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News August 2012

Washington Watch

Healthcare Law Still Faces Obstacles

By Alan M. Schlein

This will save seniors hundreds of dollars on prescriptions. Last year, 3.6 million Medicare beneficiaries saved more than $2.1 billion on prescription drugs, an average of $604 per person, as a result of the Obamacare requirement that drug companies provide a 50 percent discount on brand-name drugs for seniors who fall into the doughnut hole coverage gap.


WASHINGTON – President Obama’s health care law survived the bruising two-year court fight largely intact, but the battle over the Affordable Care Act (ACA) is far from over. At a time when most polls show the public wants the nation to move past the health care controversy and focus on economic solutions, many politicians seem to be laser-focused on trying to repeal the health care law.

The Supreme Court’s decision in late June, upholding President Obama’s signature domestic achievement aimed at expanding health care coverage to 30 million uninsured Americans, faces a series of battles before the law can be fully implemented in 2014.

There will be big fights in Congress over funding or perhaps de-funding the law, and at the state level, over implementing the provisions of the law. Meanwhile, the November election fight over who controls the power of the federal government and Congress could also result in curtailing or even wiping out the law. Then, after the November election, there will be a challenging series of budget fights that could also change the future path of the ACA’s implementation. Think of the Supreme Court ruling as just the first of many hurdles in a race.

The Supreme Court upheld both the requirement that all individuals buy insurance and the expansion of Medicaid, a joint federal-state insurance program for the poor – as long as the federal government does not threaten to withhold states’ Medicaid funding if states choose not to expand it.

Under the individual mandate, people who refuse to buy insurance will face a tax penalty. By the year 2016, that will amount to either $695 a year or 2.5 percent of income, whichever is greater for those who use emergency rooms and health care services but do not pay for insurance coverage.

The Supreme Court’s decision leaves intact other major parts of the law that require insurers to accept all customers regardless of their health status and provide tax credits to those who need help to buy coverage. Those provisions go into effect in 2014, so for many people the health care law has not affected them yet. If the law’s provisions go into effect, among the features that could be beneficial include:

  • Requires that insurance plans must allow young adults to stay on their parents’ plan until age 26.
  • Insurers must cover preventive services, including birth control, without imposing out-of-pocket costs, an option that 32.4 million beneficiaries took advantage of in 2011.
  • Insurers must eliminate lifetime dollar limits on coverage and they must phase out annual caps.
  • States must establish “health insurance exchanges,” or online marketplaces to help the uninsured choose and buy subsidized insurance plans, qualify for subsidies or enroll in Medicaid.

Under the Affordable Care Act, people who do not get health insurance through their employers will be able to buy cheaper insurance on these state-run exchanges starting in 2014. That includes “pre-retirees” – people who don’t get insurance through their employers and have yet to turn 65 and thus don’t qualify for Medicare. These people will be able to enroll through the exchanges until they turn 65. After that, they’ll qualify for Medicare.

The health care law also helps millions of seniors who fall into Medicare's prescription drug coverage gap – known as the doughnut hole – when they do not have insurance to help cover the cost of their medications. This will save seniors hundreds of dollars on prescriptions. Last year, 3.6 million Medicare beneficiaries saved more than $2.1 billion on prescription drugs, an average of $604 per person, as a result of the Obamacare requirement that drug companies provide a 50 percent discount on brand-name drugs for seniors who fall into the doughnut hole coverage gap.


The Hurdles Still to Come

CONGRESS: A July repeal vote has little to do with repealing the legislation and instead is about the House Republicans’ political agenda – to gain control of the White House and both houses of Congress, and to rally its conservative election base to go to the polls in November. When Congressional votes will matter significantly will be in December, after the November elections, when lawmakers will have to confront significant budget challenges.

REGULATION: The next fight will be a regulatory one and will happen in all 50 states as the deadlines to implement key provisions of the law are met or delayed. While many states have worked diligently to lay the groundwork for implementation of the health care law, some states and the federal government may face such complex technical and political realities that they may have to push back some deadlines, including the January 1, 2014, opening of new online marketplaces. So far, at least, the federal government says the marketplaces and other elements of the law will move forward on time. Right now, each state is responsible, along with the federal government, to plan its insurance exchange. More than $850 million in grants have already gone to states to plan their exchanges, with most accepting the money, even where lawmakers have opposed moving forward with any aspect of the health law. Still, only 14 states and the District of Columbia have so far passed legislation authorizing the exchanges.

Many of the 26 states that brought the lawsuit that led to the Supreme Court ruling have continued to resist planning their exchanges. Passing up the Medicaid expansion is a mixed bag, saving the states some money in the long term, but bringing no relief to millions of uninsured or the doctors and hospitals that care for them. So far, Republican officials in several states, including Texas, Missouri, Idaho, Nebraska and Mississippi, said they were likely to oppose expanding the program. In addition, some lawmakers in key election-year battleground states, like Florida, Ohio and Pennsylvania are refusing to carry out the Medicaid expansion.

