Ruth Colker
Distinguished University Professor
The Ohio State University
Moritz College of Law




History of enactment of ACA
Constitutionality of ACA
Provisions of ACA
Implications for Medicaid, Children’s Health
Insurance (CHIP) and Longterm Care

Obama made a campaign promise to help enact
a new national health plan for all Americans
that would include:
Guaranteed eligibility
 No pre-existing condition rules
 Affordable premiums, co-pays and deductibles
 Those who do not qualify for public insurance
would be able to buy private insurance with
subsidies
 Portability and choice


Need to deal with “adverse selection” problem:
If preclude insurers from turning away anyone, including
those with a pre-existing condition, then people would
have a strong incentive not to buy insurance until they
had a serious health event.
 So, have to require everyone, even when they believe they
will be healthy, to buy insurance in order to expand the
pool.


Need to preserve employer-provided health
insurance
Don’t allow people to choose Exchanges if employer
offers affordable insurance
 Require people to buy employer-provided insurance so
long as it is affordable



In 2008, Democrats had strong majority in
House but had exactly 60 votes in Senate
Needed all 60 Senate votes to prevent filibuster


Ted Kennedy died on
August 25, 2009. To
attain 60 votes in Senate,
needed all 57 Democrats,
Independents Joe
Lieberman and Bernie
Sanders, and a
Massachusetts Senator.
Special election scheduled
for January 19, 2010. Seat
meanwhile vacant.


In 2004, when John Kerry ran
for President while Senator
from Massachusetts, Mitt
Romney was Governor of
Massachusetts.
Massachusetts legislature was
worried that Governor
Romney would replace Kerry
with a Republican if he won
the election so it took away
Governor’s power to
nominate a replacement (over
Romney’s veto).


Massachusetts legislature passed
legislation that would keep the
January special election but allow
Governor Deval Patrick to
appoint an interim senator until
the special election.
On September 24, 2009, the
Governor named a Kennedy
family friend, Paul Kirk, to be the
interim Massachusetts Senator.

November 7, 2009

ACA approved by House by a
vote of 220-215 with one
Republican supporting it and 39
Democrats voting against it.
 Joseph Cao, a first-term
Republican from New Orleans,
was the lone Republican in favor.
(Needed 218 for passage.) He
ultimately voted against the final
bill. His district was
overwhelmingly Democrat and
he lost re-election to a Democrat.

The Senate passed a different
version of the ACA after first
voting to end a possible
filibuster with a vote of 60-39
on December 23rd. Democrats
were only able to get to 60
votes by caving into a request
by Democratic Senator Ben
Nelson (Nebraska) to offer a
higher rate of Medicaid
reimbursement for Nebraska.


House and Senate needed to
pass same language.
Republican Scott Brown
won election in
Massachusetts on January
19, 2010 so Democrats no
longer had 60 votes to break
a filibuster.



Financing: House sought a 5.4 % surcharge on
families with incomes over $1 million whereas
Senate sought an excise tax on high-cost
insurance plans
Public option: House version had a public
option
Abortion: House version gave more freedom
for plans to cover abortions



House agreed to pass a bill that was very close
to the one that had already passed the Senate.
After coming to an agreement with a group of
pro-life Democrats, the House passed the bill
with a vote of 219 to 212 on March 21, 2010
with 34 Democrats and all 178 Republicans
voting against it.
Senate used the reconciliation process that is
available for revenue bills to pass some
amendments that would not be subject to
filibuster.

President
Obama
signed
ACA into
law with
the strokes
of 22 pens
on March
23, 2010.


Does Anti-Injunction Act bar
suit from even occurring
before statutory penalty has
gone into effect?
No, because Congress did not
intend the payment for
failure to comply with
individual mandate to be a
“tax.” It is a “penalty.”


The individual mandate
is an invalid exercise of
Congress’ commerce
clause authority,
because it compels
individuals to become
active rather than
regulates existing
activity.
Cannot justify ACA
under “necessary and
proper clause” because
using this broad power
is not “proper” even if it
is considered
“necessary.”



Individual mandate must be construed as
imposing a tax on those who do not have
health insurance, if such a reasonable
construction could save it from
unconstitutionality.
Court uses a functional approach to answer
question if it is a tax (rather than deferring to
Congress’ label under Anti-Injunction Act).
Should not be understood as punishing
unlawful conduct because there are no
negative consequences other than paying the
tax.

Roberts, Breyer and Kagan: Medicaid expansion
violates spending clause by threatening states with
the loss of their existing Medicaid funding if they
decline to comply with the expansion.
Threatened loss of over 10 percent of a state’s overall
budget is economic dragooning that leaves the States with
no real option but to acquiesce in the Medicaid expansion.
 Violation is remedied by precluding the Secretary from
applying ∫ 1396c to withdraw existing Medicaid funds for
failure to comply with the requirements set out in the
expansion. The other provisions of ACA are not affected.

 Ginsburg and Sotomayor agreed to this remedy, creating five
votes for holding.

Insurers:
Cannot deny coverage of children under the age of
19 based on pre-existing conditions.
 Cannot rescind coverage based on a review of the
original application after someone gets sick.
 Cannot impose lifetime dollar limits on essential
benefits, like hospital stays.
 Must cover certain preventive services without
charging a deductible, co-pay or coinsurance.




