Supreme Court’s decision isn’t end of reform

A Q&A with health policy expert Timothy Jost regarding today's Supreme Court decision overturning the individual mandate

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  • healthinsurance.org Contributor
  • June 28, 2012

Today the Supreme Court ruled on the challenge to the Patient Protection and Affordable Care Act.

To get a sense of what the decision means to the future of health reform, I conducted the following brief Q & A with Washington & Lee Law Professor Timothy Jost. Professor Jost is a widely recognized expert on health law, an author of several book books about health care regulation and comparative health law and policy. He’s written numerous essays on health care reform and is a frequent contributor for the Health Affairs Blog.

Mahar: Are you surprised by the Justices’ ruling?

Jost: No – I thought it was most likely that they would strike the mandate.

NOTE TO STEVE

USE THE NEXT Q &As ( in Red) ONLY IF the court overturns guaranteed issue, community rating and the requirement that insurers cover people with preexisting conditions, charging them no more than healthy applicants.

Mahar: They’ve done just that. They’ve also ruled that insurers do not have sell policies to people suffering from pre-existing conditions. And if they do, they can charge them more. Meanwhile, I’ve read that according to the Government Accountability Office 36 million to 122 million adults under 65 suffer from a pre-existing condition. As many as 17 million don’t have insurance because they can’t get it or because it’s exorbitantly expensive.

Jost: Yes, and now many of them are likely to remain uninsured.

Mahar: Given the Court’s decision, is this the end of reform? Go to Answer that begins “Fewer people will be insured,

Reform – minus the mandate

Mahar: Now that the mandate has been overturned, is this a serious blow to reform?

Jost: Fewer people will be insured, but it’s not going to be the end of the world. States can do things …

Mahar: What can states do?

Jost: They can pass their own mandates to apply to the citizens of that state. Maryland, for example, may do that. You’re going to see stories in the media exaggerating the importance of this. It’s important that we get the story straight: the law can work without the mandate.

Mahar: So you don’t see the mandate as the centerpiece of health care reform?

Jost: No, the game changer under reform is not the mandate, but the premium tax credit for those who buy their own insurance. The tax credit is based on income and will be very important for middle-income and low-income younger people in their 20s and 30s who tend to earn less than older Americans.

Mahar: Just how many people would have been affected by the mandate?

Jost: It’s a pretty small slice of the population. Ninety percent of people who are insured will still be insured through employers or government programs.

Mahar: People who buy their own insurance in the individual market would have been most affected by the mandate.

Jost: Yes and it’s a pretty small group. The vast majority of Americans would never have noticed the mandate. They were already covered – by an employer or the government.

Mahar: President Obama has said that if you like the insurance you have, under reform, you will be able to keep it. I assume he was referring to people who have employer-based insurance.

Jost: Yes, and in that large-group market, I don’t think we’ll see many changes.

Health insurance premiums?

Mahar: Without a mandate, won’t premiums go up?

Jost: Insurance will be more expensive for some people buying insurance in the individual market. But they will be getting better value for their dollars: insurance policies will have to cover essential benefits – rehabilitative care, mental health care, and there will be no co-pays for preventive care. And, if your income makes you eligible for premium tax credits, your health insurance will be more affordable once you apply those credits.

Mahar: Who will receive these subsidies?

Jost: A single person earning up to $44,680 – or a family of four earning up to $92,200 – will be eligible for tax credits that will help them buy insurance in the individual market.

Coverage for women, older Americans

Mahar: What about women? Today, insurers can – and do – charge women as much as 30 percent more than they would charge a man of the same age for insurance that doesn’t even cover maternity benefits.

Jost: That’s right. Under reform, insurers won’t be able to discriminate against women. So some of them will end up paying lower premiums – or roughly the same premiums for much better benefits.

Mahar: How about older Americans insurance in the individual market – will they wind up paying more?

Jost: It depends on where they live. In many states, insurers now can charge an older person six times as much as they would charge a 25-year-old for exactly the same policy. Under reform law, they can charge only three times as much. So many older adults will pay less. If a state wants to it can eliminate age rating altogether. Or it can decide that insurers can charge a 60-year-old only twice as much.

The beginning of the end for reform?

Mahar: Some say that this is only the beginning of what will be an ongoing effort to dismantle the ACA through the courts.

Jost: An awful lot of issues have already been litigated – there have been 30 lawsuits – challenging the employer mandate and many other issues. They have thrown almost all of them all out. Though one case is pending at the district court level challenging the Independent Payment Advisory Board (IPAB).

Mahar: That’s the panel that would recommend ways to cut heath care spending – if Medicare spending began to soar again. But recently, growth in Medicare spending has been slowing, so IPAB may never be used.

Jost: That’s right. The second case questions the ban on Medicare payment for physician-owned hospitals. The lower court ruled for the government in that case, but it is on appeal. These are pretty narrow issues – even if a court ruled against the government, this wouldn’t have much effect on reform.

Health insurance exchanges

Mahar: Others say that reform will grind to a halt because the states will simply refuse to set up exchanges, the marketplaces where individuals and small businesses are supposed to be able to buy insurance.

Jost: When it comes to the exchanges, federal law trumps state law.

Mahar: There will be federal exchanges as well as state exchanges. But will there be enough money to fund these exchanges? Could Congress block that funding?

Jost: Once they are operating, federal exchanges will be paid for by assessments on insurers using the exchange The problem is getting them up and going – the federal government has some money allocated to do this. Going forward, we are going to have to have some pretty tough budget negotiations. But I can see President Obama vetoing a bill that did not include money for the federal exchange. I’ve been on the phone with people from the federal agencies, asking “Are things on track for the federal exchanges?” and they have said ‘YES.'”

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