Monday, August 13, 2012

Misrepresentation of the ACA in the Supreme Court: a postscript

In April and May,  during the countdown to the Supreme Court decision on the constitutionality of the Affordable Care Act, I did everything I could to highlight the material misrepresentation of the individual mandate in oral argument by Michael Carvin, counsel to the law's opponents.  To serve his argument that the ACA forces young and healthy individuals to buy insurance far in excess of their needs, Carvin  asserted, "Congress prohibits anyone over 30 from buying any kind of catastrophic health insurance" (p. 105). That was wrong on two counts: 1) the ACA allows not only adults under 30, but older adults who can show financial hardship, to buy bare-bones catastrophic coverage offered outside the ACA's insurance exchanges; and 2) the cheapest plans on offer in the exchanges provide coverage of an actuarial value low enough to be considered "catastrophic coverage" by most experts, including the Kaiser Family Foundation.


Via Don Taylor, I learned just last week that the plaintiffs' broader claim that the ACA forced people to buy insurance in excess of their needs was misleading on yet another count. The ACA contains a little-known option for states that want to provide affordable to those ineligible for Medicaid yet poor enough that the cheapest option within the insurance exchanges may prove a financial hardship. States may opt to establish a federally-funded Basic Health Plan (BHP). A March 2011 McKinsey report summarizes:
The Affordable Care Act contains a little known but potentially significant provision that allows states to create a more affordable alternative to health insurance Exchanges – the Basic Health Plan, or BHP. A Medicaid-like insurance plan targeted at people with incomes just above Medicaid levels and for certain legal immigrants, the BHP holds the promise of offering consumers lower premiums and co-payments than insurance sold on the Exchanges. States would contract with health plans or providers to create a managed care plan meeting essential health benefit requirements. Given increasing interest by states and the potential appeal for consumers, the Basic Health Plan could carry noteworthy implications for health insurers and providers.

Modeled after a program in the state of Washington, the BHP would be state-run but federally financed. A state deciding to create a Basic Health Plan would mostly likely contract with private Medicaid managed care organizations, but states could also adopt a fee-for-service reimbursement approach combined with primary care case management.

Individuals with incomes between 133% and 200% of the federal poverty level, or $15,000 to $21,800, would qualify for coverage in the Basic Health Plan (Table 1). Legal immigrants who are not eligible for Medicaid could qualify for the BHP as well. Once states establish a plan, enrollees would not have the option of purchasing insurance through the Exchange. Without enrollees from the BHP target income group, Exchange enrollment would fall.

Many states are likely to give the Basic Health Plan serious consideration, for both financial and policy reasons. States are facing tremendous budget pressures at the same time that they are grappling with how to set up Exchanges and update administrative systems to meet requirements of the Affordable Care Act by 2014. The Basic Health Plan could offer a cost effective option distinct from state health insurance Exchanges for reducing the number of lower-income uninsured people.
Taylor points to an op-ed by Micah Weinberg, adviser to a San Francisco-based employer group, opposing formation of a BHP in California on grounds that it will sap business from the insurance exchange, driving up costs.  Taylor counters that by removing low income (and therefore presumably less healthy) participants from the exchanges, a BHP might lower the cost of coverage within them (this is suggested as an alternative possibility, not a positive rebuttal).

With regard to the now-moot legal argument, I would stress only that the BHP option, which no one but health experts seems to have heard of,  provides further evidence that the ACA's drafters did everything they could to minimize the financial burden of the mandate -- that is, to make healthcare affordable for the nonwealthy in a wide range of circumstances.

That intent, and the law's actual effects, might seem irrelevant in the exalted plane of constitutional theory. But Carvin's misrepresentation of the mandate cited above advanced the emotional center of the plaintiffs' argument, which was, as I suggested in the Atlantic, "a simple morality tale":
The main characters are hordes of healthy young adults, forced to buy more coverage than they need in order to subsidize the coverage of older adults. The key verbs in the private respondents' brief against the individual mandate are force, conscript, compel, and commandeer. Free, strong, savvy young Americans are being robbed of their ability to assess risk, drive bargains, and buy just the right amount of insurance for their robust condition. The ACA, according to the brief, was "forcing healthy individuals to immediately start paying inflated premiums that exceed their actuarial risk."
The conservative justices' questions in oral argument indicated that they bought that argument hook, line and sinker. It was a fairy tale.

3 comments:

  1. Well, HOW do you get an exemption for age? Is it hard? Easy? Whether or not it's technically possible doesn't tell us a lot.

    Also, it's not enough to just talk about cost. Is it catastrophic only by that measure...but you're still paying for therapy/birth control/some other thing not everyone needs? Specifics, please!

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