PPACA and the Fate of Medicaid Expansion

February 08, 2011 at 07:00 PM
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On Jan. 31, a federal court judge made one of the most significant decisions in U.S. Court history, and the action will have far-reaching effects on government. U.S. District Court Judge Roger Vinson ruled that PPACA was unconstitutional based on the interstate commerce law – the result of a lawsuit in which the plaintiffs argued that Congress overreached its boundaries in requiring that consumers buy health insurance. The plaintiffs – 26 states, two individuals, and the National Federation of Independent Business – also argued that the costs of Medicaid expansion that PPACA calls for would overwhelm state Medicaid budgets. But then, Vinson went further: He determined that the law had no "severability" language, and therefore voided the entire act because all parts of the mandate were "inextricably bound" to other provisions in the law. In simple terms, it's either all or none. The judge chose all.

So, where do we go from here?

The administration's reaction

Many believe that the order means that, under the ruling, the law is void and cannot be implemented from this point forward. Some reports indicate that the judge declined to stop implementation of the law, as the plaintiffs requested. There is some confusion here, in that the White House, the Department of Health and Human Services, and the Centers for Medicare and Medicaid services believe differently, and will move forward with implementation. The administration, as expected, will seek a stay. In the meantime, the White House website says in no uncertain terms, "Implementation will continue."

Solutions to the judge's order and the White House defiance are mostly theoretical at this moment. Many proponents and opponents of the order are offering their varying interpretations. This type of debate will continue over the coming weeks and months, so don't count on a quick, concrete interpretation anytime soon.

According to a story from the Tribune Washington bureau, "Vinson rejected a second claim by the states that the health care overhaul unlawfully forced them to expand their Medicaid insurance programs for the poor, another key part of the new law." That is significant, and will surely become a major part of the health care fight. The judge's opinion stated that it is difficult to prove whether the expansion would bankrupt the states, or that Congress is not forcing the states to participate in the program.

Congressional repeal efforts

One day after the ruling, Senate Minority Leader Mitch McConnell introduced the Senate version of the House PPACA repeal bill, tying it into a Federal Aviation Administration bill. In defense of the tactic, it was made in response to Sen. Harry Reid's threat to not bring up a repeal version in the Senate, given that too many senators who planned to run for re-election in 2012 would have to make a pretty tough decision on where they would go after having originally voted for the bill.

Meanwhile, the House, regardless of the judge's order (and yet buoyed by the order), continues to move forward with several committees designing replacement parts to the bill in anticipation of a total blockage of full repeal. It also is prepared to defund any portion of PPACA with which House members do not agree.

Obviously, the White House will appeal the judge's ruling, and in so doing, delay a decision on quickly moving the matter to the Supreme Court. Most observers agree that this will not happen for one-and-a-half to two years.

Other Republican actions

In the meantime, two Senate Republicans are preparing a bill that would allow the states to opt out of the law. The legislation, created by Sens. Lindsey Graham of South Carolina and John Barrasso of Wyoming, would allow states to opt out of the individual mandate. In somewhat of a surprise move, the president indicated he would consider allowing the states to opt out if they met certain conditions.

As for the Senate, Sen. Jim DeMint's companion to the House repeal bill H.R. 2 has only 39 cosponsors, pretty much guaranteeing that there will not be enough votes to move full repeal anywhere, no matter where it originates. Sen. Tom Coburn said Senate Republicans will still strongly represent the issue, which indicates that a piece-by-piece repeal or modification will eventually happen. Even Democrat Sen. Chuck Schumer said such a political fight would be good for his party. "We welcome, in a certain sense, their attempt to repeal it because it gives us a second chance to make a first impression," he said.

The role of the states

The ultimate outcome of full or partial repeal efforts will come about with action on the parts of the states. They will be able to demonstrate that their budgets simply cannot support adding millions of people to their Medicaid rolls, nor can they handle the various other fiscal responsibilities for which the law calls. Right now, there's not one state that can add Medicaid money to their budgets. Instead, most are cutting or considering cutting what they already accomplish, as directed by Washington. And they are certainly not going to get more Medicaid money from Washington once sensible lawmakers tackle the deficit and spending practices currently at large.

So where, then, does that leave the states and the Capitol in implementing Medicaid PPACA requirements? Nowhere. Regardless of the judge's ruling, which seems to bolster belief that this is bad legislation, and in view of the fact that it will not be quickly seen by the Supreme Court, the states will not be able to wait, and will have to mobilize to get the facts to lawmakers – which they will certainly do.

Ron Iverson is president of the National Association of Medicare Supplement Advisors Inc. He can be reached at 406-442-4016. This article was adapted from a piece that ran in the Feb. 2 edition of the NAMSA newsletter.

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