In the current issue of The Pomerantz Monitor, Brian Hufford, one of the most respected healthcare counsel in the country, writes about theJune 28, 2012 U.S. Supreme Court decision on the constitutionality of Patient Protection and Affordable Care Act, otherwise known as “Obamacare.”
The focus of the challenge to the bill was on its controversial “individual mandate,” whereby individuals would be subjected to a financial penalty if they did not purchase insurance. As soon as the bill was signed on March 23, 2010, 14 state attorneys general, with support from the Republican Party, filed suit to strike down the law, contending that this provision in particular was unconstitutional. Ironically, the individual mandate was originally a Republican idea, first raised in a 1989 proposal by the conservative Heritage Foundation, then, in 1993, as part of the Republicans’ proposed alternative to then-President Clinton’s health reform bill, and finally, and most famously, as an integral part of Governor Romney’s health care plan for Massachusetts. However, by the time President Obama’s proposed healthcare overhaul began to gain traction, every single Republican Senator went on record declaring the individual mandate unconstitutional.
In its landmark decision, written by Chief Judge John Roberts, the Court upheld the mandate by a 5-4 vote. The fact that Justice Roberts chose to find that the individual mandate exceeds federal authority under the Commerce Clause, but is indeed constitutional as a tax, has pundits shaking their heads. Some see this as proof of Robert’s alleged desire to gut the Commerce Clause – the clause that has provided national protection for civil liberties such as desegregated facilities and labor laws – and as such, a gift to conservatives and libertarians anxious to limit the role of the federal government. As Justice Ginsberg wrote in her opinion, “[Justice Robert’s] rigid reading of the [Commerce] Clause makes scant sense and is stunningly retrogressive.” The Court upheld not only the mandate but also the rest of the Affordable Care Act, including: eliminating exclusions based on pre-existing conditions for children up to age 19; allowing young people up to the age of 26 to be covered under their parents’ policies; phasing out annual and lifetime limits on most benefits; prohibiting cancellation of insurance policies based on honest mistakes in applications; requiring insurance companies to publicly justify rate hikes as a means to combat unreasonable increases; requiring that the bulk of insurance premiums be spent on health care, not administrative costs; permitting access to emergency care to hospitals outside the insurer’s network; and requiring preventive care at no cost to the subscriber.
The one notable provision that was not upheld concerned the significant expansion of Medicaid, which will now cover anyone earning up to 138% of the federal poverty level (including individuals without children who previously were excluded). The Act sought to compel states to go along by threatening to withdraw federal funding of all Medicaid payments to any state that didn’t agree to the expansion. By a 7-2 vote, however, the Supreme Court found that, while expanding Medicaid was fine, the financial penalty imposed on the states was not. Thus, the federal government cannot take away current funding to compel states to accept expanding Medicaid coverage, but they can voluntarily agree to do so and accept additional funding. A number of Republican Governors have already announced that they will not agree with the Medicare expansion in their states, leaving millions of people in an uncertain position as to what insurance coverage will be available to them.
In addition, the Affordable Care Act establishes ten categories of “essential health benefits” which must be included in the individual and small group market policies, including ambulatory patient services; emergency care; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care. According to the Department of Health and Human Services, these provisions will mean that 8.7 million Americans will gain maternity coverage; 4.8 million will gain substance abuse coverage; 2.3 million will gain mental health coverage; and 1.3 million prescription drug coverage.
The new law also allows the Department of Labor to adopt regulations to govern all claims processing, reimbursement, denials and appeals for nearly all healthcare claims accept those falling under Medicare. Thus, whereas current regulations under the Employee Retirement Income Security act of 1974 (“ERISA”) applies only to insurance policies issued by private employers, they now will extend to non-ERISA plans, including those issued by governments and individual policies. Regulations issued under the Act also establish that if health care plans fail to adhere strictly to all of the requirements, they will be entitled to file lawsuit immediately, rather than having to proceed through internal appeals first. This incorporates a “deemed exhaustion” provision previously applied under ERISA, but exchanges a strict compliance requirement for a previously permitted “substantial” compliance, which offered an easier hurdle for insurers to exceed. As for Medicare, the Act expands rights there as well, by allowing free wellness exams; excluding preventive services, such as mammograms, bone scans and depression and diabetes screenings, from deductibles and copays; and gradually closing the current “doughnut hole” gap in drug coverage, including continued discounts on drug costs.
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