In an effort undoubtedly designed to confound all prognosticators, the Supreme Court today issued a surprising decision on the Affordable Care Act (ACA).
Larry Levitt, MPP
A majority of the justices ruled that the ACA can go forward, including the controversial mandate that most people obtain insurance or pay a penalty starting in 2014. This involved some complicated legal reasoning around whether the mandate was being imposed under the federal government’s power to regulate interstate commerce or its power to tax, but the practical effect remains the same.
The justices also upheld the ACA’s expansion of Medicaid, a key component of the law that is expected to insure up to 17 million low-income Americans who are now uninsured. But in their most surprising move, the justices ruled that the federal government cannot withhold all Medicaid funds to states that refuse to implement the expansion of the program to everyone under 133% of the poverty level.
This ruling, in effect, turns the Medicaid expansion component of the ACA into a voluntary option for states. But it’s a voluntary option that comes with a very big incentive, namely that the federal government will pay for 100% of the costs initially and 90% over time. Some conservative governors may refuse to implement the Medicaid expansion, despite its economic benefits. But it is difficult to believe many states will turn their backs on that infusion of federal money and in the process prevent their poorest residents from getting access to health coverage. Plus, one can be sure that local hospitals and physicians will be applying substantial pressure not to do so.
But, while the court’s decision removes the legal uncertainty around implementation of the health reform law, political uncertainty remains.
Will states continue to wait on the sidelines and balk at implementing the law? Aside from the Medicaid expansion, states are expected to set up new health insurance exchanges and enforce rules that prohibit insurers from discriminating against people with preexisting health conditions. If they don’t, the federal government will step in and do it. So although many governors may still oppose the ACA as policy or because of ideological or political grounds, they cannot now stop it from going into effect. Ultimately, many if not most of them will probably want to play a major role in implementation, if only to avoid a bigger role for the federal government.
However, this all depends on what happens in November. Although this election is likely to be much more about the economy than health reform, Governor Romney has reiterated his aim to repeal the ACA if elected president (or, short of that, change its funding and direction). So the outcome of the election could well determine the future of the health reform law.
Buckle up, because this roller-coaster ride is not over.
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Larry Levitt, MPP Larry Levitt, MPP, is Executive Vice President for Special Initiatives at the Kaiser Family Foundation (KFF) and Senior Advisor to the President of the Foundation. Among other duties, he is Co-executive Director of the Kaiser Initiative on Health Reform...