Posts Tagged: health care reform

Massachusetts and the ACA: Cause and Effect

By: Eric J. Beyer

The Supreme Court’s stunning 5-4 ruling upholding the 2010 Affordable Care Act means that the most comprehensive transformation of the US health care system since the creation of Medicaid and Medicare will remain largely intact. Since the ACA closely mirrored Massachusetts’ own groundbreaking health reform – and the Supreme Court decision would not have overturned our own law –   the logical question to be asked by Massachusetts residents and businesses is: What does the ACA’s preservation mean for us?

The answer: More than one might suspect.

To be sure, the ACA is structured around many of the features already in place in Massachusetts.  Individual health insurance mandate?  Check.  Health insurance exchanges to act as brokers for offering plans to businesses and individuals?  Check.  Financial penalties levied against residents who don’t buy coverage and businesses that don’t subsidize premiums? Check.

Despite the similarities, the federal act paves the way for significant changes in the Bay State, both in how the health insurance market will look in future years and how the flow of federal funds to the state will rise—and, significantly, fall—as many key facets of the ACA are phased in. Patients, employers and health care providers will all feel its effects – for better and worse. Combined with the health care cost controls passed by our state Legislature and signed by Gov. Patrick in July, the next several years could bring significant innovation and increased efficiency in our health care market, or we could see lower-cost hospitals being forced to close, resulting in higher prices for consumers and employers. Much will depend on how the changes set forth in the ACA and the state’s cost control law are actually executed.

I believe that one of the initiatives left intact by the ACA will have a significant positive impact on the health insurance marketplace in Massachusetts. A new insurance model established by the Act called Consumer Operated and Oriented Plans (CO-OPs), is designed to create lower-cost, high-quality health insurance plans governed by their members.  The federal government in August awarded an $88.5 million loan to help create Minuteman Health, Massachusetts’ first and only CO-OP.  Minuteman is sponsored by Tufts Medical Center, along with its 1,500-member New England Quality Care Alliance physicians’ group, and Nashville-based Vanguard Health Systems, which owns MetroWest Medical Center in Framingham and Natick and Saint Vincent Hospital in Worcester. These providers, and 17 others who wrote letters in support of Minuteman’s application, viewed this initiative – created by the ACA – as a terrific opportunity to introduce a plan that would enable doctors and hospitals, consumers and employers, and the insurer, to work more closely together than ever before to improve health and reduce costs. We anticipate that Minuteman will offer individuals and employers a streamlined administrative structure, significantly greater transparency about prices, and much more data sharing between the plan and physicians so that doctors can make better decisions about designing care around patients’ needs. Members will elect the board and ultimately decide how surpluses are reinvested – either to reduce premiums or increase benefits. The plan is expected to be up and running by January 2014.

CO-OPs were designed in the ACA to bring a lower-cost, more consumer-focused option into the health insurance market.  A health insurance model that puts hospitals and doctors at the heart of data collection, sharing and innovation can yield innovative benefits.  How will these plans operate differently? If you’re a patient, imagine getting a single bill regardless of the number of providers you see. If you’re a physician, imagine having ready access to useful data about your patients that wasn’t previously available to you, to help you design their care. If you’re an employer, imagine your health plan’s care coordinators working directly with you, your employees and their own primary care providers, to set up individualized programs addressing your employees’ specific health problems, improving their health and lowering premiums.

The Supreme Court decision on the ACA maintains Congress’s recognition that the healthcare market is not operating at its maximum potential – or at least not to its maximum potential for consumers.  The CO-OP program is among the elements of the ACA that seeks to shift the paradigm, creating change in the market by directly intervening to give the consumer more standing in the market, whether through new insurance options, guaranteed coverage in spite of pre-existing conditions, or greater investment of the premium dollar in their own healthcare instead of administrative overhead.

Minuteman will be sold through the state’s health insurance exchange, the MA Health Connector;  among other channels.  Another facet of the Affordable Care Act upheld by the Supreme Court decision, the creation of health insurance exchanges, is more recognition that the current system is not working for consumers. By creating an exchange in Massachusetts, and through the ACA spurring the development of exchanges throughout the country, we have provided consumers and small business with direct access to shop, compare and purchase insurance products that work for them.  Through the exchanges we have created new competition among insurers, a direct-to-consumer marketplace and transparency around cost and benefit design that hasn’t been seen before- in short, we are changing the old way of doing business.

In addition to the innovative features they will present to members, CO-OPs have the potential to drive improvements throughout the health insurance sector.  By introducing innovative medical services, efficient administrative functions and exceptional accountability measures, we hope Minuteman will not only offer great value to its members, but that the plan will influence other insurers to follow suit.  In the high tech industry, a company that creates a better microchip influences other manufacturers to improve their product.  Why should health care be any different? Had the Supreme Court decision struck down the ACA, Massachusetts may never have had the chance to participate in this innovative new model of health insurance.

While the upholding of the ACA confers many positive benefits on the Commonwealth, other aspects of the bill threaten to significantly harm health care. It is hard to see how any patients will benefit from the $5 billion reduction in Medicare payments hospitals had expected to receive between now and 2019.  The Medicare pull backs, being used to fund the ACA’s other initiatives, will deal an unquestioned blow to providers as more and more baby boomers reach the age where Medicare entitlements kick in.  The Medicare cuts will also present a disproportionately greater impact on lower-cost hospitals with less commercial revenue – the very providers who need support and who are a key part of the answer to our cost control issues.  In addition, the ACA empowers the Centers for Medicare and Medicaid Services (CMS) to levy fines against hospitals that exceed federally-set benchmarks for patient readmission rates. We can all agree that preventing patients from needing another hospitalization less than 30 days after their most recent admission is a worthy goal. But Medicare does not provide adequate funding for the community-based support that many of these patients need in order to stay out of the hospital. While it makes sense to hold providers responsible for factors they can control, I can see little benefit to penalizing hospitals for issues they can’t influence, and which are neglected by Medicare.  In withholding funding to hospitals around these issues, we may be unduly penalizing hospitals who need this funding to build the infrastructure and bridge the gaps in community care that are necessary to significantly reduce readmissions.

It isn’t just the ACA’s Medicare reductions that pose a threat to lower-cost hospitals.  The dominance wielded by some providers and insurers in the Massachusetts market – the primary reason for our escalating health costs – could get worse under some provisions of the ACA. Accountable Care Organizations, or ACOs, will group providers into various networks, ranging from loosely affiliated doctors groups to tightly controlled networks of caregivers. The purpose of forming these affiliations is to provide consumers with better coordinated, more effective and efficient healthcare, by aligning the incentives and responsibilities of providers through a coordinated payment stream.  While patients could benefit significantly from better coordination of their care, this approach is fraught with potential pitfalls when it comes to market power.  Large provider groups with significant clout in our market already obtain unjustifiably high prices for care that is no better and considerably less efficient than many smaller, lower-cost providers. Requiring groups of physicians to align and control the flow of patients within an organization could serve to create even stronger monopolies in the market, as physicians will likely gravitate to the organizations with the highest commercial health insurance rates.  Playing this scenario out over several years, the ACOs with the most patients and highest prices will demand even higher prices. As they attract greater patient volume with even more marketing muscle and the ability to invest in shiny new facilities, the lower cost providers with less clout could be starved out of the market, leaving all of us with a more concentrated, high cost market.  Ensuring this is not the automatic result of a well-intentioned policy will take continuous engagement in reforming the market and challenging the status quo of insurers and providers by addressing the fundamental market drivers. This would create an even playing field for the most qualified providers, not just the ones with the most clout.

The breadth and scope of the ACA touches every aspect of health care, and its possible outcomes are best understood in the context of impacts on various parts of the  system—lower-cost hospitals, large health care networks, providers with large Medicare and Medicaid demographics, and new entries into the insurance market.  It isn’t surprising that the new law is fueling market apprehension reminiscent of half a decade ago when the state adopted the ACA’s progenitor.  Now, as then, significant change is approaching, and its full impact is a diagnosis in waiting.

Eric J. Beyer is President and Chief Executive Officer of Tufts Medical Center and Floating Hospital for Children. Mr. Beyer is a seasoned health care executive who is well-known and respected for his ability to align the goals of hospitals and physicians so that they can provide high quality, cost effective care in a reform environment. 

Mr. Beyer assumed the CEO role from his position as President and Chief Executive Officer of the Tufts Medical Center Physicians Organization, Inc. (Tufts MCPO).  In that role, he was responsible for overseeing all aspects of the 550-physician faculty practice and the 415-bed academic medical center’s entire ambulatory operation. When Mr. Beyer began his tenure at Tufts MC, he was charged with merging its two separate physician groups into one highly-functioning physicians’ organization. He grew that organization nearly 20 percent in almost six years and has made Tufts Medical Center an employer of choice for talented and respected physicians from academic medical centers across the country.

To view Eric Beyer’s full biography, please click here.

What’s Empathy Got to Do with It: Medicaid Expansion and Empathic Space

By James Corbett, M.Div., J.D.

I. Introduction

            Empathy, the ability to understand the thoughts and emotions of another person, is crucial in modern healthcare at a time when patients have become reliant on the specialized skills of strangers. A landmark study recently confirmed what many intuitively suspected: clinical empathy can improve health outcomes.[1] However, while clinical empathy is typically thought of as an individual transaction, the importance of creating empathic space in order to stimulate empathy through structural mechanisms is regularly overlooked. As the legal scholar Lawrence Rosen indicates, “Law creates culture,”[2]and legislation has the capacity to create empathic space. This article is a historical and structural analysis of Medicaid expansion and the likely impact of the Supreme Court’s ruling on the Medicaid provision of the Patient Protection and Affordable Care Act (hereinafter “ACA”) [3] in National Federation of Independent Business v. Sebelius (hereinafter “NFIB”).[4] If, as commonly is held, the test of the morality of a society is the treatment of its most vulnerable residents, then the ruling on the expansion of Medicaid may be the most significant aspect of the Supreme Court’s most recent term.

