By: Eva Marie Stahl, PhD, MPA, and Anna Dunbar-Hester, JD, MPP
Thanks to the Affordable Care Act (ACA), 32 million people will gain access to health insurance. In addition, the millions of Americans who already have health insurance will benefit from new consumer protections and an emphasis on preventive and patient-centered care. The ACA moves us closer to a health care system where all Americans can access quality, affordable care. The Supreme Court reaffirmed the Congressional intent and the ACA’s legitimacy through its recent June ruling on the constitutionality of the law.
Specifically, the Court upheld the entire law except for the enforcement mechanism attached to an expansion of the Medicaid program. Medicaid is a state-run public health insurance program for low-income populations that is supported through federal matching funds. In its original form, the ACA expanded the Medicaid program to cover new populations with incomes up to 133 percent of the federal poverty level (FPL), or about $15,000 for an individual. If a state refused to expand its Medicaid program, it risked losing all of its federal Medicaid funds. The ruling removes only the penalty; the expansion option remains intact.
While there are some negative implications of the ruling, for the majority of consumers, the benefits remain unchanged. These benefits have already begun rolling out, although the majority of them kick in beginning in 2014. Most states will expand their Medicaid program and implement the law as intended. By and large, the Supreme Court ruling is a win for consumers.
The ACA provides unprecedented consumer protections to Americans in every state
The ACA takes important steps toward expanding coverage, reducing cost and improving the quality of health care for all consumers in all states. It builds on successful health reforms from across the country and extends them to all states. (Of course, many of the reforms were modeled in Massachusetts.) The ACA offers many new benefits for consumers ranging from reforms of our private insurance market, creation of health care marketplaces (Exchanges), to expansion of Medicaid and strengthening the safety net.
As in Massachusetts, success of these reforms is inextricably tied to the individual mandate. Now validated by the Supreme Court, the individual mandate strongly encourages everyone to gain insurance coverage. Requiring all who are able to purchase health insurance protects the market from adverse selection (people buying insurance only when they are sick) and keeps premiums from skyrocketing over time – it provides stability. These are key pieces of reform that allow many of the following benefits to be possible.
Private Insurance, Market Reform and Exchanges
Those who already have health insurance will benefit greatly from the ACA, but this group of people may be the least aware of these new benefits.
Beginning January 1, 2014, no one may be denied coverage due to a pre-existing condition or health status, and no one’s health coverage can be pegged to a lifetime dollar amount. Already implemented reforms include allowing young adults to continue to enjoy their parents’ health insurance coverage until the age of 26. As of August 2012, women can now access preventive coverage with no co-pay including mammograms and birth control. In addition, seniors continue to receive discounts on their prescriptions as the ACA brings us closer to elimination of the ‘donut hole’ (gap) in prescription drug coverage for Medicare recipients.
As consumer advocates, we see health reform making a difference every day. Consumers and businesses all over the country received reimbursement checks if their health insurer failed to direct enough premium dollars toward health care. This reimbursement is based on the new medical loss ratio (MLR) requirement – for every premium dollar, 80 cents must be spent on care. If the insurance company spends less than 80 cents on care, they have to correct the balance using rebates. In Florida, a school system in Sarasota received a check for over $800,000. On average, consumers will receive $151 per household.
Consumers have access to new tools to hold insurers accountable and level the playing field. New rate review tools provided by the ACA hold insurers accountable for premium increases, requiring insurers to be transparent and justify premium hikes. For example, New York consumer advocates used ACA rate review tools to pressure insurers to be more transparent about premium rate hikes. This pressure resulted in New York’s largest insurer agreeing to make rate filings publicly available.
In 2014, about 16 million consumers will have access to insurance Exchanges (online marketplaces, similar to the Massachusetts Health Connector) where they can use federal subsidies to purchase health insurance for the first time. For wage earners between 133 and 400 percent of FPL, federal subsidies will support the purchase of insurance, making it affordable. The ACA requires a consumer-friendly Orbitz-type website with simplified application forms and information about plan quality. California, for example, is leveraging the ACA quality reporting requirements to explicitly address health disparities in its Exchange. Small businesses will be able to use the Exchanges to provide insurance to their employees – making it easier for them to do so.
