OBAMACARE: Was The Runner’s Knee Down?

NFL-REF-WATCH-BREAKING-BAD-bigger-300x211The play lasted only eight seconds out of 3,600 in the entire game. The distance traveled roughly 16 inches out of 3,600 across the field. Yet what occurred during those 8 seconds and 16 inches could make the difference between immeasurable joy or profound sadness. It all depends on how the referees view the play.

Of less substantial consequence in the minds of most Americans, starting tomorrow the Supreme Court will begin hearing arguments over 6 words of the Affordable Care Act – out of roughly 382,000: “through an exchange established by the State.” In November of last year when the Court determined (or at least four Justices did) to hear King v. Burwell I wrote, Does Legislative Negligence Trump Legislative Intent? I discuss there the background and ramifications of this case.

Here I am more interested in briefly sharing some thoughts on the relative influence of sociopolitical factors in SCOTUS’s review and consideration of this case. Whereas our historical view of the Court is one of great reverence and respect – the last bastion wherein ethics and morality trump politics – I think the image I chose for this post today more accurately reflects public opinion of that institution today – right or wrong.

I am not about to argue that politics has only recently become an unsightly element of the Court. Justices are appointed and approved by those who are elected, and they don’t get to the position of being considered by living out an apolitical professional career. From accusations against President Grant for court packing to FDR’s proposal to add members (conjectured to dilute a conservative bench) to more recent skirmishes over presidential nominees (e.g., Bork and Thomas) the Court has been steeped in political undertones for decades.

But what we are witnessing today is beyond just the politicization of appointees and the legacy influences of political ideologies. Like all things touched by our modern media the Court is engulfed by a sea of opinions and editorials in anticipation of a “wrong” decision – having not even heard one word of oral argument. How can the justices not hear the deafening crowd noise any less than the referees on the field looking under the video replay monitor. What influence, if any, will that carry on how they view King v. Burwell?

Regardless of how you hope the case is adjudicated you must see the irony in 8 million lives potentially being negatively impacted by 9 individuals out of 320 million based on the arbitrary interpretation of 6 words among 382,000.  Welcome to 21st century democracy in America.

  ~ Sparky

Implications of SCOTUS Decision on Medicaid Funding of PA/LTC

Before I get to the heart of this post (the Medicaid story), please allow me to share some additional thoughts up front.

Dewey Wins Moment
First, as was announced this morning, the Supreme Court has found the Affordable Care Act is constitutional in its entirety (noted exception regarding Medicaid expansion).  I was following the announcement on the
SCOTUS blog this morning (where it was shared that the Individual Mandate was upheld), and so I had a very hearty laugh listening to John King of CNN go on for nearly five minutes about the implications of the Individual Mandate being struck down.  Apparently, a reporter in the Court read the opinion passage that, “the individual mandate thus cannot be sustained under Congress’s power to ‘regulate Commerce’ ” and failed to keep reading.  Ah, the risks of wanting to be first.

Maintaining Political Perspective
Second, a modest word of caution.  As I have written here and shared with industry peers and constituencies in various other formats, this is another step along the path of Healthcare Reform.  The next challenge the Affordable Care Act faces is the fall elections.  And I would not be the least bit surprised – or really, at all disappointed – to know that Republican strategists are in a back door way pleased with this decision because they can
now use it to energize their voting base.  It will be a rallying cry to get the vote (and donations) out.  Democrats will have to redouble their efforts (if not their campaign fund raising) if they want the ACA to survive in tact beyond the 113th Congress.

But, it will be very difficult now to rescind the entire Act regardless of what Messrs. Romney, Boehner, McConnell, et al would like us to believe.  First, there is the political reality of having to not only win the Presidency but to maintain a majority in the House and take back control of the Senate.  I think retaking the Senate will actually be a longer shot than Romney defeating Obama.  Second, by the time any new legislation could be drafted, vetted and passed, the ACA will be well into implementation.  Trying to go backwards at that point would have devastating social and economic consequences that elected officials of any stripe are unlikely to want to be associated with.

There very well could – and I would expect, regardless of election outcomes, will – be some modest tinkering in the future.  We still have the economic realities of a very fragile world economy that keeps us teetering on the brink of another deep recession.  So I think it is likely the essential benefits definitions and actuarial soundness of insurance plans under standardization of coverage will be tightened up in ways that improve budget projections. 

Medicaid Expansion
To some, like me, this part of the decision was more of a surprise than the IM being found as constitutional – and there could, potentially, be rather significant implications for post-acute/long-term care providers.  I am not by a long stretch a legal scholar, but I will try to give you my best understanding.

Title II, Section 2001 of the Act – Medicaid Coverage for the Lowest Income Populations – expands coverage for individuals with incomes at or below 133 percent of the federal poverty level ($14,856 in 2012).  As a practical matter, this means expanding coverage for adults without children or disabilities.  According to a May 2010 Kaiser Family Foundation Report, it is estimated that an additional 15 million individuals will receive beneficial healthcare coverage under this provision by 2019 at an estimated cost of $465 billion.