In 2010, in the midst of the greatest financial downturn since the Great Depression,[5] President Obama signed into law the ACA in an effort to improve the health of the Nation while at the same time reducing unsustainable health care costs.[6] One controversial aspect of the ACA was that the law expanded Medicaid and tied existing federal funding to the expansion of the program. Due to objections by twenty-six states, the Supreme Court ruled on the constitutionality of the Medicaid provision of the ACA in NFIB.[7]

The Supreme Court declared the withholding of a state’s entire Medicaid budget for non-compliance with the ACA to be unconstitutional.[8] However, the Court upheld the ACA’s Medicaid expansion by preserving the existing Medicaid program and interpreted the ACA expansion to be a new program rather than an amendment, which would expand the existing Medicaid program.[9] In the NFIB ruling, seven of the nine Justices voted to limit the power of the Federal Government to impose conditions on federal funding allocated to the states. However, five Justices upheld Medicaid expansion as a new program, distinct from existing Medicaid funding. The holding allows Congress to offer federal funds to states to expand Medicaid, and if states accept the funds, Congress may require states to comply with the terms of the new grant.[10] Nevertheless, declining the Medicaid expansion cannot cause pre-existing federal funds to be withdrawn. Thus, post-NFIB, a state’s practical considerations regarding Medicaid expansion will involve several issues, including how a state views its obligations to its most vulnerable residents, fiscal capacity, and, of course, political factors.

II. History of Medicaid Expansion

Medicaid has been successful in providing coverage to some of the Nation’s most vulnerable populations, and “enrollees have consistently received more regular medical care than the uninsured through that time.”[11] To appreciate the impact of the NFIB decision, it is necessary to understand the history of Medicaid and the goals of its expansion under the ACA.

In 1960, President Eisenhower signed into law the Kerr-Mills Act, which created a new grant program to fund states that provided medical assistance for certain elderly individuals.[12] In 1965, Congress expanded the Kerr-Mills Act, adopting a combination of approaches to improve access to health care for the elderly.[13] The Social Security Amendment Act of 1965 created a hospital insurance program to cover nearly all of the elderly (Medicare Part A) and a voluntary supplementary medical insurance program (Medicare Part B).[14] At the same time, Congress also decided to cover other vulnerable populations including families with children, the blind and the disabled through the creation of Medicaid,[15] an individual entitlement program with open-ended federal matching of funds.[16]

In order to respect state autonomy, Medicaid was originally envisioned as a voluntary program to provide the means for states to offer medical coverage to vulnerable populations. States had the option of opting into or declining to participate in Medicaid.[17] If a state chose to participate, it was required to provide coverage to all individuals who qualified for coverage under the federal government’s guidelines, although each participating state was free to add to the minimum federal requirements.[18] From the inception of the Medicaid program, Congress retained the ability to alter, recall, or replace it with a new law. Since 1965, Medicaid has been expanded on multiple occasions.[19]

The ACA expansion requires coverage for participating states to include adults under age 65 with incomes up to 133% of the federal poverty level.[20] This translates to an income of approximately “$14,800 for individuals and $25,400 for a family of three.”[21] The constitutionality of this mandated coverage, and the threat of the total withdrawal of Medicaid funds for a state choosing not to participate, spurred state protestation.

III. NFIB and Medicaid Expansion

            Twenty-six state plaintiffs claimed that by making the states’ existing Medicaid funding contingent on agreeing to participation in the expanded program, the ACA’s conditions were coercive, and a violation of principles of federalism.[22] Chief Justice Roberts’s controlling opinion posited that Congress could require the states to adhere to the ACA’s conditions in order to qualify for the ACA’s newfunding for Medicaid expansion, but Congress could not require the states to participate in the ACA’s “new program” by threatening the loss of existing Medicaid funds.[23]

Chief Justice Roberts began his Medicaid expansion opinion with the notion that under the Spending Clause, Congress may condition grants of funds in a way that might “encourage a State to regulate in a particular way, [and] influenc[e] a State’s policy choices.”[24] But, Chief Justice Roberts recognized that there are limits; he articulated that “when ‘pressure turns into compulsion,’ the legislation runs contrary to our system of federalism… [and] the Constitution simply does not give Congress the authority to require the States to regulate.”[25] Thus, as a federal grant of funds, Medicaid is subject to Spending Clause constitutional standards and by threatening the withholding of a state’s entire Medicaid budget, Congress forced the states’ hands.

Medicaid funding is a substantial portion of state budgets and on average comprises twenty percent of a state’s budget across the country.[26] As Chief Justice Roberts indicates, “[t]he threatened loss of over 10 percent of a State’s overall budget … is economic dragooning that leaves the States with no real option except to acquiesce to the Medicaid expansion.”[27] Chief Justice Roberts’s opinion expressed his belief that the original Medicaid legislation covered a relatively narrow population, only America’s most vulnerable,[28] whereas the ACA’s attempt to use Medicaid expansion to meet the health needs of the entire non-elderly population with income below 133 percent of the poverty level is a new program and “an element of a comprehensive national plan to provide universal health insurance coverage.”[29]

Thus, as a new program, funds that were previously committed under existing Medicaid grants could not be withdrawn for noncompliance with the new legislation. Despite what he considered to be a fundamental change in Medicaid, Chief Justice Roberts found that “[n]othing in our opinion precludes Congress from offering funds under the Affordable Care Act to expand the availa­bility of health care, and requiring that States accepting such funds comply with the conditions on their use” as an independent program.[30] As a result, the Supreme Court found Medicaid expansion under the ACA to be a voluntary program, which states are free to enter as they choose, and the Secretary of Health and Human Services is free to condition entry and exit of the program within the parameters of the NFIB holding.

Notably, Chief Justice Roberts’ opinion has a broader impact regarding rights retained by the states. Under Chief Justice Roberts’s opinion, the Medicaid condition at issue would impermissibly coerce the states and therefore exceed Congress’s power to spend the federal fisc on behalf of the general welfare.[31] In attempting to differentiate between “pressure” and “compulsion,” the Court distinguished South Dakota v. Dole, a previous case on conditions of federal funding, on the grounds that the only funding at issue in Dole was five percent of a State’s federal highway funds, whereas in NFIB a substantial portion of the states’ budgets would be threatened.[32] The Court upheld the ACA by interpreting it as conditioning the receipt of new funds only on acquiescence to the Medicaid expansion as a new program, removing Congress’s ability to withhold existing Medicaid funding, and thereby preserving state autonomy. Thus, “less than half of one percent” of a state’s budget in Dole would be pressure, whereas a state’s entire Medicaid budget, often “20 percent of the average State’s total budget,” would be coercion, akin to “a gun to the head.”[33]

Essentially, the Court in NFIB affirmed that Congress cannot achieve indirectly through its spending clause power what it has no power to do directly.[34] Congress cannot “commandeer” state legislatures and force them to expand Medicaid, and thus Congress cannot achieve Medicaid expansion by offering the states a financial incentive that they cannot refuse.[35] The Court recognized the nature of political accountability inherent in our federal system, and the danger of allowing Congress to remove the choice from accepting federal programs, which may be unpopular, whereby the state legislators would bear the brunt of political backlash, rather than Congress.[36]

This is consistent with traditional notions of federalism. As Justice Brandeis noted, “It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”[37] NFIB upholds this concept by allowing Congress to provide the means to create state Medicaid expansion programs, while allowing the several states to create what would best suit individual state needs, but not allowing Congress to penalize states for choosing not to so experiment.

In a dissenting opinion, joined by Justice Sotomayor, Justice Ginsburg suggested that “the expansion [will not] exorbitantly increase state Medicaid spending [and] [t]he Congressional Budget Office projects that States will spend 0.8% more than they would have, absent the ACA” and was thus not unconstitutionally coercive.[38] However, this view fails to fully account for the financial crisis states face. Notably, any additional funding to health care would likely come at the expense of other state programs such as education, housing, employment, or other programs, and detracting from these programs may negatively impact other social determinants of health that can be of equal import to health outcomes. With the decision to expand Medicaid left to the states, the speculation of what states will do has intensified, but perhaps the answer to what this decision portends can best be discerned from the response to the creation of Medicaid, which was equally contentious.

IV. Empathic Space

            The passing of two signature pieces of federal legislations – the Civil Rights Act of 1964[39] and the Social Security Amendment Act of 1965[40] – had a positive impact on health outcomes, but not without controversy. The Civil Rights Act outlawed discrimination in voting and ended racial segregation in schools, the workplace, and public accommodations, which meant that blacks could no longer be barred from hospitals based on race. The Social Security Amendment Act established Medicare and Medicaid, which meant that many of America’s poorest residents garnered health insurance.[41] Notably, the receipt of both Medicaid and Medicare was conditioned on adherence to the Civil Rights Act.

