Capital Commentary is the weekly current-affairs publication of CPJ, written to encourage the pursuit of public justice.
What to Watch for in the Next Phase of Health Care Reform
January 4, 2012
By Clarke Cochran
This is the first of a two-part series on health care reform by Clarke Cochran.
Support for health care reform stems from two fundamental principles: institutional religious pluralism and public justice. For the first principle, the fact that so many health care providers are faith-based demands that health care regulations respect their religious freedom and relative sovereignty. The second principle demands that government assure effective universal access to needed medical care.
Judged by these two principles, the Patient Protection and Affordable Care Act of 2010 (ACA or “Obamacare”) represents an imperfect realization of reform aspirations. Yet, desire for the perfect must not overshadow the very real good done by the ACA. Below is a summary of the public justice related provisions that will be implemented in 2013. In the next article, I will summarize the status of the religious liberty issues at stake in the ACA.
Key provisions of the ACA come into effect for the first time in 2013, including a 2.9 percent excise tax on medical devices, increased Medicare taxes on high income earners, and higher Medicaid payment rates for primary care physicians. However, the chief decisions to be made in 2013 involve preparations by the federal government and state governments for implementation in 2014 of the Medicaid expansion and the Health Insurance Exchanges (HIE). During this year, private employers will also decide how to structure their employee insurance in light of requirements to come in 2014.
The ACA originally required each state to expand its Medicaid coverage to adults in families with less income than 138 percent of the federal poverty level (approximately $31,000 for a family of four), increasing the number of insured by 21 million persons. Many of these adults are employed but unable to purchase health insurance, so the expansion represents a clear victory of public justice. The federal government would cover all state spending on this expansion during the first two years, declining to 90 percent after a few years.
However, the Supreme Court ruled that the ACA-created expansion must be voluntary for the states. Many governors and state legislators, for ideological reasons and out of distrust of the promise of generous federal underwriting, have pledged to refuse the expansion, thus leaving millions without promised insurance. Christians should support the Medicaid expansion because it is the only effective means now available to get insurance to low-income persons who need it.
Approximately half of the persons obtaining insurance under the ACA after 2014 will do so through Medicaid (if all states participate in the expansion). The other half will acquire a new ability to purchase individual health insurance policies made more affordable by the ACA. The law does this by creating transparent and efficient health insurance marketplaces (HIEs) and by furnishing income-based subsidies to enable purchase. The ACA also eliminates the ability of insurance companies to exclude from coverage those with pre-existing health conditions and narrows the price differentials between high and low-risk enrollees.
A health insurance “exchange” is similar to an online dating service. Persons seeking insurance can go to a specific website for their state, where they can examine products offered by insurance companies in a competitive market. The insurance companies would be required to create a limited number of comparable policies. Individuals who qualify by income will be eligible for sliding-scale subsidies to help them purchase the HIE policies. In addition, there are tax-enforced penalties for those who do not buy insurance when required.
The question of who will operate and regulate the HIEs is the locus of controversy. HIEs need to be ready to accept enrollments in October 2013 for insurance beginning in January 2014. Because state governments have traditionally been the regulators of insurance, the ACA gives states the first choice to operate HIEs. The deadline for states to declare their intention to do so was December 15, 2012. Implementation will be complex and time-consuming, so work needs to begin immediately (if not sooner!).
Only 16 states and the District of Columbia have opted to implement exchanges themselves. A similar number are refusing, with some states begging for more time to decide. If a state does not design its own, the federal government will operate that state’s HIE. Thus, 2013 will be a vital year for both federal and state health administrators to establish the complex regulations and mechanisms for operating insurance exchanges that will enable 16 million Americans to afford insurance. Major concerns are whether the federal and states governments (as well as private insurance companies) have the talent and administrative capacity to fashion effective HIEs by fall 2013.
Finally, during 2013 many private companies, especially medium-sized employers (between 50-200 employees) will decide whether to begin or continue furnishing health insurance to their employees. The ACA will require many to offer insurance or to pay a fine. Some employers may decide to pay the fine and force their employees onto Medicaid or HIE, making the state and federal implementation above even more important.
In essence, the greatest task for 2013 by federal and state governments is preparation for the following year. The success of the ACA will be important for public justice, whether or not one thinks it was the best available solution to our nation’s health care system failures. Failure to implement effectively in 2013 could mean failure of the ACA in 2014 and beyond. That would be an unmitigated disaster for the health and well-being of our nation. Christians should pay careful attention as active citizens over the next 12 months.
—Clarke E. Cochran is Vice President of Mission Integration at Covenant Health in Lubbock, Texas.
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Capital Commentary is a weekly current-affairs publication of the Center for Public Justice. Published since 1996, it is written to encourage the pursuit of justice. Commentaries do not necessarily represent an official position of the Center for Public Justice but are intended to help advance discussion. Articles, with attribution, may be republished according to our publishing guidelines.”