In a surprise, Chief Justice John Roberts joined four liberal US Supreme Court Justices to uphold the constitutionality of most of the Affordable Care Act (the “ACA” or “health reform”). See NATIONAL FEDERATION OF INDEPENDENT BUSINESS v. SEBELIUS. This is generally good news for seniors. It means that the following beneficial aspects of the health reform law remain in effect:
• Prescription drug savings. Under the ACA Medicare beneficiaries get discounts on drugs when they are hit by the so-called “doughnut hole.” Without the law, there would be no help with the cost of their medications when they are in the hole. The ACA provides increasing drug coverage and will entirely eliminate the doughnut hole by 2020. As a result of the health reform law, Medicare beneficiaries saved an average of $604 on prescription drugs in 2011.
• Free preventive services. Medicare beneficiaries who participate in traditional Medicare (like me) receive preventive services such as colonoscopies with no deductible or co-payment.
• Annual wellness visits. Medicare enrollees can see their doctor once a year for a free assessment development of a personalized plan. The Federal government reports that 26 million people benefited from the wellness and preventative services portions of the law in 2011.
In addition, promising practices like Accountable Care Organizations and Health Insurance Exchanges will now be able to continue to develop.
The reform law also extends the financial viability of the Medicare program. It does so by reducing payments to providers like Medicare Advantage Plans and by imposing some tax increases on higher income taxpayers. See my earlier blog article: New Medicare Contribution Tax on Investment Income starts on January 1, 2013. And the employee portion of the Medicare hospital insurance tax is increased by 0.9% on wages that exceed a threshold amount ($200,000 for most individuals, and $250,000 for joint and surviving spouse returns).
The Court did effectively rewrite one aspect of the health reform law - a provision that would have required states to provide Medicaid coverage for virtually all poor Americans (up to 133% of the poverty level) or risk losing all of their federal Medicaid funding. The Court held that this penalty was too severe (a “gun to the head” of states) to be constitutional. The federal government can, however, withhold Medicaid expansion funding from states that decide not to expand. Since most people who are over age 65 get Medicare, this provision mainly impacts poor people who are younger than that, including many older adults between 50 and 65 who have lost their employment based insurance.
The Court’s decision on Medicaid means that states, like Pennsylvania, will now have the ability to choose whether or not to expand their Medicaid programs to cover millions of currently uninsured poor. Under the health reform law, the federal government will pay 100% of the costs of the expansion until 2016 and eventually 90%. While it seems like a “no-brainer” for states to accept this federal financial largess to provide health coverage to their uninsured poor, it may turn out that some Republican controlled states, like Pennsylvania, will refuse the money.
Refusal may stem in part from philosophical or partisan opposition to “Obamacare” in general, but states will in fact incur some additional administrative costs if they add individuals to their Medicaid roles. And some state officials may worry that a future Congress will reduce the generous federal share and shift more of the cost of expansion to the states. See, Uncertainty Over States And Medicaid Expansion, Robert Pear, New York Times, June 29, 2012. This reduction could happen as part of a transition of Medicaid to block grant funding as has been proposed in the budget passed this year by the House of Representatives and supported by Governor Romney.
In Pennsylvania, Governor Corbett issued a Press Release which expressed his disappointment about the Supreme Court ruling, but which did not express his view on the Medicaid expansion issue. Pennsylvania, led by the Governor, was one of the states which had sued the federal government in the National Federal case.
Pennsylvania and other states should have at least until next summer to decide whether to opt in or opt out of expanding health coverage to the poor. This should be a hot topic in the upcoming political year. Hospitals and advocates for the poor will likely lobby powerfully for expansion.
Although the Supreme Court resolved the issue of the constitutionality of the health reform law, much political uncertainty remains about its future. Nationally, Republicans have vowed to repeal it, which they will be able to do in January if they gain the Presidency and a majority in both the Senate and the House. Even if the Republicans don’t gain control of Congress, Governor Romney will be likely to retard the implementation of the law if he is elected President. So health reform moves forward, but only grudgingly. The election in November will have consequences.