Health Policy Experts Size Up the Supreme Court’s Historic Ruling

Today, the United States Supreme Court issued its ruling on what many call the most important case since 2000’s Bush v. Gore. At stake was the constitutionality of the Affordable Care Act (ACA). A signature piece of legislation of the Obama administration, the ACA has been a lightning rod for conservative Republicans, who view it as a vast overreach by the federal government. They especially object to the law’s requirement (known as the “individual mandate”) that all people have health insurance or face a financial penalty and the requirement for states to expand eligibility for Medicaid coverage.

Michael Sparer,  PhD, JD, chair of the Health Policy and Management Department, and John W. Rowe, MD, professor of Health Policy and Management and former Chairman and CEO of Aetna, Inc., answered a few questions about the Court’s decision and its implications for the country.

What did the Court decide and what are some of the immediate impacts of this ruling?

Sparer: This morning the Supreme Court upheld the individual mandate in the ACA on the grounds that it represented a constitutional tax that the Congress has the right to impose and not on the grounds that there was congressional authority under the commerce clause. This was a quite a surprise. Also, surprising: the individual mandate was upheld 5 to 4 with Chief Justice Roberts, not Anthony Kennedy, as the swing vote.

The Court also upheld the Medicaid expansion, though they added that the federal government cannot financially penalize states that do not implement the expansion.

It was a historic day. The heart of this major comprehensive effort to reform our healthcare system survived a very tough constitutional challenge.

Rowe:  From the point of view of the healthcare industry and health insurers, the ruling doesn’t really have very much overall effect because these companies were assuming that the law would be upheld. They really had no choice but to make investments to prepare themselves for the legislation.

What are the implications for the Medicaid portion of the ACA?

Sparer: One of the main ways the ACA seeks to expand insurance coverage in the United States is through a dramatic expansion of the Medicaid program. As of 2014, another 18-20 million individuals presumably will be on Medicaid. Under the court’s ruling today, the states have the option of not going ahead with that portion of the ACA.

Rowe: This sets up a very interesting dynamic because in the law the federal government pays for 100% of the expansion of Medicaid for previously uninsured individuals for the first year and then after that the cost-sharing for states is only 10% with the Feds paying 90% of the cost.

So what can you do if you are a conservative governor of a large-population state like Texas with Governor Perry, Florida with Governor Scott, or New Jersey with Governor Christie? You are going to get pressured not only from patient advocates but from hospitals and doctors to accept the Medicaid expansion to have fewer uninsured people, especially since the federal government is essentially covering all the cost.

But you are also going to get pressure from your conservative base to be a real conservative because the Supreme Court has given you the option not to make government bigger – not to expand Medicaid. Will the true conservatives stick to their guns and pass on the option of increasing Medicaid or will they go ahead and do it for the dollars even though it is really against their principles? I think that is the most interesting and unexpected finding.

Everyone thought that Justice Kennedy would be the deciding vote. Yet it was Roberts who sided with the administration’s argument. What do you think of that?

Sparer: I think it’s extraordinary. I think it’s clear that Kennedy was skeptical during the oral arguments. He was viewed as the swing vote, which is one of the reasons that many lawyers and law professors became increasingly pessimistic about whether the individual mandate would be upheld. And at the end of the day Kennedy leads the charge against the legislation, while Justice Roberts sides with the liberals upholding it – but upholding it on general taxing power authority, not upholding it on commerce clause authority. Roberts was able to accomplish his goal of limiting the extent of federal power on the commerce clause while also upholding this legislation.

Rowe: Everyone expected it to be Kennedy. What Roberts did is he went for history and the legacy, instead of the politics. That’s what the Supreme Court is supposed to be about.

Who had the most to lose in this case?

Rowe: Obama.

Though health insurers had a possibility of losing a lot in in one particular scenario: if the individual mandate was thrown out, but the other insurance provisions were retained–so that only the sick people would sign up for them. That would lead to what’s called in the insurance business a “death spiral.”

If the whole bill was thrown out, then if the Democrats swept the November elections, you might have to face a public option or a single payer option  - all the things that the health insurers hate.

Sparer: The 40-50 million uninsured in the United States had the most to lose. Worst case scenario from the perspective of a supporter of the law, was that the Court would strike down the entire law. And, in fact, there were four judges on the Supreme Court whose opinion said that was exactly what should have happened, including Kennedy. Had there been one more vote in that camp, if Roberts had joined the dissents and the dissents became the majority – the entire ACA would have been struck down and that would have been devastating for the effort to expand coverage for the uninsured in the United States.

You hear a lot about this country's runaway spending in healthcare. How does the decision impact that?

Rowe: There are three issues about healthcare: quality, access, and cost. We have problems in all three. This bill primarily addresses access. There are provisions in the bill that focus on some aspects of quality and cost. But this is a bill that focuses primarily on access-reducing the number of uninsured individuals.

Could the reform fail if the penalties are too low to induce young healthy people to buy insurance?

Sparer: There’s huge concern about that. What the law says is that by 2014 you have to have insurance coverage – public or private - or pay a penalty on their taxes. The first year the penalty is $95.  It goes up over a few years to $695. But even when it goes up, clearly $695 is a lot less than the cost of an individual health policy in the market.

Rowe: Some skeptics think it was designed to fail by having such low penalties.  If I were to rewrite the bill that is the thing I would change. They are nowhere near strong enough. The experts in insurance were battling with the much more liberal politicians who wanted it to be very low. The insurance guys say to the politicians, that these things are too low so healthy people will pay the penalty instead, while sick people will go in, the rates will go up and the whole thing fails. And then you get the ultra-liberal politician who says that’s fine with me, we get the single payer option now.

At the Mailman School, we talk about health as a human right. Based upon the national discourse around this case, do you think the American public feels that healthcare is a human right?

Sparer: I think all Americans would believe that no one should be left in the street to die unattended. We have laws in place right now that ER can’t turn people away. And I think conservatives and those on the more right-side of the equation say that’s enough.

Those on the left or those supporting this legislation say that simply enabling people to show up at emergency rooms in a crisis hardly represents a minimum level of adequate healthcare. This legislation pushes us further down the road towards saying that some minimum level of healthcare is a guaranteed right for all Americans. It doesn’t take us there completely; there are certainly those who are left out, such as undocumented immigrants. But this legislation moves us much closer to the international norms of some access to some level of healthcare as a right of citizenship or residence.

Rowe: Ted Kennedy for 40 years gave speeches that started with the sentence that “healthcare is a right not a privilege.” That’s a fundamental decision that we have to make in this country. I don’t know where the American people are now. Two years ago when they elected President Obama, they were in favor of it and saw it as a right. Today the polls are fifty-fifty.

I think it’s a right. That’s my vote.