Supreme Court ruling a temporary victory for the administration
Thursday, the Supreme Court issued a controversial 5-4 verdict on the constitutionality of President Obama’s signature piece of legislation — the Patient Protection and Affordable Care Act. Unfortunately, it was not the 5-4 verdict most of America was hoping for.
Chief Justice John Roberts ruled with the liberal wing of the court that the law’s individual mandate, which requires Americans to purchase or otherwise obtain health insurance or face a fine starting in 2014, was constitutional as a tax — not under the Constitution’s Commerce Clause, which grants Congress the power to regulate commerce “among the several states.” President Obama did not want the mandate to be labeled a tax because it amounts to a regressive tax on the middle class — something he wanted to avoid.
The high court may have deemed Obamacare constitutional, but both Republicans and Democrats acknowledge that this ruling alone won’t solve our nation’s healthcare woes. Health care spending is still set to gallop on at a dizzying pace. And for many people, coverage will remain unaffordable.
Obamacare won’t solve either problem. And just because the law passes constitutional muster doesn’t mean it’s good policy.
Fortunately, Americans have the chance this fall to put in place a Congress and a president who will dismantle this law as it was created — through the legislative process — and replace it with reforms that actually lower health care costs and improve the quality of Americans’ care.
The individual mandate was the motivating factor for the legal challenge to Obamacare — and has long been the law’s most unpopular feature. Sixty-one percent of Americans oppose the mandate, according to a Reuters poll this week.
The mandate is designed to expand insurance coverage by fiat. No longer will the uninsured visit expensive emergency rooms and consume care without paying for it — at least, in theory.
The government says that the 50 million uninsured consume about $43 billion each year in uncompensated care. If that figure goes down, so too will insurance premiums for everyone.
The mandate was justified as the financial glue that held Obamacare together — the necessary component to rein in the costs that the uninsured shift to the insured.
But it’s bound to fail in that pursuit. Under the mandate, the Congressional Budget Office (CBO) predicts that only 16 million people — less than a third of the current population of uninsured — will gain coverage anew. These newly insured individuals will consume at most $9.5 billion in uncompensated care — about one-fifth the amount claimed by the administration.
Medicaid — the jointly run federal-state health program for the poor and disabled — will swallow up between 6 and 7 million of those 16 million people.
But Medicaid makes the uncompensated care problem worse. On average, it pays doctors and other health providers between 58 and 66 percent of what private insurers pay. Reimbursement rates are so low that providers actually lose money serving the program’s enrollees — just like they lose money when the uninsured visit the emergency room.
But the uninsured consume about half as much health care as the insured, mostly because they can’t afford it. If their healthcare consumption were to double once they enrolled in Medicaid, they’d end up consuming an additional $10 billion to $12.5 billion in “uncompensated” care.
By contrast, if they’d remained uninsured, they would consume about a third as much uncompensated care — some $4 billion.
Add that up, and the net effect of the mandate will be to increase uncompensated care by as much as $3 billion.
With the law upheld, Obamacare’s insurance exchanges also have a legal green light. But it’s unclear when — or even whether — these online marketplaces will get off the ground.
Seventeen states refrained from taking any action to set up their exchanges while the Supreme Court challenge was pending. A few have no intention of establishing an exchange at all.
Obamacare stipulates that states must get conditional approval for their exchange plans by Jan. 2013. The feds will step in and set up exchanges in states that are deemed unable or unwilling to do so.
But Jan. 2013 is just six months away. And the election is only four months off. Reshaping multiple state healthcare marketplaces will likely be an insurmountable challenge for both state and federal policymakers.
The Court did hand the Obama Administration a slight loss, ruling that the feds cannot withdraw the funding they already give states for their existing Medicaid programs if the states decline to expand the health program for low-income Americans as the law prescribes.
The Supreme Court’s decision offers the Obama administration a temporary victory. But the fight to deliver real health reform that expands access to quality care and lowers our nation’s unsustainable health costs is far from over.