Déjà Vu

The Court ruling could leave millions of poor people — the ones the law was meant to protect — uninsured.

Crowds outside the Supreme Court await the justices decision on the Affordable Care Act on June 28, 2012 in Washington, DC.
National Journal
Margot Sanger Katz
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Margot Sanger-Katz
June 28, 2012, 1:03 p.m.

The Af­ford­able Care Act was sup­posed to pad the safety net by for­cing states to ex­pand their Medi­caid pro­grams and cov­er all of the poorest Amer­ic­ans — not just chil­dren, preg­nant wo­men, and the dis­abled. But Thursday’s Su­preme Court rul­ing au­thored by Chief Justice John Roberts holds that states don’t have to join in the ex­pan­sion if they don’t want to. Con­gress is free to pay states that ex­tend Medi­caid ac­cess to every­one un­der 133 per­cent of the fed­er­al poverty lim­it, but it can’t co­erce them to do so by threat­en­ing to yank the fed­er­al funds that cov­er their cur­rent, smal­ler Medi­caid pro­grams. That’s a prob­lem for the law’s au­thors, who didn’t write a backup pro­vi­sion to help many of these low-in­come people buy in­sur­ance in some oth­er way. Now they’re out of luck: The biggest losers in Pres­id­ent Obama’s vic­tory are the poor.

Twenty-six states — in­clud­ing some of the poorest, such as Mis­sis­sippi, Louisi­ana, and Ten­ness­ee — joined the law­suit chal­len­ging the Medi­caid pro­vi­sion. Al­to­geth­er, about 8.5 mil­lion res­id­ents in those states would have got­ten Medi­caid if the law went for­ward as writ­ten, ac­cord­ing to a ProP­ub­lica ana­lys­is. It’s not clear that all 26 gov­ernors will opt out of the ex­pan­sion now that they can, but some cer­tainly will. A spokes­wo­man for Kan­sas’s Sam Brown­back, for in­stance, tells Na­tion­al Journ­al that the gov­ernor “will not take any ac­tion to im­ple­ment Obama­care.” South Car­o­lina’s Health and Hu­man Ser­vices dir­ect­or says that his state will “con­tin­ue to fight” the law’s rules for Medi­caid. Most res­id­ents in those states who were ex­pec­ted to get in­sur­ance thanks to the law would have got­ten it through Medi­caid.


The de­cision puts these poorest res­id­ents in a dif­fi­cult po­s­i­tion. They’ll be re­quired to buy in­sur­ance but in­eligible for Medi­caid. As Roberts wrote in his opin­ion, Con­gress “en­acted no oth­er plan for provid­ing cov­er­age to many low-in­come in­di­vidu­als.” The up­shot is that those Amer­ic­ans will prob­ably not be pen­al­ized for vi­ol­at­ing the in­di­vidu­al man­date, but they’ll still have trouble find­ing cheap in­sur­ance. “There is simply no oth­er af­ford­able form of cov­er­age for those people, so you are ef­fect­ively con­sign­ing them to health in­sur­ance hell,” says Daniel Hawkins, the vice pres­id­ent for fed­er­al, state, and pub­lic af­fairs at the Na­tion­al As­so­ci­ation of Com­munity Health Cen­ters, a group of fed­er­ally sub­sid­ized clin­ics.

The not-quite-poor will fare bet­ter. The health care law ex­tends tax cred­its to Amer­ic­ans who earn between 100 per­cent ($11,170) and 400 per­cent ($44,680) of the fed­er­al poverty lim­it. Us­ing those cred­its, they will be able to use reg­u­lated on­line mar­ket­places, called ex­changes, to buy private in­sur­ance. Those cred­its will not be avail­able to the poorest people, be­cause law­makers as­sumed that every state would be com­pelled to ex­pand its Medi­caid pro­gram, and Medi­caid is much cheap­er than the tax cred­its for private in­sur­ance. “You’ll have high­er-in­come people hav­ing ac­cess to cov­er­age but not low-in­come people,” says Heath­er Howard, dir­ect­or of the State Health Re­form As­sist­ance Net­work at Prin­ceton Uni­versity. There is one ex­cep­tion: Be­cause leg­al im­mig­rants are not al­lowed to get Medi­caid, poor im­mig­rants will get the cred­it that poor Amer­ic­ans can’t. “You’ll have real gaps in cov­er­age,” Howard says.

States op­pos­ing the law said that Wash­ing­ton over­stepped by re­quir­ing them to cre­ate big pro­grams that they may not al­ways be able to sup­port. Be­cause the fight was couched as a mat­ter of states’ rights, and be­cause so many Re­pub­lic­an gov­ernors so strongly op­pose the health re­form law on prin­ciple, ex­perts think that many states are likely to opt out of the ex­pan­sion, at least at first. But over time, the polit­ic­al pres­sure on gov­ernors to par­ti­cip­ate will rise. “They are ef­fect­ively deny­ing the poorest res­id­ents of their state ac­cess to this vi­tally im­port­ant cov­er­age that they would have been eli­gible for,” says Hawkins. Gov­ernors will have a tough time ex­plain­ing them­selves, es­pe­cially when the law says that the fed­er­al gov­ern­ment will pick up 100 per­cent of the tab for ex­pan­ded cov­er­age dur­ing the first two years and more than 90 per­cent of the tab through 2022.

Loc­al health care pro­viders, par­tic­u­larly hos­pit­als that serve a lot of low-in­come pa­tients, will also lean on state gov­ern­ments to join the en­larged Medi­caid pro­gram. The health care law cut sub­sidies that helped them treat poor and un­in­sured pa­tients. The the­ory was that more people would ac­quire in­sur­ance once the law kicked in, mak­ing the sub­sidies un­ne­ces­sary. But the Court’s rul­ing makes that less likely, mean­ing that loc­al pro­viders — many of which already op­er­ate on nar­row mar­gins — will be forced to treat pa­tients without re­ceiv­ing the money to do so.

The Na­tion­al As­so­ci­ation of Pub­lic Hos­pit­als and Health Sys­tems, the trade group that rep­res­ents those pro­viders, is already ask­ing Con­gress for help. In a state­ment on Thursday, the or­gan­iz­a­tion “urges Con­gress to avoid a po­ten­tially dis­astrous out­come for vul­ner­able pop­u­la­tions by im­me­di­ately ree­valu­at­ing safety-net fund­ing in light of this de­cision.” In this budget cli­mate, these pro­viders may not get far with Con­gress. But their ar­gu­ment may make a big­ger im­pres­sion on the states, es­pe­cially once the dust has settled on the Court’s de­cision. 

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