in late June 2012
when the high court ruled the individual mandate was constitutional because the
penalty amounts to a “tax” and the federal government has the ability to levy such.
A negative ruling threatened to upend the entire subsidized insurance scheme as
about two-thirds of states failed to set up an independent state Exchange. A literal
reading of the law seemed to indicate that subsidies would only apply to citizens
who enrolled in state-sponsored Exchanges. Those in the two-thirds of states, where
the federal government stepped in to run the insurance Marketplace, would have been
out of luck and had to pay full insurance premiums.
Arguing that the Court should stay out of political disagreements and allow for
success of public policies passed by Congress, justices on the prevailing side noted
that the success of the initiative meant all Americans should get subsidy help if
they qualified and it should not be dictated by where they live and what their state
did or did not legislatively do to implement the ACA. The court bowed to the often
expansive regulatory discretion the Department of Health and Human Services (HHS)
and the Centers for Medicare and Medicaid Services (CMS) have taken and use to move
health policy along. Two conservative justices teamed up with the four liberal
members to prevail.
Six million citizens might have lost coverage if the subsidies were struck down
in those states. In addition, rates likely would have immediately proven inadequate
as only those with adverse health would likely maintain coverage in these states.
Uncompensated care would have increased dramatically as well.
The fate of the Exchanges look sealed now and the likelihood of future challenges
diminish. Not so clear is what will happen on the Medicaid expansion side, which
is the second leg of the stool for success in reducing the uninsured rate permanently
in the country. About half the states still have not expanded Medicaid coverage,
creating the ugly scenario where certain citizens who are very poor in non-Medicaid
expansion states are left with no options at all. Under a quirk in the ACA, those
just over 100% of the Federal Poverty Level (FPL) can get on the Exchange and receive
subsidies, but theoretically those just under 100% cannot and are not eligible for
Medicaid (as income standards for Medicaid are even lower).
To close this final insurance gap and forge ahead with rationalizing the healthcare
system nationwide, CMS should signal to states that expansion to 100% of the FPL
vs. 133% (as originally wanted) is acceptable. This would allow all citizens in
those states access to health care either through Medicaid or the Exchange.