marc j. roberts

Marc J. RobertsProfessor of Political Economy and Health Policy

Harvard School of Public Health

National Quality Colloquium August 15, 2012

• The Supreme Court Decision

• Public Opinion and the A.C.A.

• The Politics of Implementing the A.C.A.

• The Economics of Not Implementing the A.C.A

• The Essential Questions

• Chief Justice Roberts fashioned a very surprising coalition to reach a very surprising result

• The individual mandate was sustained under the taxing power but not the commerce clause

• The ONLY section found unconstitutional was the power of the Secretary of H.H.S. to remove all

Medicaid support for states that do not follow the Medicaid expansion

• The latter result was based on a theory that had NEVER before been used to justify a Court opinion

Given its expansive scope, it is no surprise that Congress has employed the commerce power in a wide variety of

ways to address the pressing needs of the time. But Congress has never attempted to rely on that power to

compel individuals not engaged in commerce to purchase an unwanted product

The language of the Constitution reflects the natural understanding that the power to regulate assumes

there is already something to be regulated.

The individual mandate, however, does not regulate existing commercial activity. It instead

compels individuals to become active in commerce …

permit(ing) Congress to regulate

individuals precisely because they are doing nothing would open a new and potentially vast

domain to congressional authority.

The exaction the Affordable Care Act imposes on those without health insurance looks like a tax in many respects. The “[s]hared

responsibility

payment,”

as the statute entitles it, is paid into the Treasury by “taxpayer[s]”

when they file their tax

returns.Although the payment will raise considerable

revenue, it is plainly designed to expand health insurance coverage. But taxes that seek to influence

conduct are nothing new.

The question is not whether that is the most natural interpretation of the mandate, but only whether it is a “fairly possible”

one…As we have explained, “every

reasonable construction must be resorted to, in order to save a statute from unconstitutionality.”... The

Government asks us to interpret the mandate as imposing a tax, if it would otherwise violate the

Constitution. Granting the Act the full measure of deference owed to federal statutes, it can be so

read...

Permitting the Federal Government to force the States to implement a federal program would threaten the

political accountability key to our federal system.

Indeed, this danger is heightened when Congress acts under the Spending Clause, because Congress can use that power to implement federal policy it could not

impose directly under its enumerated powers…

this limitation is critical to ensuring that Spending Clause

legislation does not undermine the status of the States as independent sovereigns in our federal system.

In this case, the financial “inducement”

Congress has chosen is much more than “relatively mild

encouragement”—it is a gun to the head.

The threatened loss of over 10 percent of a State’s overall budget…is economic dragooning

that leaves the States with no real option but to acquiesce in the Medicaid expansion

The States contend that the expansion is in reality a new program... We cannot agree that existing

Medicaid and the expansion dictated by the Affordable Care Act are all one program simply because “Congress styled”

them as such.

The Medicaid expansion…accomplishes a shift in kind, not merely degree…It is no longer a program to care for

the neediest among us, but rather an element of a comprehensive national plan to provide universal

coverage

"From what you have heard about Barack Obama's health care plan that was passed by Congress and signed into law by the President in 2010, do you think his plan is a good idea or a bad idea—say if you do not have an opinion either way,

Good idea Bad idea No opinion Unsure% % % %

7/18-22/12 40 44 15 16/20-24/12 35 41 22 24/13-17/12 36 45 17 212/7-11/11 34 41 24 11/13-17/11 39 39 21 16/17-21/10 40 44 16 -5/6-10/10 38 44 17 13/13-14/10 36 48 15 11/23-25/10 31 46 22 11/10-14/10 33 46 18 312/11-14/09 32 47 17 410/22-25/09 38 42 16 49/17-20/09 39 41 17 38/15-17/09 36 42 17 57/24-27/09 36 42 17 56/12-15/09 33 32 30 54/23-26/09 33 26 34 7

"Which comes closest to what you would like to see lawmakers do

with the new health care law: repeal the law entirely, repeal parts of

the law, expand the law, or leave it as is?"

Repeal

entirelyRepeal

parts ExpandLeave

as is

% % % %

7/15‐17/12 29 28 18 223/10‐12/12 31 28 22 144/3‐5/11 31 29 18 161/18‐19/11 27 34 20 1412/14‐15/10 27 32 15 1610/26‐28/10 29 29 20 1510/11‐13/10 27 27 19 17

• Medicaid to be expanded to all under 133% of the federal poverty line – mainly childless adults

• Perhaps 15 million individuals – a 50% increase

• Income eligibility to follow national guidelines

• Federal funding for the newly covered: 100 % in 2014 ‐

16; declining to 90% in 2020 and after

• States that now cover some beyond current requirements will ultimately get the same funding

• States will pay primary care providers Medicare rates for 2013‐14 with 100% federal funding

• States that do not participate stand to loose significant funding

• In addition section 2551 decreases D.S.H. funding by $14 billion over five years beginning in 2014 – up to 65% depending on the state

• States that do not expand Medicare can expect an increased burden on state funds for indigent care, support of public hospitals etc.

