LANSING – While it seemed the attention of the political world was on the issue of whether the 2010 Patient Protection and Affordable Care Act could impose a mandate on individuals to acquire health insurance, from the standpoint of the state, possibly the most significant aspect of the ruling is its effect on Medicaid.
Because the ruling barred the act’s provision allowing Congress to financially penalize a state that does not expand eligibility for Medicaid benefits to those whose incomes are as much as 131 percent of the poverty line, several health care attorneys said it provides the possibilities of a wide-open array of different state Medicaid programs.
Ironically, one attorney said the ruling could actually pave the way for states to have the ability to run Medicaid programs with greater autonomy, which is one proposal various Republican candidates for president have championed.
In a statement, Community Health Director Olga Dazzo said the state would study the decision to be sure the actions it takes have “as much of a positive impact on Michigan as possible.” Sara Wurfel, Governor Rick Snyder’s press secretary, said the administration is still analyzing the ruling for its impact, including on Medicaid.
Legislators also said they would have to look at the Medicaid provision to see what the long-term cost would be for the state.
And the dean of one of Michigan’s medical schools said unless the state does decide to expand its Medicaid coverage, it will be left with a situation where the children of low-income parents will be covered, but not their parents, who are in the same financial situation.
The immediate state response was that the House would take action to implement a health insurance exchange as Governor Rick Snyder has supported and as the Senate has passed (see related story). The House had held off acting on the proposal – which some critics outside the Legislature had called “Snydercare” – awaiting Thursday’s ruling.
But health care experts agreed the biggest impact on the state from the legislation will likely be on the Medicaid system.
While the vast majority of the controversial act – labeled as “Obamacare” by its critics – was upheld by the court in National Federation of Independent Businesses v. Sebelius (SCOTUS docket No. 11-393) in a majority opinion written by Chief Justice John Roberts, the decision did not go exactly as supporters of the act anticipated.
Supporters had argued the provision requiring individuals to acquire health insurance was permissible under the Commerce Clause of the U.S. Constitution. Mr. Roberts ruled that in fact it was not.
The provision presumes that Congress is regulating activity already underway, Roberts wrote.
“The individual mandate, however, does not regulate existing commercial activity. It instead compels individ�uals to become active in commerce by purchasing a product on the ground that their failure to do so affects interstate commerce. Construing the Commerce Clause to permit Con�gress to regulate individuals precisely because they are doing nothing would open a new and potentially vast do�main to congressional authority,” Roberts wrote. “The framers gave Congress the power to regulate com-merce, not to compel it, and for over 200 years both our decisions and Congress’s actions have reflected this un�derstanding. There is no reason to depart from that un�derstanding now.”
Not constitutional under the Commerce Clause, Roberts surprised many by saying the provision is legal under Congress’s power to tax. In this interpretation, he said, Congress is not requiring someone to buy insurance, it is just taxing them if they do not.
Congress’s authority to tax is broader than its authority to regulate commerce, Roberts said.
And he applied a principle once often cited in Michigan appellate decisions, but now less so, that acts passed by Congress (and by extension state legislatures) are presumed constitutional. In preserving those acts, if a court finds one argument unconstitutional, but the second constitutional, then it should uphold the act on the basis of that second argument.
The other major ruling reached by Roberts was the provision that he called a “gun to the head” of the states: that if they do not expand eligibility for Medicaid for all persons with incomes of 131 percent of the poverty level or less they would lose their federal Medicaid match.
The provision also has a bit of a carrot, with the federal government paying 100 percent of the increase for the first two years and then rolling back to 90 percent in 2016.
But Roberts said this was a new provision and as drafted dangerous to the overall system of federalism. Congress can offer incentives to encourage states to take actions, as it did when it offered more road money to states to adopt seat belt legislation, and even take some punitive action, as it did when it threatened to cut funding if states did not increase the drinking age to 21.
The kind of threat implied in the ACA went beyond that which is constitutionally allowable, Roberts said.
“Congress may use its spending power to cre�ate incentives for States to act in accordance with federal policies. But when ‘pressure turns into compulsion,’ the legislation runs contrary to our system of federalism,” he said.
Critical to the overall act – especially as the dissenters would have overturned the entire law – Roberts said the rejection of that provision had no effect on the constitutionality of the other provisions, including provisions barring insurance companies from denying coverage for pre-existing conditions.
Justice Ruth Bader Ginsburg, Justice Stephen Breyer, Justice Sonia Sotomayor and Justice Elena Kagan agreed with Mr. Roberts that the individual mandate was allowable under the taxing provision. But Ms. Ginsburg also wrote an opinion that it was permissible as well under the Commerce Clause, and that Congress did have the right to put the restriction on the states.
This creates a conundrum for the state, which had earlier forecast that boosting coverage to 131 percent of the poverty line would add 500,000 people to the 1.9 million in Michigan now on Medicaid.
But Michael James, a health care attorney with the Lansing firm of Fraser Trebilcock Davis and Dunlap, and Greg Moore, a health care attorney with the Detroit-based firm of Clark Hill, said the court’s provision on Medicaid completely throws that requirement in a hat.
At a minimum, James said, it gives states flexibility in terms of implementing the proposal. A state could decide to phase the provision into place instead of simply lifting the eligibility provision to 131 percent, he said.
Moore went further and said the ruling could open Medicaid administration up to a whole variety of concepts and operations. States, including Michigan, often ask for waivers on their Medicaid policies to implement different concepts. The federal government has held back on granting those as it waited for the decision, but now some of those provisions should come through, he said.
“The sky’s the limit now,” in terms of state Medicaid proposals, Moore said.
That would also allow ways for the states to try to come up with creative methods of covering the uninsured, he said.
Sen. John Moolenaar (R-Midland), chair of the Senate Appropriations Community Health Subcommittee, said the ruling recognizes the 10th Amendment rights of states (though in fact the ruling does not refer to the 10th Amendment in that section) and “gives the state flexibility we would expect, so I’m pleased with that decision.”
The state will look more specifically at the provisions and the requirements in light of the DCH budget, and there will be a hearing with experts for legislators to hear about the impact of the decision.
“Whatever Michigan decides, we want to take a responsible long-term view with
