By Judy Wang
On Monday, March 26, the Supreme Court began hearing arguments for all cases involved with the Patient Protection and Affordable Care Act (PPACA). Unless you have been living under a rock, you probably know that the PPACA is the landmark health care legislation passed by the 111th Congress and signed into law by President Obama on March 23, 2010.
You may be more familiar with one portion of the law that became an immediate point of contention after the PPACA was signed into law. Many states filed suit against the government immediately after signing, arguing that the PPACA is unconstitutional because it calls for an individual mandate. This means that every citizen is required to have health insurance, not unlike what we are used to as residents of Massachusetts. In this blog post, I aim to outline and explain what is being contested in the Supreme Court, and its potential implications on health care reform in the United States. I will also shed light on other, less publicized, portions of the law that have profound implications for healthcare costs for the poor and elderly and for healthcare entrepreneurs trying to breathe new life into a troubled system.
Passed in 2010, the Patient Protection and Affordable Care Act (PPACA) held a number of provisions aimed at extending health insurance coverage to more than 30 million previously uninsured Americans, while reducing costs associated with health care services and outlawing provisions that prevented many citizens from receiving private health care coverage (The White House, 2010). For example, health insurance companies are no longer allowed to deny coverage due to preexisting conditions. The provisions of the PPACA of concern in the Supreme Court arguments come into effect in 2014 and are listed below:
- The individual mandate: This provision will require that everyone not currently insured under an employer-sponsored plan or a government-subsidized plan (Medicare, Medicaid, etc.) must carry health insurance or pay a penalty
- Expansion of Medicaid eligibility: Medicaid eligibility will expand to include all individuals and families with incomes up to 133% of the poverty level. Otherwise, there is no federal requirement that states provide health insurance for adults with no dependent children. States that do not adhere to this provision may see their federal Medicaid subsidy withheld. (Galewitz, 2010).
28 states in total, including Florida, Colorado and Texas, have filed joint or individual lawsuits against the federal government stipulating that the PPACA’s provision to mandate that each individual must carry health insurance is unconstitutional because it violates state sovereignty under the Commerce Clause. Meaning that states filing suit against the federal government are arguing that for the federal government to mandate that individuals be insured and to order that Medicaid eligibility be expanded would be an unconstitutional expansion of federal powers, as it would be beyond Congress’s constitutional purview for regulating interstate commerce.
Oral arguments to the Supreme Court began on Monday, March 26, and will continue through Wednesday, March 28. Over the course of three days, the following questions will be discussed:
- Whether the case is premature because the portion of the law regarding the individual mandate and the expansion of Medicaid hasn’t yet taken effect;
- Whether Congress abused its power in mandating that Americans be insured or face a penalty;
- The constitutionality of the individual mandate; and
- Whether Congress violated federalism by stipulating the expansion of Medicaid, a program delivered by the states and partially subsidized by the federal government. (The New York Times, 2012).
If the Court rules that the provisions are unconstitutional, many Americans who would have gained eligibility for public health insurance programs will now be left uninsured, which was one of the main achievements of the PPACA. More alarming would be what this potential ruling might mean for other federally subsidized state programs, such as transportation and education subsidies, that hinge on states meeting certain requirements to receive federal grants. Regardless of the Court’s decision, many of the provisions will remain intact, including those expected to reduce the costs of health care services in the United States.
Implications for Health Care Reform in the United States
Other provisions of the PPACA that have already gone into effect include the creation of the Center for Medicare and Medicaid Innovation (CMI), responsible for developing and testing innovative payment and delivery models for the Medicare and Medicaid populations. Earlier this year, CMI announced the availability of $1 billion to support the testing of proposed models for three years ready for rapid deployment (Center for Medicare and Medicaid Innovation, 2012).
One effect of the PPACA was catalyzing the health care entrepreneurship movement, where startups and public-private partnerships emerged to promote innovative solutions for health care delivery in the United States. With the emergence of health tech accelerators Rock Health, Blueprint Health and Healthbox, and the press surrounding the digital health movement (i.e. TechCrunch’s 6 Big HealthTech Ideas That Will Change Medicine in 2012), the industry seems to be ripe for a revolution.
Medicare and Medicaid insure a specific subset of the American population (the elderly, low-income and disabled individuals) who often receive the most services and as a result comprise a large portion of health care costs (Medicare Payment Advisory Commission, 2007; McHugh, et al. 2010). By targeting innovations for this specific patient population, health care costs should decrease in the long-term, and extending Medicaid via the PPACA as it stands would enable these technologies and new delivery models to be accessible to a population that otherwise would not receive these benefits.
In addition, a provision that took effect at the PPACA’s enactment involved giving the Food and Drug Administration the ability to approve generic versions of biologic drugs and grant biologics manufacturers 12 years of exclusive use (Kaiser Family Foundation, 2010). This provision gives biotechnology and pharmaceutical companies the incentive to develop cheaper versions of new biologic drugs and put more resources into research and development efforts for future drugs.
Based on the first day of arguments, it appears as though the Court is ready to move on from the question of consideration and move on to questions of legality and constitutionality. The Court is expected to rule on the case in June, immediately before this year’s general election, making this a highly charged issue with likely enormous repercussions for both President Obama and the eventual Republican presidential nominee.
Center for Medicare and Medicaid Innovation, Health Care Innovation Challenge. http://innovations.cms.gov/initiatives/Innovation-Challenge/index.html. Assessed March 26, 2012.
Galewitz, Phil. Consumer’s Guide to Health Reform, Kaiser Health News (2010).
Kaiser Family Foundation, Health Reform Implementation Timeline. http://healthreform.kff.org/timeline.aspx. Assessed March 27, 2012.
McHugh, Matthew D., Carthon, J. Margo Brooks, Kang, Xiao L. Medicare Readmissions Policies and Racial and Ethnic Health Disparities: A Cautionary Tale. Policy, Politics & Nursing Practice; 11(4): 309–316, November 2010.
Medicare Payment Advisory Commission. 2007. Report to the Congress: Promoting Greater Efficiency in Medicare. Washington, DC: Medicare Payment Advisory Commission, p. 103.
The New York Times, A Guide to the Supreme Court Challenges to Obama’s Health Care Law. http://www.nytimes.com/interactive/2012/03/19/us/guide-to-supreme-court-challenges-to-obama-health-care-law.html?ref=us. Assessed March 26, 2012.
Supreme Court of the United States, Patient Protection and Affordable Care Act Cases. http://www.supremecourt.gov/docket/PPAACA.aspx. Assessed March 24, 2012.
The White House, Health Care that Works for Americans. http://www.whitehouse.gov/healthreform/healthcare-overview#healthcare-menu. Assessed March 24, 2012.