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
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 »
CONTRACTS MAY NOT BE RENEWED
Senate Contractors Short Cafeteria Workers by $1 Million
9 minutes ago
THE DETAILS

"The Labor Department announced Tuesday that federal contractors had shorted 674 Senate cafeteria workers to the tune of $1 million. Two companies, Restaurant Associates and its subcontractor, Personnel Plus, violated the law by misclassifying workers into lower-paying positions and having them work off the clock, the agency said." The department is looking into whether to renew the contracts.

Source:
ASSANGE WANTS TO CRIPPLE CLINTON’S CHANCES
Spy Agencies Hone in on Russia as Culprit of DNC Hack
21 minutes ago
THE LATEST

"American intelligence agencies have told the White House they now have 'high confidence' that the Russian government was behind the theft of emails and documents from the Democratic National Committee, according to federal officials who have been briefed on the evidence. But intelligence agencies have cautioned that they are uncertain whether the electronic break-in at the committee's computer systems was intended as fairly routine cyberespionage—of the kind the United States also conducts around the world—or as part of an effort to manipulate the 2016 presidential election." WikiLeaks founder, Julian Assange "has made it clear that he hoped to harm Hillary Clinton's chances of winning the presidency."

Source:
FOUNDER PRAISED TRUMP AT CONVENTION
Colony Capital Pulled Out of Trump Hotel
32 minutes ago
THE DETAILS

Colony Capital Founder Tom Barrack spoke on Donald Trump's behalf at the Democratic National Convention last week. But as the Washington Post learned, his company pulled out of Trump's Old Post Office project. The two companies issued a joint statement when the project was announced. But as a Colony spokeswoman told the Post, “Colony exited the joint venture after the project’s timeline became too long for the firm. As the project evolved, cheaper sources of capital for longer term investment became available to Trump." The Trump Organization is now financing the project through their own cash and a loan from Deutsche Bank. It's scheduled to open Sept. 12.

Source:
MAN WHO SHOT RONALD REAGAN
John Hinckley Jr. Granted Release
41 minutes ago
WHY WE CARE

Thirty-five years after he tried to kill President Reagan, John Hinckley Jr. has been freed. "A federal judge in Washington, D.C., has granted a request for Hinckley to leave the mental hospital where he's lived for decades, to go live full-time with his elderly mother in Williamsburg, VA. The release could happen as early as next week, the judge ruled. Under the terms of his order, Hinckley is not allowed to contact his victims, their relatives or actress Jodie Foster, with whom he was obsessed. Hinckley also will not be permitted to 'knowingly travel' to areas where the current president or members or Congress are present. The judge said Hinckley could be allowed to live on his own or in a group home after one year.

Source:
SHARES THEIR LOVE STORY
Bill Clinton Gets Personal in Convention Speech
10 hours ago
THE DETAILS

“In the spring of 1971, I met a girl,” started Bill Clinton. In his speech Tuesday night at the Democratic National Convention, Clinton brought a personal touch, telling parallel stories of his relationship with Hillary Clinton and the work she has done throughout her career. He lauded the Democratic nominee for her career of work, touching on her earliest days of advocacy for children and those with disabilities while in law school, her role as Secretary of State, and her work in raising their daughter, Chelsea. Providing a number of anecdotes throughout the speech, Clinton built to a crescendo, imploring the audience to support his wife for president. "You should elect her, she'll never quit when the going gets tough," he said. "Your children and grandchildren will be grateful."

×