The Patient Protection and Affordable Care Act Largely Ruled Constitutional: Now What?
After months of deliberation, in a 5–4 decision the US Supreme Court voted to uphold the majority of the Patient Protection and Affordable Care Act (ACA). While this ruling resolves the legal uncertainty about the future of the ACA, it does not resolve the intense differences of opinion on how to reform health care in the US. The debate that began before the ACA will continue through and beyond the 2012 elections.
The Supreme Court considered the constitutionality of two main provisions in the ACA. First, could Congress require most citizens to have health insurance or pay a penalty? And second, could Congress require states to expand Medicaid eligibility?
- On the provision often referred to as the "individual mandate" which requires most citizens to have health insurance coverage by 2014, the Court determined that Congress does have the authority to impose a tax on those who do not comply. Read further analysis by legal experts.
- The Court also upheld the constitutionality of the expansion of Medicaid to all individuals with incomes up to 133–percent of the federal poverty level, but it did set limits on the ability of the federal government to enforce this expansion by withholding Medicaid funding for states that do not comply. Under the Court's ruling, only new, not existing, Medicaid funds could be withheld. Read further analysis by legal experts.
- Chief Justice Roberts joined the left in supporting this decision.
- Read the full decision in the National Federation of Independent Businesses et al. v. Sebelius, Secretary of Health and Human Services, et al.
- Supreme Court Decides Fate of the ACA.
Highlights of the ACA
The Patient Protection and Affordable Care Act (P.L. 111–148) became law in March 2010, but does not fully take effect until 2014. Below are some of the law's key features:
Expands access to coverage
- Health Benefit Exchanges for individuals and small businesses, requires individuals to obtain coverage, expands Medicaid eligibility
Medicare payment and delivery system reform
- Quality and value–based payment programs added to Medicare, program started to test innovative payment and delivery models, phases out Medicare Part D coverage gap (i.e. donut hole), funds research on the effectiveness of different treatments
- Eliminates denials based on pre–existing conditions, eliminates limits on annual and lifetime coverage, requires that insurers spend more of their premium dollar on direct patient care, allows coverage of young adults on their parents' plans, guarantees essential benefits
- $250 rebate for Medicare beneficiaries who reach the Part D coverage gap
- Individuals with pre–existing conditions gain access to coverage through a temporary program
- Dependents up to age 26 may remain on parental health plans
- Individual and group plans may no longer enforce lifetime or annual limits on coverage, nor deny coverage to children based on pre–existing conditions
- New health plans must provide minimum preventative care coverage without cost–sharing Requires insurers to justify unreasonable rate increases
- Continued shrinking of the Part D coverage gap: 50% discount on brand–name prescriptions and federal subsidies for generics filled in the donut hole
- Restructures Medicare Advantage plan payments
- Participating states can begin to their own health care exchange programs (or allow the federal government to set up the exchange) —exchanges will expand health care access and coverage by offering competitive insurance plans to individuals and small business owners
- With some exceptions, individuals without health insurance will be assessed a tax (based on family income) that they must pay along with their regular federal tax return. (See Kaiser Family Foundation diagram).
- Participating states must expand Medicaid eligibility to all people with incomes up to 133% of the federal poverty level. Initially 17 million people were expected to gain coverage. However, as a result of the Court's ruling, states still have the option to continue their current Medicaid programs as is without federal penalty. This means significant numbers of individuals projected to become insured as a result of the ACA may be left without coverage. At least 15 governors have already said they will not participate in this Medicaid expansion even though the federal government would cover all expansion costs until 2017, and then would cover at least 90% of the costs moving forward.
