Health System Reform Insight - July 20, 2012
The AMA has developed Health System Reform Insight to help you better understand new physician payment and care delivery models, and improve patient care.
The Supreme Court of the United States' recent ruling on the Affordable Care Act (ACA) upheld the law's individual responsibility requirement. At the same time, the decision rendered the Medicaid expansion provision optional, making coverage for some of America's poorest patients uncertain.
Medicaid expansion ruled optional
In its 5-4 decision, the court found the ACA's individual responsibility provision to be constitutional, saying Congress has the authority to tax those who forego insurance coverage. However, the court ruled that Congress exceeded its power in threatening to withhold existing Medicaid funding from states that failed to expand their programs to cover everyone younger than age 65 with an income up to 133 percent of the Federal Poverty Level (FPL).
This decision means states are not obligated to expand their Medicaid programs and accept the additional federal funding provided under the ACA. That funding would cover 100 percent of the coverage expansion costs for the first three years and at least 90 percent in subsequent years. States that choose not to expand their Medicaid programs would maintain their existing funding without any penalties.
Implications for poor patients
While it is not yet clear how many states will expand their Medicaid programs, governors in Texas, Florida, Mississippi, Louisiana and South Carolina already have announced that their programs will not expand. It also is unclear what coverage options might be available for uninsured patients in states that do not expand their programs.
Patients who are between 100 and 133 percent of the FPL and could have received Medicaid coverage under an expansion will be eligible for federal subsidies to purchase health insurance through an exchange. But because Congress assumed that adults who are below the FPL would be eligible for Medicaid, these patients would not be eligible for the subsidies, even if their state does not provide coverage for their demographic group. Many of these poorest patients would remain uninsured.
At the same time, hospitals will receive lower funding for disproportionate care because the ACA assumed they would see fewer uninsured patients.
The court's ruling on the Medicaid provision has led to much uncertainty about its potential implications. Several groups, including national governors' associations and state Medicaid directors, have asked the Centers for Medicare & Medicaid Services (CMS) to provide detailed guidance on a number of questions. The agency has offered only limited responses.
However, acting CMS Administrator Marilyn Tavenner told one group that there is no deadline for states to decide whether to move forward with their Medicaid expansion. She also confirmed that the court's decision leaves intact all other aspects of the law affecting Medicaid.
Many questions remain, including:
- Can states that do not expand their programs right away do so in the future?
- Can states implement the expansion while there is 100 percent federal funding but then end the expansion when funding drops to 90 percent?
- If states expand their Medicaid programs to include patients below the full 133 percent of the FPL, can they still receive enhanced federal funding?
CMS has said that more guidance will be forthcoming. Meanwhile, the U.S. Department of Health and Human Services will hold four regional implementation sessions in August, during which department officials will discuss the next steps in ACA implementation with state officials and other stakeholders.
The ACA is a first step in improving the health care system, and the AMA is working with Congress, the Obama administration and others to ensure the best outcomes for physicians and patients. Read more in AMA Wire.
A webinar at 1 p.m. Eastern time will kick off an AMA series on managed care contracting. Physicians will learn about new contract changes, such as payment and delivery system amendments. Register today.
An AMA webinar at 8 p.m. Eastern time will teach effective grassroots advocacy techniques to influence members of Congress who are meeting with constituents during the August recess. Register today.
Physicians interested in starting a Medicare accountable care organization in 2013 must submit an application to CMS between Aug. 1 and Sept. 6. Applications are now accepted annually. Learn more.