Some states simply refuse to make the effort to implement the law because it would be a waste of legislative time and state resources. They are counting on the possibility of a November presidential victory by Romney, who has vowed to repeal the health law if elected. In Wisconsin, for example, only a Romney defeat would compel his state’s lawmakers to “figure out some alternative within the state” to a federal exchange, Republican Gov. Scott Walker has said.

To prevent delays, the federal government is working to build fallback exchanges, which would be available for states that either can’t, or refuse to run their own. This effort includes creation of a federal data hub, which will provide state exchanges with data from the Internal Revenue Service and other federal agencies. But not everyone thinks the federal government will be ready.

There are other administrative and regulatory hurdles that could also be tricky to implement, especially in this politically charged climate. There are insurance, payment and delivery reform components that all have delicate interrelationships to be choreographed.

NOVEMBER ELECTION POLITICS: The elephant in the room -- or the donkey -- depending on your political persuasion, will be the November election. Who wins in November will determine who has control of the White House, the Senate and the House. A shift to Republican control of the White House and the Senate would almost certainly spell the end for the Affordable Care Act.

If elected, Mitt Romney and the Republicans have several ways they could kill off the health care law. Although publically Romney has said that if elected, on day one he would repeal the legislation, that will actually take a Congressional act to put into action. But he does have options that he could implement administratively.

Politico, the DC-based political newspaper, laid out several ways a Romney administration could wipe out health care reform funding. Among the options: it could break the federal exchanges by basically making it impossible for them to function. It’s a bit complicated, but while Obama’s Internal Revenue Service is implementing the rules to let the federal exchanges function, a Romney IRS could reverse those rules and over time, gut the way the new law is being carried out. Without a working exchange, the insurance market would likely buckle under the weight of the health reform law’s rules, forcing Congress to ultimately repeal the law. But that wouldn’t happen overnight.

Or they could block the funding of the exchanges. As written, the law only funds the implementation of the exchanges for the first year, so far about $1 billion. Congress will have to come up with the money next year to keep implementing the law and House Republicans with a Republican in the White House, could undercut the funding or slow it altogether, thereby starving the law from having the money it needs to operate.

Yet another way a Romney administration could restrict the health care law would be by withdrawing the Obama administration’s rules. A new administration can’t just change existing rules that its predecessors have gotten into final form. That requires a full rule-making process. But rules that aren’t finalized can easily be tossed out or reworked. One of the key health care reform rules – defining the essential health benefit package that must be covered by health insurance plans – is not expected to be proposed until after the November election, which means it won’t be finalized before a potential change in administration next January.

Finally, as the Politico analysis pointed out, Romney could all but stop the law by simply doing nothing at all. He could stop the writing of the remaining rules to implement the law, stop Medicare from moving ahead with programs to find new ways to pay providers, stop the IRS from enforcing the individual mandate and even stop Medicaid officials from facilitating the expansion of the program in the states that want it.

These moves, would inevitably, land a Romney administration in court, but the process of forcing the president to implement a law through the courts is a long process and how much public opposition is raised to the Affordable Care Act could be the key to what kind of political price Romney would pay for fighting the law, if he wins.

THE DEFICIT FIGHT: Even if Obama wins a second term, there is no guarantee the law will survive in its current form. Pressure is mounting in Washington to dramatically cut federal spending as budget deficits grow. The president and other supporters of the law may be hard-pressed to defend the $1.7 trillion price tag for expanding insurance coverage over the next decade. But an Obama victory in November should ensure some protection for the law for the next four years. He has vowed to veto any legislation aimed directly at defunding the law.

Congress is facing several critical budget deadlines in the December lame-duck session after the November election but before the next president takes office. Under the existing budget laws,

Congress will have to negotiate a major deficit reduction deal or automatic budget cuts will take effect early next year for federal spending on everything from Medicare to defense. Those cuts, known as sequestration, will put pressure on both Democrats and Republicans to do something to slow spending.

To avoid the automatic cuts, lawmakers might agree to a one-year delay of the exchanges, saving money because the federal government wouldn’t be spending billions of dollars. With Democrats saying they will never touch the health care bill, and Republicans saying they will never raise taxes, something has to give.

Stir together the mounting debt, the automatic cuts and that Congress will need to raise the debt-ceiling again in order to fund the federal government for next year, and you have the recipe for some real political fireworks ahead.

Also contributing to this story were: LA Times, Wall Street Journal; Kaiser Health News, Washington Post, Associated Press, New York Times, International Business Times and Politico.

Alan Schlein has been covering the national Washington beat for Senior Wire News Service for over two decades.

Alan Schlein runs, an internet training and consulting firm. He is the author of the bestselling “Find It Online” books.

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