- Prohibits annual limits on the dollar value of coverage by insurers
2015 and Beyond
- Federal subsidies continue to phase–in for brand–name prescriptions filled in the Medicare Part D coverage gap (reducing coinsurance from 100% in 2010 to 25% by 2020)
- Patient–Centered Outcomes Research Institute (PCORI) established to conduct research that compares the clinical effectiveness of medical treatments
- National Health Care Workforce Commission established
- 10% Medicare bonus payment for primary care services (for eligible providers only ? excludes neurologists)
- Center for Medicare and Medicaid Innovation established to test new payment and delivery system models that reduce costs while maintaining or improving quality
- Increases the number of Graduate Medical Education (GME) training positions by redistributing currently unused slots and promotes training in outpatient settings
- Authorizes $50 million for grants to states to develop, implement and evaluate alternatives to current tort litigations.
- Independence at Home demonstration program established to provide high–need Medicare beneficiaries with primary care services at home
- Physicians will be required to submit a report which details their financial connections with pharmaceutical companies, hospitals, insurance companies as well as other physicians and medical companies
- The first Independent Payment Advisory Board (IPAB) recommendations are due January 15, 2014. The IPAB was created to submit legislative proposals containing recommendations to reduce the per capita rate of growth in Medicare spending if spending exceeds targeted growth rates.
2015 and Beyond
- 10% primary care bonus ends (unless reauthorized by Congress)
- Tax credits available to small employers with 25 or fewer employees and average annual wages of less than $50K that provide health insurance (Phase I, 2010–2013: up to 35% credit)
- Over–the–counter drugs not prescribed by a physician are no longer eligible for tax free health savings, such as a Flexible Savings Account or a Health Savings Account
- Allows providers organized as accountable care organizations (ACOs) that voluntarily meet quality thresholds to share in the cost savings they achieve for the Medicare program
- Establishes a national Medicare pilot program to develop and evaluate making bundled payments for acute, inpatient hospital services, physician services, outpatient hospital services, and post–acute care services for an episode of care
- Beginning of Phase II small employer tax credit of up to 50% of employer cost if purchased through an insurance Exchange for two years
- Starting January 1, 2014, some employers will be assessed a fee for not providing health insurance to their employees. (More information available here from the Kaiser Family Foundation.)
2015 and Beyond
- In 2018, a 40% excise tax will be charged to employers who provide expensive health insurance plans to their employees. The threshold for insurance plans subject to this tax divided between individuals with plans over $10,200 and families whose plans are over $27,500.
Next Steps for Congress
In mid-July, the US House is expected to pass a fiscal year 2013 financial services spending bill (HR 6020) that would prohibit the Department of Health and Human Services from transferring money to the IRS to implement and enforce the federal health reform law, based on the Supreme Court's decision to allow the law's individual mandate to stand as a tax. This effort is largely symbolic as it will not pass the Senate. However on–going efforts to repeal and de–fund to core provisions of the ACA will continue through this Congress and the next.
The AAN maintained a neutral position on the ACA when it was passed and continues to be very involved in seeking to ensure that neurology's interests are protected as its many provisions are implemented. The AAN has commented on Accountable Care Organization implementation, Health Insurance Exchange essential benefit packages, and the extension of Medicare rates to Medicaid services for primary care physicians, and its opposition to the Medicare Independent Payment Advisory Board. The AAN has created tools and resources to help members learn about alternative payment and healthcare delivery models established by the ACA and participate in incentive programs to avoid payment penalties called for by the ACA. As such, the AAN continues to develop evidence–based quality measures for neurologists to participate in the Medicare Physician Quality Reporting System. Because the ACA did not fix the broken Sustainable Growth Rate (SGR) formula, the AAN is strongly advocating for broader payment reform that brings stability back to Medicare and recognizes the value of cognitive care services. Legislation has recently been introduced that takes a step at achieving this, however more work remains to be done.
Join the Discussion
Though the legal questions on the ACA have been resolved, the political debate continues at the state and federal levels. We would like to hear from you about your views on this dynamic topic. Please comment by email to firstname.lastname@example.org. Also, keep informed about events in DC by reading Capitol Hill Report and look for emails from the AAN's Grassroots Network to add your voice to this important debate.