More than 8,000 hospitals were subject to civil rights legislation set forth in Title VI of the Civil Rights Act and within two years of the enactment of the Social Security Amendment Act most hospitals were complying with desegregation laws.[42] Of the 8,000 hospitals approved for participation in Medicaid and Medicare, more than 3,000 had to revise their traditional practices in order to participate.[43] Although the receipt of federal funding for hospitals was an economic boon and led to increased revenue and hospital building booms throughout the country, 250 hospitals, predominantly in the South, refused to comply with Title VI and were barred from receiving Medicare and Medicaid funding.[44] Rejecting the federal funding was based on ideological rationales, as hospitals were initially resistant to desegregation, but by refusing federal dollars so as to not have to integrate their institutions, these hospitals lost revenue and prevented both blacks and whites alike from utilizing federal health insurance funding in their institutions, which negatively impacted health outcomes. Eventually, due to practical financial and medical rationales, these hospitals changed course and accepted the conditioned federal funding.[45]

As a result of the empathic space created by the Civil Rights Act and the Medicaid and Medicare Expansion Act, health outcomes dramatically improved for those who were previously uninsured.[46] For African Americans, the new regulations and capacity to receive better healthcare as a result of health insurance led to the greatest improvement in health disparities in the history of the country.[47] From 1965 to 1980 the overall age-adjusted death rates fell 25.2% for blacks and 21.1% for whites.[48]

The expansion of Medicaid authorized in the ACA has the similar potential to reduce the health disparities that are based on income, as it will allow individuals who previously could not afford health insurance coverage to receive care. Chief Justice Robert’s opinion highlights that allowing states to voluntarily accept federal funds to expand Medicaid when the state is financially ready recognizes that health is not determined by coverage alone, but is multifaceted and impacted by multiple state-funded programs. However, with the large amount of bad debt and charity care that hospitals in states with uninsured individuals encounter, it is likely that states will be under inordinate pressure to accept the Medicaid expansion funding, and like the hospitals who initially refused insurance funding in the 1960’s, it is expected that the states too will eventually accept Medicaid expansion funding.

To be sure, empathy can exist separate from health insurance, but health insurance does help create the empathic space where hospitals and providers who can expect reimbursement can diminish the practical fiscal obstructions that limit the care and empathic space for the uninsured.[49] In fact, if we look at outcomes alone, it is clear that those who have Medicaid have better health outcomes than those without health insurance.[50] The Institute of Medicine estimates that health insurance may reduce adult mortality by 25%.[51] Consequently, the states that refuse to accept the Medicaid funding, if otherwise financially able to expand, would be negatively impacting the health of some of their poorest residents.

V. Conclusion

            Chief Justice Roberts presented each state with a choice. On one hand, to expand Medicaid per Congress’s offering which would improve health and provide the tools to providers to create empathic space for the practice of medicine. On the other, refrain from expansion at a great cost to its most vulnerable citizens. Recent studies confirm that Medicaid insurance improves health outcomes.[52] Despite the clear public health rationale, for Medicaid expansion there remains the possibility that ideological or political factors, may, at least initially, prevent expansion. But sometimes the best political argument can be a financial one.

The federal government will pay 100% of the cost of the newly insured Medicaid beneficiaries through 2016 and 90% after 2020 instead of the 50% to 83% that it currently pays for eligible categories across the country.[53] Furthermore, Medicaid ACO demonstration projects in Oregon and payment reform in Massachusetts may lower the cost curve even further making the financial consequences of not accepting the funding too great for any state to resist.[54] A country that seized the opportunity to improve the health of its most vulnerable residents would be a repudiation of the misguided characterization of DH Lawrence who claimed, “The essential American soul is hard, isolate, stoic, … and has never yet melted.”[55] If a common test of the morality of a society is indeed its treatment of its most vulnerable residents, perhaps the empathic space created by health insurance expansion is more important to the country than we recognize.

James Corbett, M.Div., J.D. is the System Vice President of Community Health & Ethics at Steward Health Care System. James is also a Fellow at Harvard Medical School, Division of Medical Ethics. At Steward, James provides oversight to Community Health, Behavioral Health and Ethics. He received his BA in International Relations from Syracuse University, a Juris Doctor from Saint John’s Law School, and a Master of Divinity from Duke University. James has taught health care law and ethics courses at both the University of Maine Law School of law and New England School of Law. James presents on topics related to health, ethics and empathy internationally.

[1] Mohammadreza Hojat et al., Physicians’ Empathy and Clinical Outcomes for Diabetic Patients: Building the Evidence-Based Medicine, 86 Acad. Med. 359 (2011).

[2] Lawrence Rosen, Law as Culture: An Invitation 14 (2006).

[3] The Patient Protection and Affordable Care Act, Pub. L. 111-148, as amended by the Health Care and Education Reconciliation Act of 2010, P.L. 111-152 (2010).

[4] National Federation of Independent Business v. Sebelius, 132 S.Ct. 2566 (2012).

[5] Phil Oliff, Chris Mai, & Vincent Palacios, States Continue to Feel Recession’s Impact, Center Budget & Pol. Priorities (updated June 27, 2012), index.cfm?fa=view&id=711.

[6] Neil Irwin, It’s Official: The Great Recession Ended Last Summer, Wash. Post, Sept. 20, 2010, _the_great_recessi.html. See also The Patient Protection and Affordable Care Act, Pub. L. 111-148, as amended by the Health Care and Education Reconciliation Act of 2010, P.L. 111-152 (2010).

[7] See NFIB, 132 S.Ct. 2566 (2012).

[8] Id. at 2607.

[9] Id.

[10] Id.

[11] Eliot Fishman, Running in Place: How the Medicaid Model Falls Short, and What to do About it 2:9 (Century Foundation Press 2002).

[12] Judith D. Moore & David G. Smith, Legislating Medicaid: Considering Medicaid and Its Origins, 27 Health Care Financing Rev. 45, 45 (2006). See also Sidney Fine, The Kerr-Mills Act: Medical Care for the Indigent in Michigan, 1960-1965, 53 J. Hist. Med. Allied Sci. 285 (1998).

[13] Moore & Smith, supra note 12, at 46-50.

[14] Ctr. Medicare & Medicaid Serv., Tracing the History of CMS Programs: From President Theodore Roosevelt to President George W. Bush, 4 (last visited Aug. 25, 2012), Downloads/PresidentCMSMilestones.pdf.

[15] Id.

[16] The Social Security Amendments of 1965, Pub.L. 89-97, 79 Stat. 286 (1965). See also Ctr. Medicare & Medicaid Serv., supra note 14, at 46.

[17] Ctr. Medicare & Medicaid Serv., supra note 14.

[18] 42 U.S.C. §§1396a(a)(10)(A); 1396d(a)(1)-(5), (17), and (21).

[19] See Moore & Smith, supra note 12, at 45-48. See also Ctr. Medicare & Medicaid Serv., supra note 14.

[20] The Patient Protection and Affordable Care Act, Pub. L. 111-148, as amended by the Health Care and Education Reconciliation Act of 2010, P.L. 111-152 (2010). The program previously required coverage for adults with incomes up to 100% of the poverty level.

[21] Jordan Rau, Medicaid Expansion Favored in General, Less so Near Home, Survey Finds, Capsules: Kaiser Health News (July 31, 2012), http://capsules.

[22] Brief of State Petitioners on Medicaid at 24–53, Florida v. U.S. Dept. of Health & Human Servs., No. 11–400 (S.Ct. Jan. 10, 2012).

[23] National Federation of Independent Business (NFIB) v. Sebelius, 132 S.Ct. 2566, 2607 (2012).

[24] 2602 (citing New York v. United States, 505 U.S. 144, 166 (1992)).

[25] 2602 (citing New York, 505 U. S., at 178).

[26] Timothy Stoltzfus Jost & Sara Rosenbaum, The Supreme Court and the Future of Medicaid, New Eng. J. Med., July 25, 2012, NEJMp1208219.

[27] NFIB at 2604-05. Medicaid spending accounts for over 20 percent of the average State’s total budget, with federal funds covering 50 to 83 percent of those costs. See id. at 2604 (citing Nat. Assn. of State Budget Officers, Fiscal Year 2010 State Expenditure Report, p. 11,Table 5 (2011), and 42 U.S.C. § 1396d(b)).

[28] NFIB, 132 S.Ct. at 2605-06 (citing 42 U. S. C. §1396a(a)(10)) (“The original program was de­signed to cover medical services for four particular cat­egories of the needy: the disabled, the blind, the elderly, and needy families with dependent children.”).

[29] NFIB, 132 S.Ct. at 2606.

[30] Id. at 2607.

[31] Id. at 2604-06.

[32] Id. at 2604-05.

[33] Id. at 2604.

[34] Id.

[35] Id. at 2602.

[36] Id. at 2602-03.

[37] New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting).

[38] Id. at 2632.

[39] The Civil Rights Act of 1964, Pub.L. 88-352, 78 Stat. 241 (1964).

[40] The Social Security Amendments of 1965, Pub.L. 89-97, 79 Stat. 286 (1965). See also Moore & Smith, supra note 12, at 45.

[41] The Social Security Amendments of 1965, Pub.L. 89-97, 79 Stat. 286 (1965). See also Ctr. Medicare & Medicaid Serv., supra note 14.

[42] W. Michael Byrd & Linda A. Clayton, An American Health Dilemma: Race, Medicine and Health Care in the United States 1900-2000 and the Problem of Race 313 (2002).

[43] Id. at 313.

[44] See Jill Quadagno, Promoting Civil Rights through the Welfare State: How Medicare Integrated Southern Hospitals, 47 Social Problems 68 (2000). See also Paul Starr, The Social Transformation of American Medicine 358-62 (New York: Basic Books, 1982).

