How Governors Could Become America’s Health Care Czars

a doctor tends to a patient in the US health care system
National Journal
Sophie Novack
Add to Briefcase
Sophie Novack
Aug. 12, 2014, 1:09 a.m.

Courts have put more and more power in the hands of states to run health care cov­er­age — and not in the way the Af­ford­able Care Act in­ten­ded.

The health care law as­sumed that all states would ex­pand Medi­caid and es­tab­lish state-based ex­changes. But a 2012 Su­preme Court de­cision made it easi­er for gov­ernors to opt out of Medi­caid ex­pan­sion, and 24 states de­cided not to ex­pand their cov­er­age, leav­ing mil­lions of low-in­come people un­in­sured. An­oth­er round of court chal­lenges could soon al­low gov­ernors to de­cide wheth­er to provide sub­sid­ized cov­er­age on the in­sur­ance ex­changes as well.

A re­cent set of law­suits chal­lenges the pro­vi­sion of sub­sidies on the fed­er­al mar­ket­place, ar­guing the law spe­cific­ally says they should be avail­able on “ex­changes es­tab­lished by the state.” In Hal­big v. Se­beli­us, the U.S. Court of Ap­peals for the D.C. Cir­cuit ruled last month against the Obama ad­min­is­tra­tion, say­ing that sub­sidies are il­leg­al in the states that are on the fed­er­al ex­change. On the same day, the 4th Cir­cuit Court of Ap­peals came to the op­pos­ite con­clu­sion in King v. Bur­well, say­ing it’s clear that Con­gress in­ten­ded sub­sidies to be avail­able on all ex­changes. Both de­cisions are be­ing ap­pealed, and the is­sue could go to the Su­preme Court as soon as next ses­sion.

If the Hal­big rul­ing is up­held, sub­sidies will van­ish in more than half the states, mak­ing in­sur­ance un­af­ford­able to many who now re­ceive them. Gov­ernors in states cur­rently on the fed­er­al ex­change would thus be put in the po­s­i­tion of de­cid­ing wheth­er to switch to a state ex­change and keep the sub­sidies, or al­low res­id­ents to lose their in­sur­ance cov­er­age.

The de­cision is a com­plex one, and par­tic­u­larly un­com­fort­able for Re­pub­lic­an gov­ernors, most of whom are op­posed to any ac­tion that would make the ACA work bet­ter. Al­low­ing the sub­sidies to ex­pire would cripple the very found­a­tion of the law, but it could also in­cur the wrath of the health and busi­ness com­munit­ies, along with their con­stitu­ents.

An es­tim­ated 7.3 mil­lion people could miss out on $36.1 bil­lion in sub­sidies if the Hal­big de­cision stands, ac­cord­ing to a re­port from the Urb­an In­sti­tute re­leased last month. This is about 62 per­cent of the 11.8 mil­lion people ex­pec­ted to en­roll in the fed­er­ally fa­cil­it­ated mar­ket­place by 2016. Res­id­ents in the red states of Texas and Flor­ida would lose the most: $5.6 bil­lion and $4.8 bil­lion, re­spect­ively.

This could throw the over­all in­sur­ance mar­ket in­to a tailspin.

“There’s a ques­tion of wheth­er the in­di­vidu­al mar­ket would be stable in states without sub­sidies,” said Larry Levitt, a seni­or vice pres­id­ent at the Kais­er Fam­ily Found­a­tion. “The in­di­vidu­al man­date would still stand, but many wouldn’t be able to af­ford cov­er­age. Most of those eli­gible for sub­sidies would end up be­ing ex­empt, be­cause their in­sur­ance costs more than 8 per­cent of their in­come. The in­di­vidu­al man­date would be very weakened, and with no abil­ity to at­tract healthy people, the risk pool in states without ex­changes would likely de­teri­or­ate quickly.”

Yet there are hurdles that could give pause even to Demo­crat­ic gov­ernors. While the Medi­caid de­cision was simply a mat­ter of ex­pand­ing an ex­ist­ing pro­gram, set­ting up an ex­change would re­quire build­ing a whole new in­fra­struc­ture, something that has proven a ma­jor chal­lenge for many states — and the fed­er­al gov­ern­ment — in the first open-en­roll­ment peri­od.

Pay­ing for the new ex­changes would be a prob­lem as well. States that es­tab­lished their own ex­changes early on had ac­cess to an un­lim­ited pool of fed­er­al grant dol­lars, but those that choose to switch now are es­sen­tially on their own to get the ex­change up and run­ning.

