Newest Lively Experiment: Bringing Universal Health Care to Rhode Island, 1014 RIBJ, 63 RI Bar J., No. 2, Pg. 11

• Author: Samuel D. Zurier, Esq. Oliverio&Marcaccio, LLP, Providence.

Newest Lively Experiment: Bringing Universal Health Care to Rhode Island

Vol. 63 No. 2 Pg. 11

Rhode Island Bar Journal

October, 2014

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0 September, 2014

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0 Samuel D. Zurier, Esq. Oliverio&Marcaccio, LLP, Providence.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The goal of universal health care in the U.S. has been discussed for more than a century, during which time it has become an international norm. In 2010, Congress enacted the Patient Protection and Affordable Care Act (ACA)^[1] in pursuit of that goal; however, the actual program it established will not be universal or uniform. Instead, each state will serve as a "laboratory of democracy, "^[2] placing its own stamp on the ACA ranging from full support to determined opposition. Rhode Island has chosen to support the ACA, and has gotten off to a fast start through its successful introduction of the HealthSource RI exchange.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0This article describes how the ACA has become an ongoing experiment in federalism, shaped principally by strategies some states have adopted to oppose the program. It then describes the opportunities Rhode Island has to make its health care program more affordable for both citizens and the State, and the way it can produce savings for other significant governmental obligations.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0I. The Federalist Structure of the Affordable Care Act

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0As enacted by Congress, the ACA creates a path to universal health care combining private insurance and public assistance through insurance market reforms, federal subsidies and an individual mandate.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0A. Insurance Market Reforms

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Prior to the enactment of the ACA, many Americans could not obtain affordable insurance (or any insurance at all) because of restrictive underwriting practices by insurance companies. The ACA eliminated a number of these barriers through, among other things, the following national mandates:

• All individuals have the right to purchase any insurance policy, regardless of previous illness or current medical condition, ^[3]

• Insurers can differentiate rates only on the basis of age and smoking status, with cap on the variation of rates within these groups, ^[4]

• All insurance policies will include a set of federally-mandated "essential health benefits, " supplemented by state mandates.^[5]

• Insurers will rate all insurance plans in four categories, Bronze, Silver, Gold and Platinum, based on the amount of expected medical costs is covered in each policy, ^[6]

• Consumers will have access to a single outlet (or exchange), where they will have a choice of medical insurance policies that provide a wide range of available options including at least one each of Bronze, Silver, Gold and Platinum, ^[7] The exchanges will provide information about the scope of coverage, available subsidies, the cost of plans and an opportunity to enroll in the plans.^[8]

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0B. Subsidies and Supports

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The ACA as enacted contained the following two key subsidies to extend affordable federal health insurance to all Americans:

• For Americans near the poverty line, the ACA, as enacted by Congress, required state programs to provide Medicaid coverage to adults with incomes up to 133 percent of the federal poverty level, whereas many states now cover adults with children only if their income is considerably lower, and do not cover childless adults at all.^[9]

• For Americans who do not qualify for free care, but whose incomes are up to 400% of the federal poverty threshold, the ACA provides a sliding scale of subsidies based on the cost of insurance and the individual's ability to pay.^[10]

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0C. Mandated Coverage

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The ACA requires all people who meet income criteria purchase a health insurance policy with specified minimum levels of coverage, ^[11] Taxpayers who can afford insurance but choose not to purchase pay a tax penalty, ^[12]

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The individual mandate is critical to the viability of the ACA. When states have tried to regulate the private insurance market without requiring people to join, it can collapse under the principle of adverse selection. For example, New Jersey tried to regulate the direct purchase insurance market in 1993 by guaranteeing access to all and requiring community rating, but without imposing a mandate, ^[13] Only those most in need of insurance joined, causing insurers to pay out recoveries in excess of premiums collected. Premiums rose by 155% from 1996-2000 for standard plans and by 48% for less expensive health maintenance organization plans. Enrollment declined by 41%, causing a death spiral of increasing premiums and declining enrollments, ^[14] Massachusetts faced the same issue when it instituted its health care program in 2006. During the first year, the enrolling population was especially old and prone to illness. Massachusetts imposed an individual mandate, which caused the risk pool to become more diverse and protected insurance rates from precipitous increases, ^[15]

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0II. Fragmenting the Vision: The Supreme Court Decision and State-Level Resistance

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The ACA faced intense resistance in Congress, passing over the opposition of every Republican Party member of the House of Representatives ^[16] and the United States Senate, ^[17] Since its passage, the ACA's national program has been fragmented, first by the Supreme Court and then by resistance from individual states.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0A. The Supreme Court Case

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Once the President signed the ACA into law, 26 states filed or joined lawsuits to challenge its constitutionality.^[18] In 2012, the Supreme Court's decision, National Federation of Independent Business v. Sebelius, ^[19] reviewed challenges to two essential components of the program, namely the individual mandate and the Medicaid expansion. Without undertaking a complete analysis of the decision, ^[20] two key features of the holding limited the ACA's national scope.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The Supreme Court upheld the ACA's individual mandate on the basis of Congressional power to tax, rather than as regulation under the Commerce Clause, ^[21] This decision to uphold the mandate was critical to AC A's survival, although its narrow view of Commerce Clause authority could doom future Congressional initiatives.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The Supreme Court also struck down the ACA's provision requiring states to expand Medicaid coverage to new classes to retain funding for existing Medicaid programs. According to the Court majority, Congress had authority under the Spending Clause to offer states the option of participating in new Medicaid programs; however, Congress could not coerce states into agreeing to pay for new programs (in this case expanding Medicaid) by removing federal funding for existing programs for states that chose not to expand.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The Supreme Court's Medicaid ruling opens a serious potential gap in the ACA's coverage. The ACA's private insurance subsidies will make health insurance affordable only for Americans with incomes at or above 133% of the federal poverty threshold. For non-disabled Americans with incomes at or below this threshold, existing Medicaid provides coverage principally only for the children and pregnant women, leaving adults in...