For those of you that have been living under a rock for the past year, the United States Supreme Court is set to rule on the constitutionality of the Patient Protection Affordable Care Act (PPACA), President Obama’s signature, yet highly controversial health care overhaul that was signed into law in March 2010. Passed without a single congressional Republican vote, Obamacare, as it has become known, was immediately challenged in various courts as being unconstitutional. A case brought by twenty six state officials and Attorney’s General eventually made its way through appellate courts to reach the United States Supreme Court earlier this year. In March of 2012, the Supreme Court heard an unprecedented three days of oral arguments on the constitutionality of several key aspects of the bill. A final ruling is expected in the next week.
The first day focused on whether the court could even rule on the case, since the main point of the constitutionality argument is that the “individual mandate”, a provision forcing Americans to purchase private insurance beginning January 1, 2014, has yet to actually begin. If the court rules they do not have standing to hear the case until the penalties for not purchasing insurance begin in 2014, the court could basically punt the decision a few years down the road.
The second day focused on the main argument of the case, whether the federal government has the right, under the commerce clause of the constitution, to enforce the individual mandate. The individual mandate is the enforcement mechanism that will force Americans to purchase private insurance (if they are not eligible for Medicaid services), or choose to pay a fine. Under the bill, Medicaid eligibility will be increased to 133% of the Federal Poverty Level, and subsidies will be available for individuals to purchase private insurance up to 400% of the FPL. The argument centers on whether the Federal government can, in essence, fine/tax someone for not engaging in commerce, rather the choosing to purchase insurance. If the government does have this power, what would stop a nutritionally active congress from taxing people that do not eat broccoli? Rather simplistic, I know, but this exact argument was presented to the Supreme Court!
Day two of argumens also brought constitutional questions about the federal government’s right to increase Medicaid eligibilty requirements to 133% of the FPL. Since Medicaid is a state/federal partnership program, can the federal government force states to spend additional money on Medicaid recipients? The first two years of increased enrollment would be covered by federal dollars. Federal money would begin to taper off after the initial few years, leaving states, with already tight budgets, to figure out how to pay for the increased enrollees.
The final day or arguments focused on whether, if the court rules the individual mandate or Medicaid expansions unconstitutional, can the rest of the law remain? This is why there are so many different potential outcomes to the case; the court could rule the mandate unconstitutional but keep the rest of the bill; it could rule the mandate unconstitutional and invalidate the entire law; same options with the Medicaid expansions; it could punt the decision altoghher and rule they do not have the standing to rule on the case until 2014 when the mandate begins; or it could rule the entire bill constitutional — this is why everyone is so simultaneously captivated and confused by the case.
How is O&P effected by all of these different rulings? Well, much like the law itself, all of the potential outcomes have positives and negatives. If the entire law is struck down, we would lose out on the Medicaid expansions and subsidies driving more people to have insurance coverage, but the bill does not guarantee O&P coverage on the exchanges at this point anyway. We would also lose several popular insurance regulating provisions like preexisting condition exclusions and annual or lifetime coverage caps if the bill were fully repealed. Implementation of competitive bidding for durable medical equipment would be slowed, but would continue short of additional legislative action. However, if the law is upheld we will need to continue our efforts to ensure O&P is considered an “essential health benefit” in plans sold on state-based health exchanges, we will also have some additional reporting requirements and fraud/abuse initiatives that have proven costly. The 800lb gorilla in the room as it relates to O&P, and really providers in general, is the creation of Accountable Care Organizations, integrated care networks that will form to serve large geographical areas. No matter whether the bill is struck down or upheld, ACO’s are likely here to stay. More than 200 ACO’s have already been formed by various private entities like hospital networks, physician groups and insurance companies, and they have nothing to do with the 60 or so ACO’s that will serve Medicare beneficiaries in target areas.
Confused yet? Not suprising. All I can say for certain is that the court is likely to release their decision next week, likely Monday or Thursday morning, then the Justice’s are likely to bolt town and leave a tremendous wake behind them. Republicans and Democrats alike have developed contingency plans for every potential outcome, ranging from introducing a small bill to replace the consumer friendly (re: popular) provisions, like the annual/lifetime caps, preexisting conditions and keeping dependents on insurance plans until age 26, if the entire law is struck, to storming the Supreme Court chambers if the law is upheld in its entirety — and everything inbetween. However, additional health care legislation is highly unlikely with the 2012 elections just a few months away. Any legislative fixes would likely be brought during a lame duck congressional session after the elections.
OPGA Government Effects will continue to monitor the court ruling and will send information out as soon as the court releases their rulings on the individual aspects of the bill laid out above. Contact OPGA with any questions regarding the legislation or the court ruling.