[45] See Quadagno, supra note 44, at 71.

[46] Benjamin D. Sommers, Katherine Baicker & Arnold M. Epstein, Mortality and Access to Care among Adults after State Medicaid Expansions, New Eng. J. Med., July 25, 2012,

[47] See generally Manning Marable, Race, Reform, and Rebellion: The Second Reconstruction and Beyond in Black America, 1945-2006 (Univ. Press of Mississippi 2007).

[48] Id. at 387.

[49] It is important to recognize that for some procedures and services that Medicaid payment is far below the private insurer payment for the same procedure and therefore even if Medicaid coverage is expanded to insure certain populations, in some cases the lower funding can be an impediment to services. See Doug Trapp, Low Medicare, Medicaid Pay Rates Impact Private Costs, Am. Med. News, Jan. 5, 2009, See also Avik Roy, New Study: Expanding Medicaid Reduces Access to Health Care, Forbes, Mar. 10, 2012,

[50] Jonathan Cohn, Are You Better Off With Medicaid Than No Insurance? A Landmark Study Says Yes, Kaiser Health News, Jul. 7, 2011, Columns/2011/July/070711cohn.aspx.

[51] Id. (citing Inst. Of Med., Care Without Coverage: Too Little, Too Late (2002)).

[52] See Sommers, Baicker & Epstein, supra note 45.

[53] Wendy K. Mariner, Leonard H. Glantz & George J. Annas, Reframing Federalism – The Affordable Care Act (and Broccoli) in the Supreme Court, New Eng. J. Med., July 18, 2012,

[54] See Jennifer Lubell, Are ACOs the Answer for Medicaid?, Am. Med. News, July 2, 2012, See also Thomas Lee, Massachusetts Health Care Reform: An Academic Provider’s Perspective, HealthAffairs, Aug. 13, 2012,

[55] D.H. Lawrence, Studies in Classic American Literature 68 (Penguin Classics 1990) (“The essential American soul is hard, isolate, stoic, and a killer. It has never yet melted.”).

Affordable Care Act will Restructure Health Care Market & Improve Access and Quality of Care

By: James Roosevelt, Jr.

On June 28, 2012, a divided United States Supreme Court upheld most of the elements of the Patient Protection and Affordable Care Act (henceforth ACA).  This decision, which was one of the most anticipated of any ruling in recent Supreme Court history, clears the way, pending the outcome of the November 2012 Congressional and Presidential elections, for the full implementation of the law.

If the ACA does run the gauntlet of legal and legislative challenges, the impact of this law will be among the most far-reaching of any in American history.  In this regard, conservative critics of the law are right: the ACA represents a dramatic federal governmental restructuring of the health care market. Outside of Massachusetts and a few other states, the ACA will result in sweeping changes to the business practices of health insurers and a significant expansion of private and public health insurance coverage. The law also creates a framework for significant reform of the way health care is organized, delivered and paid for.  Even after the Supreme Court’s unexpected and unprecedented limitation of the Medicaid expansion process, the law envisions a significant expansion in Medicaid coverage.

Nonetheless, where these same critics are wrong is that the law does not represent a federal takeover of health care.  The ACA preserves the predominant role in the health care system for private providers and insurers and affords the states significant latitude over implementing many provisions of the law.

Ironically, the residents of Massachusetts, whose own 2006 health care reform law was the model for the ACA, had the least to lose of any state from a decision by the Court declaring the law unconstitutional. The experience of Massachusetts with health insurance has been dramatically different from the rest of the country. The state’s successful health care reform law already has resulted in extending health insurance coverage to more than 98 percent of its residents.  Still, even Massachusetts stands to benefit substantially from the ACA, particularly in terms of the quality and delivery of health care but also in alleviating state costs associated with expanded access to care.

After reviewing the Court’s ruling, this article will examine the effect of the Court’s decision on different provisions of the ACA and the potential impact of the law on four dimensions of health care and the health care market, both nationally and within Massachusetts:

  • Access to care
  • Quality of care
  • Delivery of care
  • Cost of health care

The Decision

The majority decision delivered by Chief Justice John Roberts in National Federation of Independent Business v. Sebelius seemed to catch almost all observers by surprise (including a number of news outlets which initially misreported the decision). The two key decisions issued by the Court were (1) to uphold the so-called individual mandate to purchase health insurance and (2) to strike down the law’s provision making all federal funding of a state’s Medicaid program conditional on the state’s agreeing to implement the significant expansion of Medicaid coverage contained in the ACA.

The Court ruled that Congress could not require individuals to purchase health insurance on the basis of its authority under the Commerce Clause, despite the strong argument that as a consequence of the sui generis nature of the health care market, individual decisions not to purchase health insurance effectively imposed higher costs on other consumers.  However, the Court upheld the mandate as an exercise of Congress’ taxing power, asserting that since the only consequence of an individual not maintaining health insurance (“minimum essential coverage”) is making an additional payment to the Internal Revenue Service, the mandate effectively amounted to a tax.

While this aspect of the decision caught many off guard, perhaps it should not have been unanticipated; historically even Supreme Court majorities that were inclined to reign in federal power have given broader latitude to Congress under its taxing authority than under the Commerce Clause.  For instance, the Court first initially upheld major New Deal enactments on the basis of Congress’ power to tax.

However, the Court’s decision on the Medicaid expansion was a radical departure from its own precedent. The ACA enlarges the population covered by Medicaid to include adults under age 65 (those over 65 would be covered by Medicare) earning up to 133 percent of the federal poverty level.  However, the Court by a 7-2 margin found that the provision by which Congress threatened to withhold existing Medicaid funds from states which refused to accept the Medicaid expansion was “impermissibly coercive.”  Thus, “for the first time ever,” asJustice Ginsburg points out in her dissent, the Court “finds an exercise of Congress’s spendingpowerunconstitutionally coercive.” Despite Chief Justice Roberts’ sharp break with the Court’s consistently upholding Congress’ authority to condition states’ use of federal funds, the Court did not, as Justices Alito, Scalia, Kennedy and Thomas had sought, invalidate the expansion of Medicaid under the ACA. Thus, practically speaking, the expansion of Medicaid was made optional not mandatory.

The Supreme Court & Access to Health Care

The primary purpose of the ACA is to extend health insurance coverage to a large portion of the 50 million Americans without it.  There are several aspects of the ACA that are designed to achieve that goal and, with the exception of the Medicaid expansion, the Supreme Court left all of these provisions intact.

Under the law, private insurers are prohibited from a range of all too common practices that have had the effect of restricting access to health insurance.  These practices, which have been eliminated by the ACA, include denying coverage or charging higher prices as a result of preexisting medical conditions, charging women higher premiums than men, retroactively terminating coverage for individuals who become sick, and imposing annual or lifetime caps on benefits.  In Massachusetts, we sometimes fail to appreciate the experience of many consumers in other states who have been denied or terminated from coverage or been hit with sharp premium increases. Take for example a case with which I am personally familiar of a 33-year old woman from California, who was rejected for health coverage by a well-known national insurer for an unspecified bone and joint abnormality.  As it turns out the woman, who was otherwise a picture of health with no known risk factors, had suffered a muscle pull five years earlier – or in insurance parlance a “bone and joint abnormality.”  These types of exclusionary practices are now banned.

The Supreme Court decision also leaves in place the most controversial aspect of the law: the individual mandate.  This provision was adopted to prevent people from “free riding” (not paying for insurance but still benefitting from guaranteed access to care and thus shifting costs onto other consumers) and to protect insurers and the market from consequences of “adverse selection” where individuals acquire insurance only when they get sick.  Prior state experience had shown that when states enacted reforms such as community pricing and guaranteed-issue absent an individual mandate, reform resulted, as Justice Ginsburg stated, in a “death spiral in the health insurance market” where insurers were forced to substantially raise health insurance premiums or exited the market.  It is ironic that conservatives have opposed the mandate, which was designed by the Heritage Foundation to allow health care markets to function more effectively and efficiently.

The Medicaid expansion is the cornerstone of the ACA’s goal of enhancing access to coverage and care.  It recognizes that an individual mandate alone cannot suffice when the majority of people without health insurance are unable to afford the premiums.  However, the impact of this aspect of the law has been thrown into question by the Supreme Court decision.

Prior to the ruling, the Kaiser Family Foundation had conservatively (absent aggressive federal and state enrollment campaigns) estimated that the expansion of Medicaid to all adults at or below 133 percent of FPL would increase Medicaid enrollment  by 16 million by 2019 and would result in a 45 percent reduction of uninsured adults under 133 percent of the poverty level. But those estimates were based on the assumption that all states would adopt the expansion.

Now that assumption has been thrown into question.  Several Republican-controlled states have expressed strong opposition to moving forward with any expansion.  I suspect that in the short-term this is driven largely by political grandstanding prior to the 2012 elections.  Let’s assume that the ACA survives any future legislative challenge and becomes firmly established as the law of the land; the question remains whether those same Republican governors would continue their opposition to the Medicaid expansion.

Many suspect they would not.  Although opponents of the ACA cited the burden on states that would be imposed by a Medicaid expansion, this appears to have little factual basis. The federal government will pay 100 percent of the costs for newly eligible adults between 2014 and 2016.  States will start contributing beginning in 2017, but their share would top out at 10 percent in 2020 and thereafter.  A recent study by The Urban Institute finds that in a worst-case scenario, states would in fact realize a net fiscal gain of 40.6 billion from 2014-2019 and more than 130 billion under optimistic assumption.  This gain results largely from replacing state and local spending on uncompensated care and mental health services.

