The US Health Care Law: What's Next For Stakeholders

Originally published July 9, 2012

In a widely publicized recent health care ruling, the Supreme Court largely upheld the Patient Protection and Affordable Care Act (ACA). The Court determined that the individual mandate is constitutional. However, the Court also found that states with existing Medicaid programs are not required to adopt the law's expansion to Medicaid eligibility. The rest of the Act remains intact and is the law of the land. The summary below discusses what the decision means for various stakeholders:

States Health insurance plans Hospitals and other health care providers Massachusetts residents Life science companies 1. How The Court Ruled

Chief Justice Roberts, writing for the majority, declined to strike down the ACA's requirement that most Americans buy health insurance by 2014 – its most controversial provision. In short, the Court held that the measure is proper pursuant to Congress's taxation power, but not under its authority to regulate interstate commerce.

As written, the ACA's Medicaid expansion would have added roughly 17 million people to its rolls by increasing the threshold for eligibility to 133% of the federal poverty level. The federal government was empowered to penalize non-participants by withholding all of each state's Medicaid funding. The Court held that such a broad denial is impermissible interference with states' rights.

The Medicaid expansion is still available to any state that wishes to adopt it. Participating states that meet its requirements will receive additional federal funding. However, states that do not wish to join the expansion are free to decline without risking the federal money that they already receive. In practice, it means that the pool of Medicaid-eligible persons will grow, but probably less than it would have if the Court had deemed the expansion mandatory. This significance of this outcome is discussed in more detail below.

2. What's Next for States

   Setting Up Exchanges

   Under the Act, states must form exchanges, or marketplaces, where qualifying persons can purchase health insurance that satisfies the individual mandate. On January 1, 2013, the Department of Health and Human Services will decide which states can be ready to run their exchanges by the January 1, 2014, deadline. The federal government will implement an exchange in any state that is deemed unable or unwilling to offer its own by that time.

   According to the National Conference of State Legislatures, twelve states (CA, CO, CT, HI, MA, MD, NV, OR, UT, VT, WA, WV) – plus DC – have already enacted laws to create their exchanges. Nine others (IL, LA, MI, NY, OH, OK, PA, RI, SC) have such legislation pending. A few more have set up committees to study the issue but have yet to advance legislation.

   For more information, visit http://www.ncsl.org/issues-research/health/state-actions-to-implement-the-health-benefit-exch.aspx.

   Decision Point: Medicaid Expansion

   After the...