Excerpt from page 7, Opinion of the Court:
“In 2010, Congress enacted the Patient Protection and Affordable Care Act, 124 Stat. 119. The Act aims to increase the number of Americans covered by health insurance and decrease the cost of health care. The Act’s 10 titles stretch over 900 pages and contain hundreds of provisions. This case concerns constitutional challenges to two key provisions, commonly referred to as the individual mandate and the Medicaid expansion.”
The individual mandate requires most Americans to maintain “minimum essential” health insurance coverage. The mandate excludes some individuals, such as prisoners and undocumented aliens. Many individuals take advantage of insurance coverage through their employer, or from a government program such as Medicaid or Medicare. This mandate speaks to those who are not exempt and do not receive health insurance through a third party. Their means of satisfying this new requirement would be to purchase insurance from a private company. This is also why you’ve heard about the states or the federal government establishing health insurance exchanges as a means to aid in this aspect of the mandate, and it is a another provision of the Act.
The Court ruled that the individual mandate is treated as a tax, since it states that those who do not comply with the mandate must make a payment which is calculated as a percentage of household income, and would be collected by the Internal Revenue Service (IRS) with your tax return. The Act, however, bars the IRS from using many of its normal enforcement methods, such as criminal prosecutions and levies, and some individuals who are subject to the mandate are exempt from the penalty, such as those with income below a certain threshold and members of Indian tribes.
One reasoning here is that the dollars generated by the individual mandate will reduce the costs of health care by introducing younger adult participants into the insurance pool. They won’t need as much extensive care as the elderly or children already covered,so their premium dollars will supplement the other costs. Some current projections state that 4 million individuals could agree to pay the tax in its first year of inception. There are some additional parameters in the Act that should make it similar in cost to a reasonable yearly premium amount or average out-of-pocket health care costs per person.
And, most states plan to implement the Health Insurance Exchange (if they don’t, the federal government will set one up for them), allowing anyone to purchase insurance. It’s been speculated that some employers may start giving employees a “health care budget” amount to purchase benefits on this exchange. It’s also been suggested that undocumented aliens could purchase insurance this way as well.
The Illinois Department of Insurance already has in place the Illinois Pre-Existing Condition Insurance Plan, and plans to expand this in accordance with ACA guidelines before the January 1, 2014 deadline. For the most current updates, visit the Health Insurance Reform Information Center .
According to a background research report commissioned by the state and released last September, in 2011 an estimated 52% of the Illinois population was covered by employer-sponsored programs (including small group and large group plans), 4% purchased insurance in the individual market, 20% were covered by Medicaid (including All Kids, the State’s program to cover all children and those dually eligible for Medicare benefits), 12% by Medicare and certain other public programs (e.g., military and veterans’ programs), and 12% were uninsured. That’s over 1 in 8 Illinois residents without a health care plan.
Health insurance enrollments through the Illinois Health Insurance Exchange are projected to ramp up over the first three years of operation. As of 2017, approximately 1.3 million people are projected to be purchasing health insurance through the Exchange as part of the individual market and the small group market (Small Business Health Options Program, or SHOP) according to the baseline assumptions. This reports assumes that the ACA stays in place as passed. Because of the All Kids and Illinois Medicaid programs, it was estimated that in 2010 95% of Illinois’ children had insurance.
The current Medicaid program requires states to cover only certain discrete categories of needy individuals – pregnant women, children, needy families, the blind, the elderly, and the disabled. It is also left up to the states to decide on the coverage levels for parents of needy families. Most states cover only those employed parents who make less than 37% of the federal poverty level, and only those employed parents who make less than 63% of the federal poverty line.
The ACA provisions require states to expand their Medicaid programs by 2014 to cover ALL individuals under the age of 65 with incomes below 133% of the federal poverty line. The Act also establishes a level of coverage, known as essential health benefits, which would satisfy a recipient’s obligations under the individual mandate. The federal government will pay 100% of the costs of covering these newly eligible individuals through 2016, gradually decreasing over the following years to a federal minimum of 90%. Current estimates indicate that the federal government’s Medicaid spending will increase by approximately $100 billion per year, nearly 40% above current levels.
As to the states’ responsibility, at the current time Medicaid spending accounts for over 20% of the average state’s total budget, with federal funds covering 50% to 83% of those costs.
According to the court decision Thursday, the Medicaid expansion is not merely expanding the old program, but under the Affordable Care Act it is transformed into a program to meet the health care needs of the entire nonelderly population with income below 133% of the poverty level. It is becoming an element of a comprehensive national plan to provide universal health insurance coverage. As such, the federal government cannot penalize states that choose not to participate in that new program by taking away their existing Medicaid funding. However, the Secretary of Health and Human Services does have the ability to withdraw funds provided under the ACA if a state that has chosen to participate in the expansion fails to comply with the requirements of that Act.
So, each state will have to evaluate several factors in deciding to proceed:
Are current Medicaid costs covered under the present state budget, what additional costs and overhead would be incurred by adopting the expansion plan, and will the additional monies under the expansion plan cover the additional enrollment and services provided?
Will more people and employers utilize the Health Insurance Exchanges, and by doing so, force more competitive (and hopefully lower) premiums?
How will providers and medical facilities figure into all this? Many have been working on what is called Accountable Care models to make their services more cost effective, but that in itself costs time and money to do. There will still be people who don’t file taxes and don’t pay the tax, and still need medical care that can’t pay for it.
We’ve known for some time that there’s no easy cure to the health care problems we face. Even though this has been a monumental decision, the work has just begun.