Adding to the pressure will be new evidence that refutes claims of some critics who contend that Medicaid does not improve the health of recipients.  A July 2012 New England Journal of Medicine article finds that three states that substantially expanded Medicaid eligibility over the past decade experienced significant declines (6.1 percent) in mortality and increased rates of self-reported health status of “excellent” or “very good.” Further, elected leaders will likely face considerable pressure from hospitals and other providers to adopt the expansion if only to alleviate their financial burden associated with uncompensated care.

How this plays out could have a disproportionate effect on the success of the expansion, whose impact will vary considerably across states based on current levels of coverage.  In another twist of irony, it is precisely those states that are most likely to oppose expansion that have the most to gain.  For example, Alabama would realize a 53 percent reduction and Texas a 49 percent drop in uninsured adults with incomes at or less than 133 percent of FPL.

The final element of expanded access is the formation of state insurance exchanges, such as The Connector in Massachusetts, where consumers can purchase subsidized coverage that satisfies the individual mandate.   Those earning between 133 percent and 400 percent of FPL will be able to purchase insurance assisted by a sliding scale of federal subsidies.  On January 1, 2013, the Department of Health and Human Services will certify which states will be prepared to operate their own exchanges by January 1, 2014.  To date, 12 states and Washington, D.C. have enacted laws creating exchanges and nine others have such legislation pending.  We anticipate that many states are awaiting the outcome of the fall elections, but will ramp up their efforts to establish exchanges if it becomes clear that the ACA will survive. Still, it is very likely that the federal government will need to intervene and establish exchanges in several states that fail or refuse to implement the law.

The ACA was designed to provide a “continuum of coverage” from Medicaid to the Exchanges to employer-based plans.  With the Supreme Court decision, there is a possibility that gaps in coverage could emerge for individuals living in states that do not adopt the Medicaid expansion. Individuals who earn too much income to qualify for Medicaid but too little to receive subsidized coverage through the exchanges could face a new “doughnut hole” just as the old “doughnut hole” in Medicare coverage of prescription drugs is scheduled to be completely closed by the ACA by 2020. It is unclear how the federal government will respond to this situation but those individuals would at the very least be exempted from the mandate if they are unable to purchase minimum essential coverage on the open market for less than eight percent of their income.

Finally a word on Massachusetts.  It is quite possible that with less than two percent of the population remaining uninsured, we have hit the upper limits of coverage.  However, even in Massachusetts there are provisions of the ACA that should enhance access. Most notably the ACA allows children to be covered under their parents’ health insurance policies until the age of 26 and subsidizes the purchase of health insurance for people up to 400 percent of FPL versus 300 percent in Massachusetts.

Quality of Care

The Affordable Care Act contains numerous provisions designed to enhance quality of health care, which were left untouched by the Supreme Court decision.    In particular, the ACA contains measures which begin to (1) reorient the health care system towards a greater emphasis on prevention and keeping the population healthy; (2) reform the health care delivery system; and (3) focus on wellness and health outcomes.  In the long run, these provisions may be as significant as the expansion of access to health care in terms of improving the health of Americans.

The ACA implements key insurance reforms designed to improve access to preventive care,  including requiring that all insurers provide full coverage for clinical preventive services recommended by the US Preventive Services Task Force and that insurers not impose co-payments or deductibles for these services (in Massachusetts, this provision will eliminate co-payments on services such as pap smears and cholesterol tests).

Further the ACA provides up to $500 million for establishing a national public-private partnership  for a prevention and health promotion outreach and education campaign. The law also funds several demonstration projects promoting wellness programs in the workplace.

Finally, the ACA creates a Prevention and Public Health Fund, which could provide funding of up to $15 billion over the next ten years for public health initiatives, which would represent a substantial increase over the $10 billion annually the federal government currently spends on public health.

The ACA has been criticized by some public health advocates for its relatively paltry support for public health initiatives.  There is some justification for this criticism, but it often overlooks the changes the ACA initiates in the way we pay for and deliver health care, which will create market pressure for a stronger investment and emphasis on preventing and managing chronic diseases that now account for 75 percent of U.S. health care costs.

Delivery of Care

This brings us to changes the ACA facilitates in the health care delivery system.  Restructuring how health care is organized, delivered and paid for in this country is a monumental task, given that health care consumes nearly 20 percent of GDP.  The ACA cannot claim to restructure the health care market. However, it begins the process of moving the system towards one that better aligns cost and quality and integrates the delivery of health care.

The ACA creates a framework for the establishment of accountable care organizations (ACOs) in Medicare and establishes a shared savings program under which ACOs may earn additional payments by exceeding certain cost and quality benchmarks.  The law establishes several demonstration and pilot projects for supporting the shift away from fee-for-service payment methodologies to bundled payments (for episodes of care) and global payments (for defined populations over a given time period).  Finally, the ACA establishes a Center for Medicare and Medicaid Innovation to develop, test and disseminate innovative payment and care delivery models that emphasize care coordination and efficiency.

The ACA is subject to the criticism that it does not go far enough, fast enough in mandating these system-level changes.  However, as the experience in Massachusetts and in a number of health care systems across the country suggests, providers and payers are responding to strong market pressures to reduce costs by developing more integrated systems of care delivery and shifting to new reimbursement models. Even while the ACA was in a kind of legal suspension pending the outcome of the Supreme Court decision, the market was already adapting to the changes that the law is only beginning to set in motion.

Cost of Care

There has been no bigger myth than the claim that national health reform is a budget buster.  The best evidence for this comes from the experience of Massachusetts, which implemented its initial health reform law in 2006.  As the Massachusetts Taxpayers Foundation concluded in an April 2012 report, “Massachusetts has achieved near universal health coverage with only modest additional costs to state taxpayers.” During the five full fiscal years since it was implemented, the law has cost the state an additional $91 million a year after federal reimbursements — well within initial projections. The vast majority of the state’s increased spending has come from subsidies paid to low-income adults to cover the costs of private insurance, but that has been largely offset by decreases in state spending for uncompensated care and other supplemental payments made to safety net hospitals and Medicaid managed care plans.

Massachusetts has managed to pay for these reforms prior to the passage and implementation of the ACA, with its very generous federal subsidies. Massachusetts in fact stands to gain some $1.3 billion from 2014-2019 as a result of the increased federal support under national health reform.

And beyond direct state government costs, Massachusetts is making real gains in reducing its overall health care cost trend as it has begun to experiment with some of the innovative payment and care delivery models that are supported in the ACA. The annual rate of medical expense increase declined from 7.5 percent in 2007 to 1.5 percent in 2011.  As a result, the Massachusetts family health insurance premium declined 0.8 percent in 2010, as opposed to the national trend of a 6.5 percent increase.

The case of Massachusetts strongly supports the conclusion that the country can greatly expand access to health care without breaking the bank, and that the innovative health care quality provisions embodied in the ACA have great promise for significantly reducing the rate of growth in health care expenditures.


The Supreme Court decision removed the Constitutional threat to the ACA but ultimately left unresolved the political challenge to its very survival and complete implementation. The 2012 elections and politics in 50 state capitals will ultimately decide the fate of health care reform and whether the United States will finally join the ranks of almost every Western nation in guaranteeing full access to health care for all of its citizens.

Nonetheless, the ACA has set in motion transformative changes to the nation’s health care system that are unlikely to be reversed, including the ACA’s reforms that correct widespread abuses and inequities in the health insurance markets and the emerging shift towards new health care delivery and payment systems.  The ACA responds to two powerful currents in American society – the demand for equity in access to health care and the growing fiscal crisis brought on by unsustainable increases in the cost of health care.  The ACA’s future may remain in doubt, but no viable alternative has emerged for reconciling these two imperatives.

James Roosevelt, Jr. is president and CEO of Tufts Health Plan.

Expanding Health Care Access to the Poor, ‘A Simple Case’? Roberts: Not so much

By: Matt Selig

About thirty employees from three non-profit organizations that advocate for increasing access to health care held their collective breath in an unadorned conference room on the morning of June 28th.  Several typed nervously on their cell phones while others chuckled through anxious small talk and a few seemed to meditate or perhaps pray.  None of them lost sight however of the large projected image on a pull-down screen of’s innovative live coverage of that day’s United State Supreme Court session where the opinion in the constitutional challenge to the Affordable Care Act (ACA) (National Federal of Independent Business (NFIB) v. Sebelius) would be issued.  This, of course, was the reason they had gathered.

Finally came the blog post that quieted the room: “10:07 Amy Howe: We have health care opinion.”

All eyes in the room were now transfixed on the pull-down screen.

“10:08 Amy Howe: Parsing it asap.”

“10:08 Amy Howe: The individual mandate survives as a tax.”

Thunderous applause echoed off the conference room’s patterned linoleum floor and mini blinds.  The ACA’s requirement on individuals to maintain health insurance, one of the linchpins of the law’s expansion of health insurance coverage to tens of millions of uninsured U.S. residents, had been deemed constitutional by the Court as a valid exercise of Congress’s power to tax.

Moments later, another post, “10:10 Tom: So the mandate is constitutional. Chief Justice Roberts joins the left of the Court.”, drew various exclamations to the effect of “Wow!”, and spontaneous expressions of pure joy.

The assembled advocates had barely enough time to consummate a few hugs and high-fives by scotusblog’s next update: “10:11 Amy Howe: The Medicaid provision is limited but not invalidated.”

Quizzical and concerned looks flashed across the faces of those in the room.  Apparently this was not simply an up or down verdict on the ACA after all.  The lawyers and policy analysts among the advocates would have to do their own parsing of the opinion, asap.

