Billy Wynne is senior vice president and principal with Health Policy Source Inc., a Washington-based consulting firm contracted by the Colorado Health Foundation. Previously, he served as health policy counsel to the U.S. Senate Finance Committee and its chairman, Sen. Max Baucus, D-Mont.
In my last Reform Watch post, I looked at what most believed would be the most critical issue in the U.S. Supreme Court's decision regarding the Affordable Care Act (ACA): the constitutionality of the requirement that all Americans carry insurance.
But, alas, while the court addressed the validity of the "individual mandate" in an interesting and important way, the real game-changer in their decision relates to the mandatory Medicaid expansion included in the ACA. So let's take a closer look at what the court did and what it means for health reform (and Colorado) going forward.
First, it's important to understand that the court ultimately couched their decision in the philosophy of judicial restraint. As Chief Justice Roberts put it, writing for the majority:
"We do not consider whether the [Affordable Care] Act embodies sound policies. That judgment is entrusted to the Nation's elected leaders. We ask only whether Congress has the power under the Constitution to enact the challenged provisions."
After upholding the individual mandate by a 5 to 4 margin, the court addressed the provision of the ACA that requires states to expand their Medicaid programs to cover all individuals with income below 133 percent of the Federal poverty level. Only a small minority of states covers their residents up to this threshold, and many states' programs are substantially more limited than this.
I think this justifies a brief trip back to Medicaid 101. Targeted at low-income individuals and families, Medicaid delivers coverage to 46 million Americans (including 602,000 Coloradans). This makes it larger than the more often-discussed Medicare program, which is primarily for seniors. Medicaid is the largest source of coverage for American children and 68 percent of individuals in nursing homes. Chances are, someone in your family will receive Medicaid coverage at some point in their lives. Medicaid also is extremely efficient, delivering care at approximately 65 percent of the cost of commercial health plans.
The constitutional issue at stake in the ACA case was whether Congress, under their spending power, could mandate the Medicaid expansion in exchange for continuing the considerable funding allotted to States to operate their existing Medicaid programs (Currently, the federal government covers, on average, 57 percent of Medicaid costs nationwide; states pay for the rest). Prior to passage of the ACA, the federal government had imposed several other, but more limited, mandates on state Medicaid programs.
Ultimately, the court held that this particular Medicaid mandate was a step too far. They decided that, by threatening the termination of billions of dollars states are already receiving under Medicaid, Congress was actually coercing states into effectuating this expansion. Attaching strings to federal spending is OK, but using the spending power to impose de facto mandates is not. So, after the Supreme Court's decision, states now have a choice as to whether to expand their Medicaid programs in compliance with the ACA.
This outcome has raised a host of political and policy-oriented questions for states. May a state partially expand shy of the full 133 percent level, for example, and still receive the generous federal match funds for the ACA expansion (the federal government will foot the entire bill for the expansion in the first three years)? May a state restrict the benefit package offered to some of the newly eligible Medicaid beneficiaries in order to cut the cost of their program's expansion?
While we await the answer to these and several other questions, the political debate within states is already off to the races. Many suggest states would be foolish to turn down the massive influx of federal dollars the expansion would bring; others say that the long-term financial burden of funding this new coverage will only further drown states in red ink.
Colorado is in a unique position, having recently passed the most sweeping expansion of its Medicaid program in the Health Care Affordability Act of 2009. But this legislation does not authorize the state to expand all the way to the new ACA eligibility levels. What Colorado ultimately will do rests in the hands of Gov. John Hickenlooper and the legislators in office next year – presumably with considerable input from health care stakeholders across the state and, ultimately, voters.