As it was passed, the ACA would have extended Medicaid benefits to Americans earning very low wages, less than about $15,000 annually per individual or just over $30,000 for a family of four (under 133 percent of the FPL). The expansion, if fully implemented, will reach almost 17 million people nationally. The Federal government will fund 100 percent of the expansion through 2016, transitioning to 90 percent support by 2020. This $931 billion dollar contribution over eight years will persuade most states to implement the law. This is a great deal for states, enabling them to provide insurance coverage to many uninsured at very little cost to state budgets.
Also, the Medicaid expansion is vital because it completes the coverage package that was envisioned by the ACA: it picks up where the Exchange leaves off, providing coverage to low-income populations not eligible for a federal subsidy in the Exchange. According to the Urban Institute, 82 percent of these uninsured are adults without dependent children. They have traditionally been denied public coverage opportunities at the state level.
Providing coverage to the “expansion population” holds promise of long-term better health whether through preventive prenatal services, near-elderly health care as consumers transition to Medicare, or a reduction in racial and ethnic disparities in health.
The Safety Net
The safety net will continue to play an important role for many people despite the benefits rolled out by the ACA. Even if the Medicaid expansion were implemented in every state, an estimated 20 million people would remain uninsured – the ACA does not provide universal coverage. Of those approximately 20 million, the Urban Institute estimates that 37 percent will be eligible for Medicaid but not enrolled; 25 percent will be undocumented immigrants; 16 percent will be exempt from the personal responsibility provision to buy health insurance because it is unaffordable; 15 percent will not be eligible for subsidies and will choose to not buy health insurance; and 8 percent will be eligible for subsidized coverage in the Exchanges but not enroll. These estimates were calculated before the Supreme Court ruling, so additional people will remain uninsured if some states don’t take up the Medicaid expansion.
People who are uninsured or underinsured need the protection of a strong safety net – something to catch them if they need health care when they cannot afford it. The safety net will continue to play this important role in our communities. Recognizing this need, the ACA includes provisions to bolster the safety net such as strengthening non-profit hospital partnerships with communities. Non-profit hospitals have always played an invaluable role in the safety net. The ACA elevates that role by spelling out some specific expectations of these hospitals to address community needs, thereby bringing a new level of transparency to these institutions. Under the ACA, non-profit hospitals are now required to have financial assistance policies and publicize them to the community where they reside. They are also required to make reasonable efforts to determine if a patient qualifies for financial assistance before engaging in extraordinary debt collection practices, such as placing a lien on a patient’s home. The expectation that non-profit hospitals provide benefits back to the community are justified in part by the fact that they don’t pay federal income taxes, and are generally exempt from state and local property, income, and sales taxes, although some states and municipalities determine tax exemptions using their own tests.
Similar to insurance reforms and other innovations included in the ACA, the nonprofit hospital provisions were based on leading state laws around the country. Now these critical protections will set a floor for all states and enhance access to critical service providers.
The chasm ahead
As a result of the Supreme Court ruling, state level politics will determine the insurance status of low-income populations. By saying ‘no’ to Medicaid expansion, they risk the health of some of their most vulnerable constituents and walk away from billions of federal dollars. The population at greatest risk will be those who are between a state’s own current Medicaid eligibility level and 100 percent FPL. For those earning less than 100 percent FPL, there are no real opportunities for insurance coverage. While this group will not be subject to the individual mandate penalty, they will be left uninsured. Those between 100 and 133 percent FPL will qualify for subsidies in the Exchange. However, these subsidies may not be enough to make insurance affordable and the benefits may be less robust.
If a state opts not to expand Medicaid, it will place significant strain on the safety net across their communities. Hospitals’ emergency departments and community health centers will find themselves juggling even greater demand for services. The inequalities in health access between states will grow.
Consumers march forward
The vast majority of Americans will benefit from the upheld portions of the ACA. We expect more preventive care, fairer play from insurers, and more affordable options through Exchange subsidies. However, the Supreme Court decision potentially set us back in our journey to becoming a nation where income doesn’t determine health status. In fact, by removing the Medicaid “stick” and allowing states to choose whether to take up the expansion for people under 133 percent of the poverty level, there’s an increased chance that income will determine health status. The Southern states, which have more poverty and low-income people of color, also have some of the most vocal governors threatening not to expand Medicaid. Where does this leave us? It is a major step backwards. In the words of Dr. Martin Luther King, Jr.: “Of all the forms of inequality, injustice in health care is the most shocking and inhumane.” Consumer advocates will continue to push for Medicaid expansion in every state and make efforts to strengthen the safety net, but this is more than a health care issue – it is a civil rights issue.