“The state has to start from ground zero; this is clearly a prob­lem, be­cause fed­er­al fin­an­cing is lim­ited,” said Ray­mond Schep­pach, former ex­ec­ut­ive dir­ect­or of the Na­tion­al Gov­ernors As­so­ci­ation and cur­rent pro­fess­or at the Uni­versity of Vir­gin­ia. “There are three or four states that seem to have done a good job [set­ting up their own ex­changes], but a lot have not. The av­er­age gov­ernor looks at it as polit­ic­ally risky and fin­an­cially risky.”

“The whole health care com­munity is go­ing to want the state to do an ex­change; “¦ there would be a fair amount of pres­sure. [Gov­ernors] will have to com­pare that with the fin­an­cial risk and the polit­ic­al risk of fail­ing. Then for the Re­pub­lic­ans, you have all the na­tion­al polit­ics play­ing out.”

Ex­perts say if it came to this, the ad­min­is­tra­tion would be sure to al­le­vi­ate some of the bur­den, either by al­low­ing states to sub­con­tract from the fed­er­al sys­tem or bor­row from an­oth­er state’s ex­change.

“The bar has con­tin­ued to evolve; it’s easi­er and easi­er to be­come a state ex­change,” said Joel Ario, former dir­ect­or of health in­sur­ance ex­changes at the De­part­ment of Health and Hu­man Ser­vices and cur­rent man­aging dir­ect­or at Man­att Health Solu­tions. “So far, the [HHS] sec­ret­ary has been pretty flex­ible, if you as a state are will­ing to co­oper­ate. In that light, it be­comes a mat­ter of ideo­logy for gov­ernors to stick their feet in the sand and not move.”

The polit­ic­al push­back for that kind of op­pos­i­tion could prove sig­ni­fic­ant, par­tic­u­larly as the group of people af­fected would be lar­ger, and pos­sibly more polit­ic­ally act­ive, than those who missed out on Medi­caid ex­pan­sion. Yet it’s un­likely that this would come in­to play be­fore the next elec­tion, ex­perts say.

“I doubt there will be any real tan­gible ef­fect be­fore midterm elec­tions,” Levitt said. “[The case] would have to move pretty quickly for that to hap­pen; for now it’s more polit­ic­al noise than any­thing that mat­ters for real people.”

But while the is­sue’s im­pact on midterms is fuzzy, elec­tion res­ults will have a ma­jor im­pact on health cov­er­age for mil­lions of Amer­ic­ans if the de­cision is ul­ti­mately up­held.

“The [Hal­big] case has already got­ten much fur­ther than many ex­pec­ted to be­gin with, and the [2012] de­cision [on Medi­caid ex­pan­sion] was a sur­prise,” Levitt con­tin­ued. “No one is go­ing to go broke bet­ting on Obama­care out­comes at the Su­preme Court.”

What We're Following See More »
SANS PROOF
NRA Chief: Leftist Protesters Are Paid
1 days ago
UPDATE
NEW TRAVEL BAN COMING SOON
Trump Still on Campaign Rhetoric
1 days ago
UPDATE
“WE’RE CHANGING IT”
Trump Rails On Obamacare
1 days ago
UPDATE

After spending a few minutes re-litigating the Democratic primary, Donald Trump turned his focus to Obamacare. “I inherited a mess, believe me. We also inherited a failed healthcare law that threatens our medical system with absolute and total catastrophe” he said. “I’ve been watching and nobody says it, but Obamacare doesn’t work.” He finished, "so we're going to repeal and replace Obamacare."

FAKE NEWS
Trump Goes After The Media
1 days ago
UPDATE

Donald Trump lobbed his first attack at the “dishonest media” about a minute into his speech, saying that the media would not appropriately cover the standing ovation that he received. “We are fighting the fake news,” he said, before doubling down on his previous claim that the press is “the enemy of the people." However, he made a distinction, saying that he doesn't think all media is the enemy, just the "fake news."

FBI TURNED DOWN REQUEST
Report: Trump Asked FBI to Deny Russia Stories
1 days ago
THE LATEST

"The FBI rejected a recent White House request to publicly knock down media reports about communications between Donald Trump's associates and Russians known to US intelligence during the 2016 presidential campaign, multiple US officials briefed on the matter tell CNN. But a White House official said late Thursday that the request was only made after the FBI indicated to the White House it did not believe the reporting to be accurate."

Source:
×
×

Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.

Login