Each state (or HHS) must create a pre-existing
condition insurance plan for those who have been
uninsured for at least six months because of a preexisting condition.
Young adults are allowed to stay on their parents’
plan until they turn 26 years old (unless young
adult is offered insurance at work).
States are able to receive federal matching funds
for covering some additional low-income
individuals and families under Medicaid for
whom federal funds were not previously available.



85 % of all premium dollars collected by insurance
companies for larger employer plans must be
spent on health care services or health care quality
improvement.
80 % of the premium must be spent on benefits
and quality improvement for plans sold to
individuals and small employers.
If costs are too high, then must provide rebates to
consumers.

There has been some confusion about whether money
must be returned to consumer or employer can use funds
for wellness programs for all employees, because of
language about “quality improvement.”



Provides a one-time, rebate check of $250 to seniors
who reach the gap in Medicare prescription drug
coverage known as the “donut hole.”
Seniors who reach the coverage gap will receive a
50 % discount when buying Medicare Part D
covering brand-name prescription drugs.
Seniors receive free preventive services under
Medicare. (That’s similar to rule for all insurance
plans.)





Prohibit discrimination due to pre-existing
conditions or gender
Eliminates annual limits on insurance coverage
Tax credits for those whose income is between 133
% and 400 % of the poverty line who are not
eligible for other affordable coverage.
Can buy health insurance through an Exchange.
Will have to pay a tax penalty if health insurance is
available and affordable but has not been
purchased by individual.

“Affordable” employer
provided health insurance is
defined as the individual
option being less than 9.5 %
of employee’s household
income
If that is true, then expected to
buy the FAMILY plan
 No premium tax credits or cost
sharing subsidies available


Tax credits for insurance premium:





Contribute no more than 2 % AGI towards health insurance if
less than 133 % of federal poverty line
Contribute between 2 and 9.5 % of AGI if 133 to 300 % of
federal poverty line
Contribute no more than 9.5 % if 300 to 400 % of federal
poverty line
No premium tax credits if over 400 % of federal poverty (but
can take deduction if health costs above 10 % of AGI) or eligible
for public coverage (Medicaid, CHIP, Medicare or military
coverage)
Cost sharing subsidies ranging from $604 (225 % of
federal poverty line) to $4834 (125 % of federal poverty
line) for things like deductibles, coinsurance

Cost sharing subsidy phases out at 225 % of federal poverty
line whereas premium credit phases out at 400 %

If states elect to participate:


Americans who earn less than 133% of the poverty
level ($14,000 for an individual and $29,000 for a
family of four) will be eligible to enroll in Medicaid.
States will receive 100% federal funding for the first
three years, phasing to 90 % in subsequent years.

Who are they available for?



Primarily serve individuals buying insurance on their own
Small businesses with up to 100 employees can also buy
insurance through Small Business Health Options Program
(SHOP)
What are rules governing insurance under exchanges?


Minimum basic coverage
Limits on out of pocket expenses


Employers with more than 50 employees
All individuals, unless:
Religious objection; undocumented immigrant;
incarcerated; member of an Indian tribe
 Family income is below threshold requiring you to
file a tax return
 You have to pay more than 8 % of your income for
health insurance, after taking into account any
employer contributions or tax credits
 You were insured through Medicare, Medicaid,
CHIP, military insurance, employer plan, or
purchased insurance




2014: $95 per adult and $47.50 per child (up to
$285 for a family) or 1.0% of family income,
whichever is greater
2015: $325 per adult and $162.50 per child (up to
$975 for a family) or 2.0 % of family income,
whichever is greater
2016 and beyond: $695 per adult and $347.50 per
child (up to $2085 for a family) or 2.5 % of family
income, whichever is greater

CBO estimates average annual premium for individual
would be $4,500 – 5,000 and for a family would be $12,000
- $12,500 (equivalent to 2.5 % for 4-person family with
income of $50,000).


People who earn between 100
and 133 percent of poverty
guidelines will not be entitled to
subsidies to buy insurance under
assumption they would move to
Medicaid.
If employer offers “affordable”
individual plan, and have family,
then must buy family plan (or be
subject to penalties).
But family plan might be terrifically
expensive.
 Only assistance is deduction if
expenses above 10 % of AGI




Children currently covered by CHIP between 100 %
and 133 % of poverty would be transitioned to
Medicaid
CHIP is funded through 2015, with increased federal
match
CHIP eligible children (6 to 19 years old) who cannot
enroll in the program due to federal allotment caps
must be screened to determine if they are eligible for
Medicaid and, if not, would be eligible for some new
tax credits




Establishes the Community First Choice Option in Medicaid to
allow states to provide community-based attendant supports and
services to individuals with incomes up to 150 % FPL with
disabilities who require an institutional level of care through a
state plan amendment.
Provides states with new options for offering home and
community-based services through a Medicaid State Plan
Amendment rather than through a wavier for individuals with
incomes up to 300 % of the maximum SSI payment
Creates the State Balancing Incentive Program to provide
enhanced federal matching payments to eligible states to increase
the proportion of non-institutionally-based long-term care
services.
Extends the Medicaid Money Follows the Person Rebalancing
Demonstration program through 2016

Lots of uncertainty:
What exactly would Romney seek to repeal if elected?
 If Obama is re-elected,

 Will states go through with threat not to participate in
Medicaid expansion?
 If so, will individuals in those states become eligible for
premium credit and cost sharing subsidies?
 Will all states set up Exchanges (eventually if not
immediately)?