In the weeks since the Court’s decision in the ACA case, many proponents of the law, particularly those concerned with health care access for the poor have simultaneously carried starkly divergent sentiments about the result reached.  A law, literally decades in the making, that was designed to expand health insurance coverage to more than thirty million Americans and greatly improve coverage for those already insured had survived yet another near-death experience that at least matched the drama of its slim passage by Congress in 2010.  But, the Court had substantially curtailed the ACA’s mechanism for providing health insurance coverage to the poorest in our country.

Medicaid, of course, is the public health insurance program established in federal law and carried out jointly by the Federal and State governments, that, even before the ACA, provided coverage for approximately sixty million Americans (according to Faces of Medicaid, a November 2011 publication of the Kaiser Commission on Medicaid and the Uninsured).  The Federal government pays for at least fifty percent of the cost of the Medicaid program in each State and sets a minimum level of benefits and eligibility categories that States may expand upon.

The ACA, as passed by Congress and signed by President Obama, provides that States must expand coverage in their Medicaid programs for the first time to all those under age 65 in households with incomes beneath 133 percent of the federal poverty level (FPL) ($14,856 for a single person) or risk losing their existing  Medicaid funds.  Previously, the Federal government required States to cover only those at very low income levels who also met another eligibility requirement, such as being a child or having a disability.  The ACA provided that if a State did not expand its Medicaid program, the United States Secretary of Health and Human Services (HHS) could withdraw all federal funding for that state’s Medicaid program.

But, this stipulation was hardly a ruthless powerplay by Congress.  It was more in the nature of an extravagant gift to the States because the ACA requires the federal government to pay the States’ entire annual cost of this Medicaid expansion at first and then a slightly decreasing amount until 2020 and thereafter when the federal government must pay 90 percent of the cost incurred by States to expand Medicaid eligibility to all low-income Americans.  All in all, the ACA was expected to provide health insurance to more than 15 million poor U.S. residents through the expansion of Medicaid by States, about half of the more than 30 million slated to gain health insurance because of the ACA.

So, how did the Court limit but not invalidate the Medicaid provision of the ACA as had reported?  In a blow to poor, uninsured Americans,  Chief Justice John Roberts’ majority opinion in NFIB v. Sebelius struck down the ACA’s provision allowing the Secretary of HHS to withhold all of a State’s Medicaid funds if it chose not to expand Medicaid eligibility to all those below 133 percent of the FPL.  The Chief Justice reasoned, in part, that under the Constitution’s Spending Clause, the Federal government could not try to expand insurance coverage for the poor in this way because States would be unconstitutionally coerced into partnering with the federal government to provide health insurance for the poor as distinguished from being merely encouraged to do so.

Although States still have quite a strong incentive to expand their Medicaid programs to their poorest residents, because the Federal government will pay them so generously to do it, they are less likely to go along because they no longer risk losing their existing federal Medicaid payments.  Recent pronouncements by some State officials around the country who oppose the ACA indicate the Court’s ruling will lead them to refuse to expand their Medicaid programs to more of their poor residents.  Millions in poverty who would have obtained health insurance because of the ACA may remain uninsured as a result of Chief Justice Roberts’ opinion.

Adding to the disappointment in the troubling outcome of the Medicaid issue in the ACA case was the unconventional or, one might say, tortured or unpersuasive reasoning behind the Court’s conclusion.  Justice Roberts explained why he viewed the ACA’s deal for States to expand their Medicaid programs as impermissible under the Spending Clause.  He wrote that States really had no choice but to expand their Medicaid programs because the resulting loss of existing Medicaid funds would be tantamount to “economic dragooning that leaves the States with no real option….”  The Court’s majority also expressed grave concern that Congress, by leaving States with “no choice” but to adopt a funding stream with conditions, would be acting to “achieve its objectives without accountability…,” while state officials would be unfairly held “politically accountable.”  These are factual assertions, as opposed to legal ones, and they appear to not equate with reality.

To be sure, the ACA as signed by the President provides States with a choice to expand their Medicaid programs (mostly at the expense of the federal government) or forfeit their Medicaid funding.  These days, State officials are making extremely difficult budgetary decisions every day and the ACA presented yet another one.  It has also always been the case that States can only receive Medicaid funds if they comply with minimum requirements for the program.

Also, most members of Congress would probably find the notion that they were not politically accountable for the ACA to be amusing.  To say that the ACA has been the subject of public debate would be the understatement of the decade.  From the standpoint of State elected officials, if they decided to cancel their Medicaid program because they would not agree to expand Medicaid pursuant to the ACA they would have every opportunity to explain that the federal law provided them with a tough choice in a press release or in a letter to constituents.  It is not that complicated a proposition for voters to understand.

Yes, State officials would very likely experience a negative public reaction for such a decision in most, if not all States, but not because the public didn’t “get” the options posed to State officials by the Federal government.  There would probably be an enormous backlash because the public does “get” that eliminating Medicaid would be devastating to the health and wellbeing of a State’s population, its health care system, and its economy.

As Justice Ruth Bader Ginsberg pointed out in her opinion that dissented from the Court’s majority position on the Medicaid issue, the NFIB v. Sebelius majority “for the first time ever –finds an exercise of Congress’ spending power unconstitutionally coercive.”  The Court’s ample precedent permitting Congress to attach conditions to the receipt of federal funds by States seemingly should have guided the resolution of this ACA’s Spending Clause issue as it had in every other similar instance.  In Justice Ginsberg’s words, it was “a simple case” to uphold the ACA’s Medicaid expansion provision in its entirety.

The Court majority’s reasoning in reaching its conclusion that States were unconstitutionally coerced into expanding Medicaid by the terms of the ACA also employed another unusual twist of logic.  The Chief Justice conjured a new standard in NFIB v. Sebelius that Congressional action requiring States to abide by the conditions of one federal funding stream if they expect to receive another is strongly suggestive of an unconstitutionally coercive federal policy.  The Court’s majority found that the ACA’s expansion of Medicaid was in fact an entirely new program of federal funding and that under the Chief Justice’s new reasoning Congress could not condition a State’s receipt of its existing Medicaid funds upon its willingness to comply with the conditions of the so-called new Medicaid program created by the ACA.

An analogy of the Court reasoning would go something like this: an addition to an existing home has all the same characteristics as the construction of a new home in a lot next door.  To back up the Court’s assertion that the new second story on the Medicaid house was actually a neighboring Medicaid abode at a separate address, Justice Roberts had an explanation.  He wrote that a State’s expanded Medicaid program, providing eligibility for everyone younger than 65 who are below 133% of the FPL ($14,856 for a single person) was “no longer a program to care for the neediest among us, but rather an element of a comprehensive national plan to provide universal health insurance coverage.”

In essence, the Court was stating that this population of such limited means targeted by the ACA was not destitute enough to be worthy of federal assistance intended to alleviate its distress.  Since a person without a child or a disability living at the poverty line could never be considered among the neediest in our society, Justice Robert surmised, a public health insurance program to help them could only be considered part of a plan to make sure everybody at every income level has health insurance.  That this unprovoked and breathtaking effort to judicially define the relative neediness of poor members of our society played such determinative role in the NFIB v. Sebelius case is difficult to comprehend.

The true impact of the Supreme Court’s decision on the Medicaid expansion issue in NFIB v. Sebelius is clearly yet to be known.  Perhaps public sentiment or a thoughtful analysis of the options provided by the ACA will lead State officials throughout the country to expand their Medicaid programs and the vision of the law for poor Americans will be realized.  This surely is the desire of advocates for health care access for the poor.

A broader question is whether any future expansion of Medicaid eligibility or benefits by the Federal government will prompt legal challenges from States who wish to make their compliance with such Medicaid changes optional.  If the Court did assess such litigation in the same way as it did in NFIB v. Sebelius, it would put a damper on the ability of the Federal government to continue to improve health care access for the poor though the Medicaid program.

Pulling back to perhaps the ultimate question at stake, can the United States Constitution be interpreted as a bar to federal policies that increase health insurance coverage and access to health care for the poor?  No.  The march toward health care justice continues on.

Matt Selig is the Executive Director of Health Law Advocates (HLA), Massachusetts’ only non-profit public interest law firm dedicated exclusively to improving access to health care.  As an attorney at HLA since 2005, Matt has represented low-income consumers needing legal help to access health care.  Matt’s career in health care advocacy dates back to the early 1990’s when he served as a staff assistant for the late Senator Edward M. Kennedy on the United States Senate Committee on Labor and Human Resources (now known as the Committee on Health, Education, Labor and Pensions).  He later worked as a legislative aide for Massachusetts State Representative Kay Khan who is now the Co-Chair of the Massachusetts Legislature’s Joint Committee on Children, Families and Persons with Disabilities.  He received his undergraduate degree from Washington University in St. Louis and graduated magna cum laude from Suffolk University Law School.  

Affordable Care Act Continues to Create a Healthier America

By: Eva Marie Stahl, PhD, MPA, and Anna Dunbar-Hester, JD, MPP

Thanks to the Affordable Care Act (ACA), 32 million people will gain access to health insurance. In addition, the millions of Americans who already have health insurance will benefit from new consumer protections and an emphasis on preventive and patient-centered care. The ACA moves us closer to a health care system where all Americans can access quality, affordable care. The Supreme Court reaffirmed the Congressional intent and the ACA’s legitimacy through its recent June ruling on the constitutionality of the law.