According to 42 USC § 1396c – Operation of State plans, the Secretary of HHS has the ability to withhold federal funding of a state’s Medicaid program for failure to comply with federal requirements (this was existing code not altered by the ACA).  Thus, states not complying with provisions of Section 2001 of the ACA would be at risk of having all federal Medicaid funding cut off – not just funding of the Medicaid expansion.  In lieu of the ACA’s Medicaid expansion, the Court found that application of 1396c in such instance would be unconstitutional because states could not have anticipated such an onerous exercise of coercion when electing to participate in the original Medicaid program.

The remedy of this finding is that the Act must be amended such that 1396c would not apply to a state’s decision whether or not to participate in the Medicaid expansion under Section 2001.  So, in theory, states now have the option of whether they want to participate in the Medicaid expansion or not.

Now, given that the program’s design will initially provide 100% federal funding for newly eligible enrollees under the expansion program – declining to 93% by 2019 – I cannot imagine how any state would choose not to participate.  It would seem to be political suicide for an elected official to forgo federal funding to expand healthcare coverage to the poor when the relative impact on that state’s budget is, by comparison to federal spending, rather small.  And by not participating, that state would essentially be choosing to lose a portion of the taxes paid by its citizens that will benefit the poor in other states.

On the other hand, as we witnessed when several Republican governors chose not to accept economic stimulus funding, there is a very real possibility that some states may choose to opt out of the Medicaid expansion as objection or disagreement with the expansion (or the Affordable Care Act in general).  Add to that concern over the potential Medicaid Crowding Out effect, and you can see where some states may choose to opt out of Medicaid expansion.

In as much as many post-acute and long-term care providers are very dependent upon state Medicaid funding, the ripple effect of how this plays out in the months ahead will be something such organizations will want to watch closely.  And, of course, we will be actively monitoring such developments here in the Pub.  There could be significant state policy ramifications impacting the budgeting of Medicaid funding for post-acute and long-term care.

That’s what I think, anyway.  I would be very interested to know what you think.

  ~ Sparky

SCOTUS Decision Day Approaches

Okay, it’s prediction time.  We are about to head into the back half of June next week, and that means we have a two week period now during which the Supreme Court will hand down its decision in what is one of the most notorious cases that institution has ever deliberated.  No, it doesn’t rank up there with Marbury v. Madison, the Dred Scott Decision, Plessy v. Ferguson or Brown v. Board of Education – but it is likely to be remembered as the most impactful decision on future public policy since Roe v. Wade in 1973 for our generation.

So here is my prediction.  SCOTUS upholds the Affordable Care Act in its entirety.  Now, I have read more than I wanted to of the assessments, opinions, analysis – and the all-to-irritating opinions cloaked in very weak and self-serving analysis.   I have browsed through the transcripts of oral arguments presented before the Court.  I watched and listened to legal scholars, former judges and elected officials from every level of government.  And the one key takeaway I have from assimilating those hours of my life wasted is this: nobody at this point in history has any more inkling of how SCOTUS is going to decide than you or I. 

The legal arguments, particularly those that are based upon Constitutional Law and History, I found fascinating.  I wish I could believe that those arguments – on all sides of the issues before the Court – would carry the greatest weight to effecting a decision.  But Supreme Court Justices are human, after all, and subject to social influences – to what degree is the subject of some very interesting (if not quite useless) analysis.

And the Supreme Court’s standing in public opinion has taken a real beating. A recent opinion poll shows an approval rating of only 41%.  This has to carry some influence – regardless of the external rhetoric.    But while the logical consequence would be to assume such disfavor would weigh on the side of deciding against the ACA, I think the opposite will happen.  I think, in particular, Justices Roberts and Kennedy will not want to appear unduly influenced by public opinion and out of step with their historical vantage on previous decisions.  I also think they quite rightly understand that their decision – in either direction – will ultimately serve as the catalyst to energize the political party disappointed in that decision.  And so regardless of what they decide, the Affordable Care Act will de facto be sent back to Congress in one manner or another.

But please remember the SCOTUS decision is really a side show at this point to Healthcare Reform – particularly as reform will impact care provider organizations.  This holds true for the fall elections, as well, which will be the next round of political exchange impacting the reform effort however the Court decides.  At issue is when and how reform will be implemented – not the impact it will have on healthcare providers.

The underlying trends and drivers that brought us to this place in history will not abate because of a court decision or election.  The population will continue to age; people will continue to live longer and be sicker longer; the available caregiving labor force will continue to face challenges keeping up with demand; State budgets will continue to be under tremendous pressure; and the world economy will continue to influence the US economy in ways that are still very unpredictable.

But it’s fun to make predictions in any event, especially since this one has had such drama leading up to it.  So I’ve given you mine.  What’s yours?

  ~ Sparky



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