Sunday, June 3, 2012

Health Reform in 2012 – Crunch Time


By Adam Dougherty, MPH, MS II


 This is the first piece in a two-part series on a decisive year in health care policy. 


THE DECISIONS MADE IN 2012 WILL dictate much of the health care landscape for decades to come. At the state level, implementation of the Affordable Care Act (ACA), an uncertain future for Medi-Cal, and a seemingly never-ending state budget struggle are the major foci. The national spotlight includes a Supreme Court ruling on the individual mandate, the “budget trigger,” and the November elections.

As a medical student with an interest in public health policy, I like to follow these developments because my classmates and I worry about the current health care system, how it will sustain the public in the coming years and our role as future physicians.

March 23rd marked the two-year anniversary of the passage of the ACA into law. It is by no means a perfect fix to our health care system, but even at this early stage in its rollout before the major reforms in 2014, health care reform has already lead to real programs helping real people today.

For example, the unethical practice of rescissions and denial of insurance based on pre-existing conditions for children are a thing of the past (and will be for adults in 2014). Over 2.5 million young adults aged 19-25 have gained insurance through their parents’ health plan.1 The Pre-Existing Condition Insurance Plan (PCIP) has provided vital services to nearly 50,000 previously uninsurable individuals, with the California PCIP enrolling over 5,500 people.2

Finally, in 2011 alone, over 54 million Americans (and 6.2 million Californians) received preventive services with no cost sharing because of the ACA, a crucial step forward for public health. Furthermore, preventive medicine outreach to minority populations can be challenging. But nationwide in 2011, an estimated 6.1 million Latinos, 5.5 million African-Americans, 2.7 million Asian Americans and 300,000 Native Americans with private insurance received expanded preventive benefits as a direct result of the new health care law.3


The Golden State has positioned itself as a pacesetter in health reform. The California Health Benefits Exchange (HBEX) will be an innovative, competitive marketplace that will empower millions of consumers to choose the health plan and providers that give them the best value.

California has taken advantage of numerous federal funding streams offered through the ACA. This has pumped millions of dollars into the state for the following activities: dynamic payment and delivery reforms through the Center for Medicare and Medicaid Innovation (CMMI), community clinics and teaching health centers, and local health coverage efforts offered through the 1115 waiver known as the “Bridge to Reform.” Programs like these offer relief to the many county and state programs that have seen their dedicated funding streams evaporate in the last several years.

Yet, just at the moment that “help is on the way,” a perpetually anemic state budget has placed programs like Medi-Cal on the carving table. A looming 10 percent Medi-Cal rate cut for physicians has prompted a federal lawsuit challenging those cuts. The rate cut fight has gained national attention and puts the state and feds between a rock and a hard place.

If the cuts are upheld in federal court, this would essentially allow other states (like the anti-ACA red ones) to get a backdoor to dismantling pieces of the ACA through similar cuts and challenges. If overruled, it would be back to the budget-cutting drawing board for Governor Brown and Company. While unified opposition against the cuts are important for the physician voice, the bigger problem is the FMAP formula that determines how much California gets from the feds for Medi-Cal. As a young, “high-income state” with a large low-income population, we bleed federal tax dollars to states who can enjoy better matching funds. On a positive note, though, 2013 will bring two years of federally funded parity for Medi-Cal to match Medicare reimbursement levels for many services.


Few Supreme Court rulings have had more publicity, anticipation and significance than the challenges against the ACA’s individual mandate. This was exemplified by the unprecedented six hours of oral arguments heard by the Court on March 26-28, the longest in modern history for a case. How the Court ultimately rules in the next month or two will have major implications.

There are several pieces to the lawsuit. Perhaps not to be left out of the “can-kicking down the road” mentality embraced in state and federal legislatures, the Court dedicated two hours of argument to the option of invoking the Anti-Injunction Act. This option essentially states that a challenge to the individual mandate cannot even be heard before the law — or “tax,” so to speak — is imposed in 2014. But both sides of the individual mandate argument would prefer a decision now versus this prolonged uncertainty.

An accompanying challenge put forth to the Court is the Medicaid expansion component on the grounds of undue costs to states. Many experts believe that upholding such a claim would threaten the status quo of numerous federal-state contracts beyond just Medicaid, so the expansion is likely to be upheld.4,5

The next issue to be addressed is whether the mandate is “severable” from the rest of the ACA, and whether the whole law must be invalidated if the mandate is indeed found unconstitutional. While many of the smaller programs in the law can indeed be detached from the individual mandate challenge, the interdependence of guaranteed issue, community rating, health exchange subsidies, and the mandate — the major pillars of the ACA — will likely be seen as inseverable.

Finally, there is the mandate itself. While opponents believe that an individual mandate violates the Constitution’s Commerce Clause and that the “inactivity” (i.e. not buying health insurance) of the American people cannot be regulated, there is ample precedent to the contrary.6 In 1790, the first Congress (encompassed largely by the framers of the Constitution) required all ship owners to provide medical insurance for their sailors. In 1792 came the individual mandate to purchase a firearm (let your Amendment-rights-imagination run wild on that one), and in 1798 sailors were required to purchase hospital insurance for themselves.

Most relevant, though, is the 1942 Supreme Court case that upheld congressional authority to regulate the “noncommercial activity” of wheat growers, or more plainly that wheat which is grown but not sold. This ruling was reaffirmed in a case brought to Justice Roberts’ Court in 2005 regarding medicinal use of home-grown marijuana. Congress only lacks Commerce Clause power when a regulation is not economic in nature.

Few could argue that health insurance is not economic at any local/national or public/private level, as nearly every citizen is guaranteed to access health care at some point in his/her life. If market-based health care is a concept that we, as a nation, wish to preserve, while also assuring this care is eventually paid for, then the grounds for this economic standard become prudent, and more so, self-evident.

Given recent rulings and precedent, I predict Justice Kennedy will join the four liberal Justices in upholding the mandate. Chief Justice John Roberts may also rule in favor in order to improve the Court’s perceived certainty on the issue. Thus, summoning my inner oracle, I predict the 2012 Roberts Court to uphold the law with a final ruling of 6-3!

1 comment:

  1. Great post, Adam. Keep 'em coming and I will certainly look forward to discussing this further when your inner oracle is challenged when the ruling comes out. Let's hope you're right.

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