June 28, 2012: From the desk of SHADAC Director Lynn Blewett
The Supreme Court has finally made its decision upholding most of the provisions of the Affordable Care Act (ACA).
Early in its majority opinion, the Court deems the individual mandate unconstitutional under Congress's power to regulate interstate commerce, causing many prominent news stations to initially claim that the individual mandate had been “struck down.” However, later language in the decision provides the rationale that allows the individual mandate to proceed under Congress's authority to tax. The court also determined that that states do not have to implement the ACA's Medicaid expansion provisions and cannot be penalized for choosing not to.
The Practical Implications
This historical Supreme Court decision means that states can move ahead in developing the ACA's Health Insurance Exchanges with the intent of providing affordable coverage to individuals and those working for small employers. And those states willing to expand Medicaid can begin the process of removing all categorical eligibility provisions and for the first time provide universal coverage for those with incomes under 138 percent of the Federal Proverty Level (about $44,000 for a family of four).
National estimates indicate that the ACA will cut the number of uninsured from 50 million to 20 million. In Minnesota, which already has a high rate of health insurance coverage, it is estimated that the provisions of the ACA will extend coverage to approximately 290,000 additional people. This would cut the uninsured rate in Minnesota by more than half, leaving us with a very low uninsurance rate of 4 percent.
For providers and health systems, the ACA's coverage expansions will mean more patients with health insurance – that is, more “paying” patients and fewer patients depending on charity care. Health care organizations will need to be ready for an influx of new patients in 2014. And, given that these patients have likely been uninsured for many years, health care organizations will need to develop strategies to address their pent-up demand for care.
The State Perspective: Minnesota
Minnesota is one of the leading states in the implementation of health reform. We are on track to meet the Health and Human Services (HHS) deadline of January 1, 2013, to submit state plans for implementation of the Health Insurance Exchange in 2014. States who have opted to delay ACA action until after the Supreme Court decision are behind in Exchange planning, and it will be difficult for them to catch up.
Minnesota is also one of two states plus the District of Columbia that chose to participate in the ACA's Medicaid early opt-in provision by providing Medicaid coverage to childless adults up to 75 percent of poverty. This early action puts Minnesota in good shape to move to full expansion (up to 138 percent of poverty) in 2014. States who choose not to expand Medicaid (under the authority of the Supreme Court decision) will lose out on the opportunity for the federal government to cover 100 percent of the costs of the expansion for the first two years with a phase down to 90 percent. Given Minnesota's current federal Medicaid match of 50 percent, it's worth our while to continue to pursue the ACA's expansion option, and we are well-positioned to do so.