• The Secretary of H.H.S. ,under her ‘demonstration’ authority, retains substantial room to make deals

• The individual mandate penalties, and attendant publicity, are likely to increase enrollment among those already eligible but not enrolled

• States with low current participation will face higher costs since previously eligible new enrollees only get the old federal match rate

• States will also loose control over details of program administration that some states have used to lower

Medicaid enrollment• For example providers will now be allowed to enroll

eligible patients at point of care

• Insurance regulation (e.g. guaranteed issue and limits on non‐care costs) goes into effect regardless

• So do the penalties for non‐insurance (2.5% of income or $695 –

whichever is higher by 2016)

• The premium and cost‐sharing subsidies for those between 133% and 400% of the FPL remain (at 200%

of FPL premiums are limited to 6.3% of income, at 400% of FPL to 9.6%)

• Eligibility for these subsidies requires purchasing a policy from a ‘qualified health plan’

approved by the

exchange

• Exchanges can vary greatly level of activity – from aggressive policy making to being an Amazon site

• The administrative difficulties vary commensurately

• The Secretary of HHS has authority to establish exchanges in states that fail to do so

• No state exchange means giving up much state control over the insurance market ‐

and influence

over the persons and plans receiving subsidies

• No state exchange allows the Governor to attack federal intrusion and shift blame for all difficulties

Florida – Rick Scott

Iowa ‐‐

Terry Branstad

Kansas – Sam Brownback

Louisiana –

Bobby Jindal

Nebraska – Dave Heineman

South Carolina ‐

Nicki Haley

Wisconsin – Scott Walker

Alabama – Robert Bentley Georgia – Nathan Deal

Indiana – Mitch Daniels Mississippi – Phil Bryant Missouri – Jay Nixon (D) Nevada – Brian Sandoval Texas – Rick Perry

Virginia – Bob McDonnell

• Many Governors are sitting on the fence to see what happens

• H.H.S. has been very quiet about its plans for federal insurance exchanges

• To repeal the A.C.A. its opponents will need 60 votes in the Senate, a majority in the

House and the White House• Even with a few “Blue Dog Democrat”

votes in

the Senate that is a ‘big ask’

Average spending on health per capita ($US PPP)

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

1980 1984 1988 1992 1996 2000 2004

United StatesCanadaFranceGermanyNetherlandsUnited Kingdom

29

20

30

40

50

60

70

80

90

100

2010 2015 2020 2025 2030

Years

Popu

latio

n in

Mill

ions

18-24 25-44 45-64 >65

% Increase2010- 2030

Source: U.S. Census Bureau

(>65)

4.1%

79.2%

10.9%

(25-44)

(45-64)

14.6%

(18-24)

Copyright 2012 Marc J. Roberts 30

$5,791

$6,438*

$7,061*

$8,003*

$9,068*

$9,950*

$10,880*

$11,480*

$12,106*

$12,680*

$13,375*

$13,770*


• The A.C.A. has a variety of cost control initiatives:

– A.C.O’s– P4P experiments– Bundled Payment– A more powerful payment advisory commission

• It is not clear:– How aggressively they will be administered– How well they will work to limit costs

• The drafters of the A.C.A. faced insuperable political and economic obstacles to creating a simple, federal tax financed universal health insurance system

• They chose instead to use a complex mix of Medicaid, tax‐financed subsidies for private insurance and cross‐subsidies among insurance

purchasers to create such a system

• Using Medicaid and insurance regulation to do all this involves relying on (often hostile) state

governments and raises basic constitutional issues

• Evolutionary psychologists have identified “five moral instincts”

: care, fairness and reciprocity,

group loyalty, respect for hierarchy and avoidance of the unclean

• A universal (redistributive) insurance system calls on care and group identity – what the Europeans call

“solidarity”

–

and the idea that the existing distribution of economic opportunity is unfair

• A premium based system accepts hierarchy and the legitimacy of the existing distribution of income and wealth and views redistribution as ‘unfair’

• Many in the country —not unreasonably–

view a universal health insurance system as an aspect of “socialism”

• They, like the Chief Justice, are committed to states rights and limits on government

• They are disoriented by, and suspicious of, recent social changes

• In a time of economic turmoil they deal with their anxiety by what Talcott Parsons has called the

“fundamentalist reaction”: an effort to recapture a simpler and less threatening past

• Progressive political elements have been unwilling or unable to offer an alternative narrative

• The alternative to the A.C.A. – privatizing Medicare for new enrollees under a defined contribution plan–

would be even less likely to receive sustained political support

• It is NOT CLEAR what will happen–

“That is why they play the game

• Responsible providers, and those concerned with clinical quality, would be well advised to support the

A.C.A. despite the turmoil it will cause• The alternative approaches are simply not likely to

produce an equitable, affordable and high quality health care delivery system

marc j. roberts

Documents