We expect those in more progressive states to forge ahead with implementation and reap the benefits of expansion through lower uninsured rates and greater access to care. Those who reside in more conservative climates will face a steep but winnable – on both moral and economic grounds – climb to health coverage.
The history of the Medicaid program tells us that states end up joining the bandwagon sooner or later because it makes sense for their consumers and their economies – better consumer health, healthier communities. Despite Medicaid being a voluntary program, all states joined by 1982. Finally, the uninsured do not simply evaporate, they shift to and rely on a different space in the health care system – the safety net. For many states, it is a calculation of where they will support the uninsured – in emergency rooms or practitioner’s offices.
In the coming year, consumer advocates will continue to raise their voices about the potential negative implications for consumers, and we will continue to celebrate all we’ve gained.
Eva Marie Stahl, PhD, MPA, and Anna Dunbar-Hester, JD, MPP, work as policy analysts at Community Catalyst, a national non-profit consumer advocacy organization dedicated to quality affordable health care for all. Community Catalyst works in partnership with national, state and local consumer organizations, policymakers, and foundations, providing leadership and support to change the health care system so it serves everyone – especially vulnerable members of society.
At Community Catalyst, Eva focuses on legislative and legal challenges to the ACA, the establishment of Exchanges, and Essential Health Benefits. Prior to joining Community Catalyst, Eva completed her PhD in health policy at Brandeis University. During that time she worked for the Institute of Medicine (IOM) and for the Agency for Health Care Research and Quality (AHRQ). She holds a MPA from the Lyndon B. Johnson School of Public Affairs and a BA from Colgate University.
Anna’s work at Community Catalyst is focused on state and federal laws regulating nonprofit hospitals, including requirements to be responsive to community needs for affordable access to hospital care and participate in public health strategies. Prior to joining Community Catalyst, Anna worked for a Massachusetts State Senator as legal counsel and policy advisor. She holds a JD and MPP from the University of Minnesota and a BA from Bryn Mawr College.
 O’Donnell, Christopher. “Sarasota Schools get $800,000 Insurance Rebate,” Herald-Tribute. Aug. 6, 2012. Available at http://www.heraldtribune.com/article/20120806/ARTICLE/120809734/2416/NEWS?Title=Sarasota-schools-get-800-000-insurance-rebate&tc=ar.
 “The 80/20 Rule: Providing Value and Rebates to Millions of Consumers.” Healthcare.gov. http://www.healthcare.gov/law/resources/reports/mlr-rebates06212012a.html
 Nguyen, Quynh Chi and Alice Dembner. “Promoting Racial and Ethnic Health Equity through Exchanges,” Community Catalyst, March 2012. Available at http://www.communitycatalyst.org/doc_store/publications/Health_Equity_through_Exchanges.pdf.
 Angeles, January. “How Health Reform’s Medicaid Expansion Will Impact State Budgets,” Center on Budget and Policy Priorities. July 25, 2012. Available at http://www.cbpp.org/cms/index.cfm?fa=view&id=3801.
 Kenney, Genevieve, et al. “Opting in to the Medicaid Expansion under the ACA: Who Are the Uninsured Adults Who Could Gain Health Insurance Coverage?” Urban Institute. August 2012. Available at http://www.rwjf.org/files/research/74697onepage082012.pdf.
 Buettgens, Matthew and Hall, Mark A. “Who Will be Uninsured After Health Insurance Reform?” Urban Institute, March 2011. Available at http://www.rwjf.org/files/research/71998.pdf.
 “Supreme Court Ruling on Medicaid: Challenges and Opportunities for State Advocates.” Community Catalyst. July 2012. Available at http://www.communitycatalyst.org/doc_store/publications/SupremeCourt-Ruling-on-Medicaid_MemoJuly2012.pdf.