Specifically, the Court upheld the entire law except for the enforcement mechanism attached to an expansion of the Medicaid program. Medicaid is a state-run public health insurance program for low-income populations that is supported through federal matching funds. In its original form, the ACA expanded the Medicaid program to cover new populations with incomes up to 133 percent of the federal poverty level (FPL), or about $15,000 for an individual. If a state refused to expand its Medicaid program, it risked losing all of its federal Medicaid funds. The ruling removes only the penalty; the expansion option remains intact.

While there are some negative implications of the ruling, for the majority of consumers, the benefits remain unchanged. These benefits have already begun rolling out, although the majority of them kick in beginning in 2014. Most states will expand their Medicaid program and implement the law as intended.  By and large, the Supreme Court ruling is a win for consumers.

The ACA provides unprecedented consumer protections to Americans in every state

The ACA takes important steps toward expanding coverage, reducing cost and improving the quality of health care for all consumers in all states. It builds on successful health reforms from across the country and extends them to all states. (Of course, many of the reforms were modeled in Massachusetts.) The ACA offers many new benefits for consumers ranging from reforms of our private insurance market, creation of health care marketplaces (Exchanges), to expansion of Medicaid and strengthening the safety net.

As in Massachusetts, success of these reforms is inextricably tied to the individual mandate. Now validated by the Supreme Court, the individual mandate strongly encourages everyone to gain insurance coverage. Requiring all who are able to purchase health insurance protects the market from adverse selection (people buying insurance only when they are sick) and keeps premiums from skyrocketing over time – it provides stability. These are key pieces of reform that allow many of the following benefits to be possible.

Private Insurance, Market Reform and Exchanges

Those who already have health insurance will benefit greatly from the ACA, but this group of people may be the least aware of these new benefits.

Beginning January 1, 2014, no one may be denied coverage due to a pre-existing condition or health status, and no one’s health coverage can be pegged to a lifetime dollar amount. Already implemented reforms include allowing young adults to continue to enjoy their parents’ health insurance coverage until the age of 26. As of August 2012, women can now access preventive coverage with no co-pay including mammograms and birth control. In addition, seniors continue to receive discounts on their prescriptions as the ACA brings us closer to elimination of the ‘donut hole’ (gap) in prescription drug coverage for Medicare recipients.

As consumer advocates, we see health reform making a difference every day. Consumers and businesses all over the country received reimbursement checks if their health insurer failed to direct enough premium dollars toward health care. This reimbursement is based on the new medical loss ratio (MLR) requirement – for every premium dollar, 80 cents must be spent on care. If the insurance company spends less than 80 cents on care, they have to correct the balance using rebates. In Florida, a school system in Sarasota received a check for over $800,000.[1] On average, consumers will receive $151 per household.[2]

Consumers have access to new tools to hold insurers accountable and level the playing field. New rate review tools provided by the ACA hold insurers accountable for premium increases, requiring insurers to be transparent and justify premium hikes. For example, New York consumer advocates used ACA rate review tools to pressure insurers to be more transparent about premium rate hikes.[3] This pressure resulted in New York’s largest insurer agreeing to make rate filings publicly available.

In 2014, about 16 million consumers will have access to insurance Exchanges (online marketplaces, similar to the Massachusetts Health Connector) where they can use federal subsidies to purchase health insurance for the first time. For wage earners between 133 and 400 percent of FPL, federal subsidies will support the purchase of insurance, making it affordable. The ACA requires a consumer-friendly Orbitz-type website with simplified application forms and information about plan quality. California, for example, is leveraging the ACA quality reporting requirements to explicitly address health disparities in its Exchange.[4] Small businesses will be able to use the Exchanges to provide insurance to their employees – making it easier for them to do so.

Medicaid Expansion

As it was passed, the ACA would have extended Medicaid benefits to Americans earning very low wages, less than about $15,000 annually per individual or just over $30,000 for a family of four (under 133 percent of the FPL). The expansion, if fully implemented, will reach almost 17 million people nationally. The Federal government will fund 100 percent of the expansion through 2016, transitioning to 90 percent support by 2020. This $931 billion dollar contribution over eight years will persuade most states to implement the law.[5] This is a great deal for states, enabling them to provide insurance coverage to many uninsured at very little cost to state budgets.[6]

Also, the Medicaid expansion is vital because it completes the coverage package that was envisioned by the ACA: it picks up where the Exchange leaves off, providing coverage to low-income populations not eligible for a federal subsidy in the Exchange. According to the Urban Institute, 82 percent of these uninsured are adults without dependent children. They have traditionally been denied public coverage opportunities at the state level.[7]

Providing coverage to the “expansion population” holds promise of long-term better health whether through preventive prenatal services, near-elderly health care as consumers transition to Medicare, or a reduction in racial and ethnic disparities in health.

The Safety Net

The safety net will continue to play an important role for many people despite the benefits rolled out by the ACA.  Even if the Medicaid expansion were implemented in every state, an estimated 20 million people would remain uninsured – the ACA does not provide universal coverage. Of those approximately 20 million, the Urban Institute estimates that 37 percent will be eligible for Medicaid but not enrolled; 25 percent will be undocumented immigrants; 16 percent will be exempt from the personal responsibility provision to buy health insurance because it is unaffordable; 15 percent will not be eligible for subsidies and will choose to not buy health insurance; and 8 percent will be eligible for subsidized coverage in the Exchanges but not enroll.[8] These estimates were calculated before the Supreme Court ruling, so additional people will remain uninsured if some states don’t take up the Medicaid expansion.

People who are uninsured or underinsured need the protection of a strong safety net – something to catch them if they need health care when they cannot afford it.  The safety net will continue to play this important role in our communities. Recognizing this need, the ACA includes provisions to bolster the safety net such as strengthening non-profit hospital partnerships with communities. Non-profit hospitals have always played an invaluable role in the safety net. The ACA elevates that role by spelling out some specific expectations of these hospitals to address community needs, thereby bringing a new level of transparency to these institutions. Under the ACA, non-profit hospitals are now required to have financial assistance policies and publicize them to the community where they reside. They are also required to make reasonable efforts to determine if a patient qualifies for financial assistance before engaging in extraordinary debt collection practices, such as placing a lien on a patient’s home. The expectation that non-profit hospitals provide benefits back to the community are justified in part by the fact that they don’t pay federal income taxes, and are generally exempt from state and local property, income, and sales taxes, although some states and municipalities determine tax exemptions using their own tests.

Similar to insurance reforms and other innovations included in the ACA, the nonprofit hospital provisions were based on leading state laws around the country. Now these critical protections will set a floor for all states and enhance access to critical service providers.

The chasm ahead

As a result of the Supreme Court ruling, state level politics will determine the insurance status of low-income populations. By saying ‘no’ to Medicaid expansion, they risk the health of some of their most vulnerable constituents and walk away from billions of federal dollars.[9] The population at greatest risk will be those who are between a state’s own current Medicaid eligibility level and 100 percent FPL. For those earning less than 100 percent FPL, there are no real opportunities for insurance coverage. While this group will not be subject to the individual mandate penalty, they will be left uninsured. Those between 100 and 133 percent FPL will qualify for subsidies in the Exchange. However, these subsidies may not be enough to make insurance affordable and the benefits may be less robust.

If a state opts not to expand Medicaid, it will place significant strain on the safety net across their communities. Hospitals’ emergency departments and community health centers will find themselves juggling even greater demand for services. The inequalities in health access between states will grow.

Consumers march forward

The vast majority of Americans will benefit from the upheld portions of the ACA. We expect more preventive care, fairer play from insurers, and more affordable options through Exchange subsidies. However, the Supreme Court decision potentially set us back in our journey to becoming a nation where income doesn’t determine health status. In fact, by removing the Medicaid “stick” and allowing states to choose whether to take up the expansion for people under 133 percent of the poverty level, there’s an increased chance that income will determine health status. The Southern states, which have more poverty and low-income people of color, also have some of the most vocal governors threatening not to expand Medicaid. Where does this leave us? It is a major step backwards. In the words of Dr. Martin Luther King, Jr.: “Of all the forms of inequality, injustice in health care is the most shocking and inhumane.” Consumer advocates will continue to push for Medicaid expansion in every state and make efforts to strengthen the safety net, but this is more than a health care issue – it is a civil rights issue.

We expect those in more progressive states to forge ahead with implementation and reap the benefits of expansion through lower uninsured rates and greater access to care. Those who reside in more conservative climates will face a steep but winnable – on both moral and economic grounds – climb to health coverage.

The history of the Medicaid program tells us that states end up joining the bandwagon sooner or later because it makes sense for their consumers and their economies – better consumer health, healthier communities. Despite Medicaid being a voluntary program, all states joined by 1982. Finally, the uninsured do not simply evaporate, they shift to and rely on a different space in the health care system – the safety net. For many states, it is a calculation of where they will support the uninsured – in emergency rooms or practitioner’s offices.

In the coming year, consumer advocates will continue to raise their voices about the potential negative implications for consumers, and we will continue to celebrate all we’ve gained.

Eva Marie Stahl, PhD, MPA, and Anna Dunbar-Hester, JD, MPP, work as policy analysts at Community Catalyst, a national non-profit consumer advocacy organization dedicated to quality affordable health care for all. Community Catalyst works in partnership with national, state and local consumer organizations, policymakers, and foundations, providing leadership and support to change the health care system so it serves everyone – especially vulnerable members of society.

