For a few precious moments Thursday, there was, for the first time since its passage two years ago, clarity about the Affordable Care Act (ACA). The law, with one discrete exception, is constitutional.
And then, faster than most ordinary mortals could read their way through the twists and turns of the U.S. Supreme Court’s 193 pages of text, concurrences and dissents, the obvious question made its way to the forefront: Now what?
The answer, according to policy advocates and insurance industry analysts, is that now we go about answering the million and one questions that will determine the level of care Americans — including some 32 million insured-to-be — will be afforded, how much it will cost and how people will gain access to care and coverage.
“I think now that the basic law has been declared constitutional, everybody’s going to take a much closer look at what really is in the ACA, and they’re going to decide they’re a heck of a lot better off than without it,” said former Sen. Dave Durenberger, one of the state’s foremost experts on the reform.
Except in the political arena, the big questions are settled: The addition of millions of healthy, premium-paying adults to a vastly enlarged risk pool should offset the mandate that insurers accept and keep people with costly pre-existing conditions.
Premiums will be subsidized for working people who can’t afford commercial insurance on their own by tax credits calculated on a sliding-scale basis for people with incomes up to four times the poverty level, or $92,200 for a family of four and $44,680 for a single person in 2012.
And the number of lower-income Americans who will qualify for Medicaid will go up. Starting in 2014, people with incomes up to 138 percent of the poverty level — $31,809 for a family of four and $15,415 for a single person in 2012 — will generally be eligible for Medicaid.
By 2019, Medicaid will cover an additional 252,000 Minnesotans, 132,500 of them previously uninsured, reducing the number of uninsured here by 44 percent. The expanded coverage will cost the state an additional $421 million, while the federal government will kick in $7.8 billion.
Mike Harristhal, Hennepin County Medical Center (HCMC) vice president for public policy, agreed. HCMC has seen a steady rise in the number of people using its primary care system since 80,000 Minnesotans were added to state Medicaid rolls in March 2011.
“We fundamentally believe that a person who has access to more health services, who has access to affordable care, we believe the quality of their life is enhanced,” said Harristhal. “They will be healthier, they will hold jobs and they will pay taxes.”
Some $28 million in federal funds are already being spent on planning and preparations in Minnesota. A gubernatorial task force charged with coming up with recommendations has been meeting for months to discuss how the ACA is best implemented here.
In turn, the panels have appointed some 200 individuals representing insurers, care providers, consumers, employers and policymakers to technical working groups that are hashing out the details.
Because some of the reforms already have been enacted and the more major changes are to be in place by 2014, the panels have been working frenetically, using draft guidelines. The high court’s ruling both clears the way and turns up the heat on them to make a huge number of fine-print decisions with major implications in the next few months.
A prime example: Insurers have yet to learn the parameters of a central provision of the law called the essential health benefit set, which mandates a threshold level of coverage in 10 areas, including prescription drugs, mental health care, rehabilitative and habilitative services and maternal and pediatric services.
In the wake of the reform’s 2010 passage, U.S. Secretary of Health and Human Services Kathleen Sebelius has yet to issue guidelines on the services and level of care to be required. Late last year, she said she would leave it to states to set specific benchmarks — which would still have to meet or exceed a federal threshold.
Frustratingly, there is still no deadline for the guidelines’ announcement; Minnesota insurers may not receive them until this fall. Nor has guidance been issued about risk adjustment models—formulas that are essential for setting premiums.
States have known they have until Jan. 1 to announce the design of the health insurance exchanges that are supposed to serve as Orbitz-style shopping sites for the uninsured consumers who will now be required to buy coverage. But again, as yet there is little indication of the federal threshold the state-created exchanges, which are supposed to be operational by the fall of 2013, will have to exceed.
“The timelines were already compressed to start with,” said Geoff Bartsh, vice president for public policy and government relations at Medica. “Now they’re getting more compressed.”
If all of this sounds like technical minutia, the potential ramifications are enormous.
The exchanges, for example, could be a replay of the nightmare that followed the rollout of the Medicare prescription drug coverage in 2006. Consumers were presented with an avalanche of jargon-laden, complicated options and a deadline for choosing. Panic ensued.
