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As everyone is no doubt aware by now, the U.S. Supreme Court upheld nearly every provision of the Patient Protection and Affordable Care Act (aka Obamacare) earlier today in a 5-4 ruling.
Despite many predictions to the contrary, the Supreme Court upheld the individual mandate. The Court ruled that the mandate is constitutional as a tax, but not under the Commerce Clause.
“In this case, however, it is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance,” Chief Justice John Roberts wrote in the majority opinion. “Such legislation is within Congress’s power to tax.”
Republicans are desperately scrambling to put a favorable spin on the Supreme Court ruling, insisting that the ACA is nothing more than a new tax that must be repealed. Rep. Jeff Landry (R-La.) went so far as to say that ”Obamacare is a malignant tumor that feeds on America.”
Republican attempts to paint the Affordable Care Act as a tax increase rather than a healthcare bill are patently absurd. The ACA is far from a mandatory tax increase — anyone can choose to opt out of the tax, simply by buying health insurance.
Furthermore, unlike nearly every other Federal tax, there are no real penalties associated with not paying this tax. According to the congressional Joint Committee on Taxation, the tax cannot be enforced with liens or property seizures, interest cannot be assessed, and civil or criminal penalties cannot be imposed for non-compliance.
The Supreme Court also ruled that the Federal government cannot withhold Medicaid funds from states that opt out of the Medicaid expansion proposed in the Affordable Care Act.
All things considered, this is a much better outcome than many pundits expected. However, many are concerned that states with conservative governments will refuse to participate in the Medicaid expansion.
At least one Republican governor, Bob McDonnell (R-VA), appeared to indicate that his state will implement the Medicaid expansion.
“This is going to be a huge expansion of Medicaid,” he said. “In coming months, Virginia’s health care leaders will work to develop the best possible system to meet the health care needs of our citizens.”
While this is far from an explicit assurance that Virginia will implement the Medicaid expansion, it is strongly suggestive that it will.
Gov. McDonnell also claimed that the Medicaid expansion would cost Virginia $2.2 billion over the next 10 years, while conveniently forgetting that the vast majority of Medicaid funding will come from the Federal government.
According to the Center on Budget and Policy Priorities:
Specifically, the federal government will assume 100 percent of the Medicaid costs of covering newly eligible individuals for the first three years that the expansion is in effect (2014-16). Federal support will then phase down slightly over the following several years, and by 2020 (and for all subsequent years), the federal government will pay 90 percent of the costs of covering these individuals. According to CBO, between 2014 and 2022, the federal government will pay $931 billion of the cost of the Medicaid expansion, while states will pay roughly $73 billion, or 7 percent.
Many of the states that would benefit most from the expansion, such as Texas and Florida, are also states with severely conservative governments. Expanding Medicaid in these two states alone will extend health insurance coverage to approximately 2.8 million more people, according to the Urban Institute.
Only time will tell which states decide to implement the Medicaid expansion. In the years to come, it’s likely that even the most conservative states will recognize the overwhelming benefits this expansion will have for their residents.
June 28, 2012 at 6:21 pm
Good analysis. But the Medicaid piece does give me pause. In some ways, I think they just punted that decision to the states, which will not necessarily bode well for conservative states like Colorado. We shall see… thanks for a thoughtful analysis, as always!
June 28, 2012 at 9:58 pm
You’re welcome, and thanks for reading! I’m concerned about the Medicaid decision as well. I just read that Louisiana Gov. Jindal has decided not to implement the expansion, and Scott in Florida is hinting at the same. At least we have a Democrat governor here in Colorado. But if the Republicans in the House have any say, I don’t know what will happen.
I can only hope that people who live in states that refuse the Medicaid expansion realize that they’re being excluded from affordable health care for political reasons.
June 29, 2012 at 12:05 pm
I think this will all hang on control of the House in CO. Civil unions may have helped with this….I hope so.
June 29, 2012 at 1:41 pm
Yeah, I think your right. I read this in the Post today: http://www.denverpost.com/commented/ci_20968484?source=commented
Seems to suggest that everything is going to go forward, unless conservatives make big gains in the election. Something makes me doubt that this will happen.
June 30, 2012 at 6:30 am
Good analysis. I saw the Maryland governor on PBS News Hour last night. He said they are #1 in innovation and #1 in entrepreneurship in the country and sees this as good for his state wants to adopt early. He said they are way ahead of the game on the exchange infrastructure and IT support. He noted that he feels it adds certainty and predictability around costs for small businesses and will allow people to be covered. I found it refreshing to see this can do business/ economy attitude coming from a Democratic governor. The other thing to note, is the health-care industrial complex in each state will force the states to expand Medicaid and take the money to reduce indigent costs and minimize pressure on ER departments with uninsureds.
June 30, 2012 at 11:53 am
I’m glad to see that there is an economic argument being made in favor of the ACA. Many love to say that this will hobble small business, but I’ve yet to see any evidence to that effect. i agree that healthcare interests will likely put a lot of pressure on state governments to expand Medicaid. Also, I think that since states can lose some of their Medicaid funding if they don’t implement exchanges, there will be enormous pressure on state governments to implement it.
June 30, 2012 at 12:01 pm
I hope you’re both right. Some of these conservative Govs and Legislatures scare me on this piece. The state now only loses the money they would have gotten to expand (granted, at 100 percent federally funded, ratcheting down to a 90/10 maatch as opposed to the current 50/50 match), but they don’t lose all medicaid funding which is what the original law did. Look at the Govs who turned down stimulus funds!!? Andt the sad part is that the numbers of people in poverty are much higher in states with right leaning govts. We shall see. I am not usually the skeptic, but my heart has been broken too many times with political optimism. Sad statement but true. Thanks for your thoughtful analysis!!