Checking Up On Health: July 22, 2014

Health Policy News and Views
Compiled by Benita M. Dodd


In case you missed it: There were two rulings today regarding the Affordable Care Act. In the biggest ruling yet to affect ObamaCare, a District of Columbia appeals court panel ruled 2-1 in Halbig v. Burwell that the Obama administration and the Internal Revenue Service were wrong in extending subsidies to enrollees in federally run health exchanges. This is critical because 36 states decided not to establish a state exchange. Without the subsidies, health care is suddenly not so “affordable” to millions.

Congratulations to Cato Institute’s Michael Cannon (read his Forbes article on the significance of this ruling) and his colleague, Jonathan Adler, for establishing the foundation for this case. As Cannon said in his article, “If the courts rule for the plaintiffs, I’ll be interested see how many news agencies use headlines like, ‘Ruling Denies Subsidies to Millions,’ versus the more accurate, ‘Court Rules Obama Gave Illegal Subsidies to Millions.’

“Though that small detail doesn’t change the fact that 5 million people have been deeply wronged, it does clarify who wronged them: not the Halbig plaintiffs or a few judges, but a president who induced 5 million low- and middle-income Americans to enroll in overly expensive health plans with the promise of subsidies he had no authority to offer, and that could vanish with single court ruling.”

A few hours later, the Fourth Circuit issued a directly contrary decision in King v. Burwell, upholding the IRS regulation. The decision is important as well, “though less for what it holds than for how its upholding of the regulation might actually benefit the challengers who lost the panel decision,” according to one legal analysis. “In short, the Fourth Circuit’s decision may speed up the timing of Supreme Court review of this issue.”

Will the Halbig Decision Create Chaos in the Health Insurance Market? Merrill Matthews of the Institute for Policy Innovation says, “Maybe, but no more than ObamaCare itself has created.”

Here’s how he explains it:

Under the ruling, 36 states that rely on the federal government’s exchange would not be eligible for those subsidies. That means millions of Americans in those states, and only those states, would get no federal help paying their premiums.

Because the ACA exempts individuals who cannot purchase “affordable coverage” – the lowest-cost policy available must be less than 8 percent of a person’s income, after any subsidies are applied – millions of middle- and lower-middle-income Americans in those 36 states would not be required to have coverage. The coverage mandate would still apply to higher-income workers because most of them could find coverage that costs less than 8 percent of their income. But the change would not apply to people in the 14 state-created-exchange states.

Before Obamacare went into effect there was no individual mandate to have health insurance (Massachusetts excepted) and no federal subsidies for buying it. Under the D.C. Circuit’s decision, there would be no individual mandate on most people in 36 states and no federal subsidies to buy it.

Moreover, the federal government just arbitrarily decided to exempt U.S. territories from the individual mandate, even though the law includes them. So if the ruling creates chaos, it’s no different than what the Obama administration has done.

The decision also undercuts the employer mandate, but the Obama administration has already postponed that for a year for large businesses and two years for medium-sized businesses – and reports say some Democrats are pushing to eliminate it completely. So no additional chaos there either.

While President Obama’s goal was to set a sort of national standard for the way health insurance was sold and operated, the administration’s sloppiness in drafting the law, determination in pushing it through without Republican support, and heavy-handedness in ignoring what it didn’t like has opened the door for federalism to flourish. That will create some differences, but that’s what federalism is all about. 

What worries us: The top consumer concern among insured Americans today is access to good, affordable health care, according to a National Commission on Certification of Physician Assistants (NCCPA) survey. Nearly half (47.3 percent) of those surveyed expect their health care costs to increase; More than 40percent are concerned about getting a doctor’s appointment when needed; 51 percent believe there will be too few health care providers to meet patient needs over the coming decade, and one in five are treated but don’t feel educated about their health condition.

Quote of Note 

More than 50 percent (of our MinuteClinic patients) are effectively medically homeless. Patients at MinuteClinic did as well or better than those treated in traditional primary care settings, yet cost was 40 to 80 percent lower than in other settings.” – Andrew J. Sussman, President, MinuteClinic (CVS)

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