Better, in the opinion of SEIU’s Cryan, would be an exchange where individuals could choose from a small number of insurance packages that had received a state seal of quality, essentially guaranteeing consumers no “gotcha” provisions lurk within the fine print.
“If insurers are able to get a health insurance exchange that looks the way they would like it to, it will be a website where consumers will meet information about many, many insurance plans and options,” said Cryan, who sits on the state’s Insurance Exchange Advisory Task Force. “A good exchange would be designed with the consumer and the employer in mind, so they can trust the options are all good.”
If a smaller range of options met a set of rigorous state standards, he continued, “then consumers could sort through the small set of meaningful differences.”
Also to be determined is the prevalence of high-deductible plans, where consumers pay sometimes tens of thousands of dollars out of pocket before their benefits kick in. Minnesota is second in the nation in terms of the spread of the plans, on which half a million state residents are now dependent.
Low- and moderate-income individuals are often attracted to the plans’ low premium costs, which can mask the fact that they can be much more expensive for all but a very small set of healthy, high-income consumers.
The ACA will impose caps on out-of-pocket maximums, which will likely result in fewer high-deductible plans being offered and purchased, but they will continue to exist, according to insurers interviewed in the wake of the decision.
The ease with which consumers and small businesses providing coverage for employees can sort these sometimes misleading details is one example of where an insurance exchange’s design is crucial, said Cryan.
Regardless of the outcome of the work yet to be done both in St. Paul and Washington, D.C., consumers can expect the fledgling wave of retail marketing insurers and providers to increase. Individuals who will use the ACA’s tax credits and other subsidies to buy their own policies will make decisions very differently from the large and small employers the industry is used to selling its wares to.
“People who are buying individual insurance, they’re making decisions themselves really on a one on one retail basis,” said Medica’s Bartsh. “They’re considering price, but also service, reliability and the ability to meet their specific needs.”
So what of the political statements by the GOP, which greeted the court’s ruling with vows to oust Barack Obama and overturn the law? Locally, some lawmakers say Minnesota should demand a waiver from compliance.
Steve Gottwalt, R-St. Cloud, chair of the Minnesota House of Representatives Health and Human Services Reform Committee, vowed to put changing the reform on the agenda for next year’s Legislature. Washington’s slow generation of red tape is one concern; another is what he sees as the initiative’s lack of sustainability.
“The communications I’ve received this morning suggest people are thinking ahead to November,” he said, “and they are clear that elections have consequences.”
Since the reform was approved, control of Congress and the state executive branch have both changed hands. And the law — which most Americans don’t realize was in fact birthed by conservative think tanks in the ’90s — has lots of support from the business sector.
Indeed, Justice Sonia Sotomayor took a jab at GOP presidential hopeful Mitt Romney in her concurrence, noting that the federal reform was predicated on a state initiative enacted on his watch as governor.
“By requiring most residents to obtain insurance…[Massachusetts] ensured that insurers would not be left with only the sick as customers,” she wrote. “As a result, federal lawmakers observed, Massachusetts succeeded where other States had failed … In coupling the minimum coverage provision with guaranteed issue and community-rating prescriptions, Congress followed Massachusetts’ lead.”
On the other side of the aisle, Sen. Al Franken engaged in some horn-tooting. Because the law was upheld more or less intact, consumers here and elsewhere will start receiving rebates from insurers that failed to meet the law’s medical loss provision, his creation.
“There’s a lot of great stuff in this law,” he said in a statement released after the court’s decision. “Nearly 125,000 Minnesotans will get refunds from their insurance company because of the medical loss provision I wrote into the law, which requires insurance companies to spend at least 80 percent of their premium dollars on actual health care or provide refunds when customers are overcharged. Those checks will start reaching families this summer.”
Both sides agree the law can be improved as it is implemented.
“When Social Security was passed in this country, it was a small slice of what we now enjoy,” said Cryan. “The ACA provides a framework to build on.”
“It’s just a tremendous day for tens of millions of people in this country who either don’t have insurance, can’t afford it or have had insurance but who have found it doesn’t cover what they need it to cover.”