More on the SCOTUS Health Care Decision

June 28th, 2012 at 1:01 pm

 OK, coming down off my SCOTUS high.  (“Justice Roberts, I’d be happy to mow your lawn this weekend…can I run out and get you a latte?…how about a backrub?”)

A few scattered reflections. 

First, the Medicaid expansion limitation.  The ACA, as legislated, expands Medicaid coverage to folks up to 133% of the poverty line, which amounts to about $24,000 for a single parent with two kids.  Right now, lots of poor and near-poor people, mainly adults, are uninsured, and the expectation was that the ACA Medicaid expansion would reach 17 million of them. 

Additionally, and this is very important in predicting where this lands, states that newly cover these low-income, uninsured folks initially get fully reimbursed for the costs by the Feds (by 2020, that match falls to 90%).  Also, under the original law, states risked losing their federal Medicaid contribution if they failed to implement the expansion.  (See here for more details.)

But SCOTUS reversed that part.  They said states could reject the extension and Congress could not take away their existing Medicaid funding.

So, what does this mean?  It has some potentially pretty weird implications.

For example, one’s first thought is that hard-core conservative governors—the type that rejected fully paid-for Recovery Act bucks when their citizens needed jobs—will surely reject the expansion, despite the fact that it’s fully funded through 2017.  Lefties and advocates for the poor will squawk, but so what, right?   

But the thing is, they’re not the only ones who will be pushing back on their governors.  Hospitals, doctors, community health care providers, their lobbyists, and anyone else who deals with low-income, sick people will be pushing very hard to take the money.

Obviously, ideology may triumph but the coalition in support of the expansion, even in the reddest state, will be decidedly purple.

Next, because the law was written assuming that the uninsured poor would be covered by Medicaid, subsidies to purchase health insurance in the exchanges don’t kick in until higher income levels.  The poor won’t have to pay the tax penalty formerly known as the mandate because of a hardship exemption in the law, but neither will they get the subsidy until their incomes go up enough. 

It’s a very weird reversal of the usual means-test for government benefits.  Typically, as your income rises you become ineligible for benefits.  Here, you become eligible.

The other thing I’m contemplating today are pictures like these.  It’s stuff you probably know about, but amidst all the political hurly-burly, the chin-stroking punditry, and elation on one side and anger on the other, it’s worth remembering why this is so important.

The first figure shows per capita health spending in US dollars across OECD countries in 2010.  The average of all the other countries is about half that of the US, and remember, they generally cover everyone with outcomes that are at least comparable to our own.

Source: OECD

The table below shows the rates and numbers of the uninsured by race/ethnicity.  There are about 50 million uninsured in the US, disproportionately minority, and they are a major target of what it is now, I’m proud to say, the law of the land—ie, the Affordable Care Act.

The final figure shows the CBO’s projection of how much the ACA will lower that uninsured number.  It should be noted that given the Medicaid decision by the court, this estimate should now be viewed as an upper bound—it assumes all states participate in the Medicaid expansion.  Still, most states will participate, especially the big ones where lots of uninsured low-income people live (though as I wrote that I thought…hmmm…Texas???).

Update: Here’s CBPP’s Bob Greenstein on that issue I note above re the creation of a real inequity if states refuse to take up the Medicaid extension:

…in any state that does refuse to implement the expansion, a shocking inequity will arise.  People with incomes between 100 percent and 400 percent of the poverty line will be eligible for subsidies to help them afford coverage in the new health insurance exchanges.  But people below the poverty line will not be eligible, because the Affordable Care Act assumes they’ll be in Medicaid instead.

In the typical (or median) state today, a working-poor parent loses eligibility for Medicaid when his or her income reaches 63 percent of the poverty line; an unemployed parent loses eligibility at just 37 percent of the poverty line.  In states that refuse to implement the Medicaid expansion, people with incomes between levels such as these and the poverty line will be ineligible for both Medicaid and subsidies to purchase coverage in the exchanges; their incomes will be too high for the former and too low for the latter.  It will be up to state policymakers to avert such a deeply inequitable outcome by moving forward with the Medicaid expansion.

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3 comments in reply to "More on the SCOTUS Health Care Decision"

  1. davesnyd says:

    OK– having read both this post plus the Klein one you recommended, next question: how does this affect other situations where Congress uses withholding of funds to motivate State legislative actions?

    I’m thinking of the threat of withholding highway construction funds being used to enforce speed limit, drinking age, and seat belt usage.

    I don’t know whether there are other examples, too.


  2. Auros Harman says:

    Nobody’s ever doubted that the Feds could create a program in which they offer the states money to do something and set terms about what has to be done; as far as I can tell the Court is just saying that when you tinker with a program you can’t be that coercive about changing the deal. The problem with that logic is, from what I’ve read of the decision, it seems like even though the Feds are being disallowed from applying a stick to a modification of a program — leaving them only the carrot of funding the expansion — it seems like they could still legitimately pass a law that ends MedicAid entirely, and simultaneously institutes an “entirely new” program called SchmedicAid, which just so happens to have parameters identical to the old MedicAid plus the expansion. Am I misunderstanding this?


    • Jared Bernstein says:

      The SCOTUS said the Feds can’t coerce with penalties if states don’t take the expansion…I don’t think your Schmedicaid idea fixes that. However, here’s a variation that might work. What if Schmedicaid had a tiny, fractional Medicaid program that came with an expansion that got you all the way to the ACA Mcaid + expansion levels. States that chose only to accept basic Schmed would be screwed relative to current policy so they’d have to accept Schmed+expansion.


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