At Community Catalyst, Eva focuses on legislative and legal challenges to the ACA, the establishment of Exchanges, and Essential Health Benefits. Prior to joining Community Catalyst, Eva completed her PhD in health policy at Brandeis University.  During that time she worked for the Institute of Medicine (IOM) and for the Agency for Health Care Research and Quality (AHRQ).  She holds a MPA from the Lyndon B. Johnson School of Public Affairs and a BA from Colgate University.        

Anna’s work at Community Catalyst is focused on state and federal laws regulating nonprofit hospitals, including requirements to be responsive to community needs for affordable access to hospital care and participate in public health strategies. Prior to joining Community Catalyst, Anna worked for a Massachusetts State Senator as legal counsel and policy advisor. She holds a JD and MPP from the University of Minnesota and a BA from Bryn Mawr College.

[1] O’Donnell, Christopher. “Sarasota Schools get $800,000 Insurance Rebate,” Herald-Tribute. Aug. 6, 2012. Available at

[2] “The 80/20 Rule: Providing Value and Rebates to Millions of Consumers.”

[3] Bernstein, Nina. “Insurer Drops Fight to Keep Rate Filings From Public,” New York Times. Oct. 25, 2011. Available at

[4] Nguyen, Quynh Chi and Alice Dembner. “Promoting Racial and Ethnic Health Equity through Exchanges,” Community Catalyst, March 2012. Available at

[5] Angeles, January. “How Health Reform’s Medicaid Expansion Will Impact State Budgets,” Center on Budget and Policy Priorities. July 25, 2012. Available at

[6] Id.

[7] Kenney, Genevieve, et al. “Opting in to the Medicaid Expansion under the ACA: Who Are the Uninsured Adults Who Could Gain Health Insurance Coverage?” Urban Institute. August 2012. Available at

[8] Buettgens, Matthew and  Hall, Mark A. “Who Will be Uninsured After Health Insurance Reform?” Urban Institute, March 2011. Available at

[9] “Supreme Court Ruling on Medicaid: Challenges and Opportunities for State Advocates.” Community Catalyst. July 2012. Available at

Health Law Case Brief: Revisiting Federal Authority: An Analysis of Supreme Court’s Patient Protection and Affordable Care Act Cases

By: James P. Dowden, Douglas H. Hallward-Driemeier, and Brendon O. Carrington

            In a landmark ruling this summer, the Supreme Court upheld key provisions of the Patient Protection and Affordable Care Act (ACA), while at the same time stressing the limits of federal regulatory authority.  National Federation of Independent Business v. Sebelius, 132 S.Ct. 2566 (2012).  The most immediate and direct impact of the Court’s opinion will be to spare health care providers, insurers, and insureds the task of unwinding steps they had already taken to implement the law, which many commentators believed would be held unconstitutional in whole or in part.  In a sharply divided opinion with shifting majorities, the Court held that the ACA’s individual mandate provision — which requires that nearly every individual obtain health insurance or pay a monetary penalty — was beyond Congress’s power to regulate commerce, but could nonetheless be upheld as a valid exercise of Congress’s power to lay and collect taxes.  The Court also upheld the ACA’s expansion of Medicaid programs, but effectively rendered participation in the expanded scope optional to the States.  The Court found that a provision threatening States with the loss of all Medicaid funding if they did not comply with the expansion was impermissibly coercive.

The mix of rulings came as a surprise to many commentators, who had thought that the Court would strike down the individual mandate, and perhaps the whole ACA.  However, the biggest surprise was not the Court’s ruling, but its alignment, with the Chief Justice (rather than Justice Kennedy) casting the swing vote to save key provisions of the statute.  While the decision’s final judgment upholds the law, the Chief Justice’s opinion — in civics lesson fashion — offers a strong reaffirmation of the principles of federalism and separation of powers that limit what some on the Court see as an ever-expanding assertion of federal power.  For the ACA in particular, the decision returns the debate to the political realm.

Anti-Injunction Act.  As a threshold matter, the Court first determined that it had authority to rule on the law’s constitutionality.  The Anti-Injunction Act (AIA) generally prevents taxpayers from challenging a tax in court before it becomes operative.  Because the individual mandate and requirement to pay a penalty to the Internal Revenue Service if one fails to obtain insurance do not become operative until 2014, the challenge to that provision was arguably premature.  Employing a literal statutory analysis, the Court held that because Congress called the monetary exaction a “penalty” rather than a “tax” and did not include it among penalties that should be “deemed” taxes for purposes of the AIA, the jurisdictional bar did not apply.

The Individual Mandate. The Court then turned to the question that had captured the most public attention:  whether Congress had the authority to enact the individual mandate.  In briefing and during oral argument, the Court principally focused on whether Congress had the power to enact this provision pursuant to its constitutional authority to regulate interstate commerce.  Since the New Deal, the Supreme Court has taken an expansive view of the Commerce Clause, permitting Congress to enact legislation in many areas, so long as it had a “substantial effect” on interstate commerce, including in agriculture, narcotics, and civil rights.  However, several cases over the last two decades have imposed some limiting principles.

In the Court’s opinion, five Justices — the Chief Justice and Justices Scalia, Kennedy, Thomas, and Alito — declared a further limitation on Congress’s Commerce Clause authority: Congress cannot create commerce by forcing otherwise inactive participants to enter the market.  The Chief Justice wrote separately from the other four, who authored a rare joint opinion that did not indicate the author — something often reserved for when the Justices wish to signal unity on an issue.  These five determined that the individual mandate was an attempt to compel individuals who were not participating in the health insurance market to enter that market.  These Justices rejected the argument pressed by the government and health care and insurance industries that these individuals were already participating in the health care system because almost all were accessing (or someday would access) health care services, but were shifting the cost to others by failing to pay for insurance now.  The five conservative Justices held that interpreting the Commerce Clause to encompass even non-activity that has significant effects on commerce would explode any limits on the federal government’s regulatory authority under our constitutional scheme.  For similar reasons, these Justices concluded that the individual mandate could not be regarded as “necessary and proper” to the exercise of Commerce Clause authority because it represented a vast expansion of that power, not a mere complement to it.

Justice Ginsburg, in an opinion joined by Justices Breyer, Sotomayor, and Kagan, penned a vigorous defense of the individual mandate’s validity under the Court’s Commerce Clause jurisprudence.  She rejected the activity/inactivity dichotomy as unsupported by precedent or the facts of this case.  She stressed that nearly all people will be active in the health care market at some time, and those who choose not to buy insurance are taking an active step to “self-insure.”  She likened the contrary view to the long-discredited Lochner era, in which the Supreme Court regularly struck down economic regulation.  She urged that the Court should avoid unnecessarily constraining Congress’s “capacity to meet the new problems arising constantly in our ever-developing modern economy.”

Despite all the ink spilled over the commerce power, the mandate’s fate was decided, in the end, without reliance on the Commerce Clause.  The Chief Justice was joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan in ruling that the law was valid under Congress’s power to levy taxes.  In something of a semantic twist — which the dissenters lambasted as sophistry — the majority held that the individual mandate could be saved by construing its penalty as a constitutionally authorized “tax,” despite the fact that the same penalty did not constitute a “tax” for statutory purposes under the AIA in the context of the threshold jurisdictional inquiry.  The question the Court addressed was whether it was “fairly possible” to read the individual mandate’s provisions not as making it unlawful for an individual to fail to obtain insurance, and imposing a penalty for this unlawful act, but instead as exacting a “tax,” the condition of which is that the person does not have insurance.  The majority concluded that the latter construction was “fairly possible.”  In reaching this conclusion, the Court employed a functional analysis, and relied on the fact that the exaction is collected by the Internal Revenue Service as part of tax returns, is relatively small and calculated with reference to income and tax status, and is imposed without regard to criminal scienter.

Medicaid Expansion.  The second issue on center stage before the Court was the ACA’s expansion of Medicaid coverage.  Starting in 2014, the ACA increases eligibility for Medicaid, by requiring all States to cover people under 65 with individual or family incomes up to 133% of the federal poverty level.  Although the federal government entirely pays for the expansion for the first two years, it will gradually reduce its payments and only cover 90% by 2020.  Another provision of the ACA authorized the Secretary of Health and Human Services (HHS) to withdraw all of a State’s Medicaid funding should the State fail to comply with the expansion provisions.  The question facing the Court was whether the Secretary’s ability to deprive a State of so significant a percentage of a State’s revenue made the expansion unconstitutionally coercive.

The Supreme Court has from time to time discussed limits on Congress’s power to spend and tax, but it had not found that Congress overstepped those limits since 1936.  In the Court’s ruling, seven members of the Court (all but Justices Ginsburg and Sotomayor) for the first time declared that conditional federal spending unconstitutionally coerced the States.  Chief Justice Roberts wasted no euphemisms, characterizing Congress as pointing “a gun to the head” of each State.  Moreover, he concluded that the expansion of Medicaid to cover all persons with income below 133% of the poverty line constituted a change in kind, rather than degree, to the existing Medicaid program.

But Chief Justice Roberts (joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan) ultimately saved Medicaid expansion by limiting its holding to the unconstitutional applications that the Court had identified.  In other words, the decision precludes the Secretary only from withdrawing funds under the extant Medicaid program from those States that decline to participate in, or fail to comply with, the expansion provisions.  It remains to be seen what practical issues may arise as the Secretary attempts to administer two versions of the Medicaid program, one for States participating in the expanded program and the other for States that reject the new provisions.


            While proponents of the ACA are surely celebrating its constitutional vindication, the Justices’ multiple opinions exposed deep ideological rifts and foreshadow fissures that are likely to expand in future cases dealing with the scope of federal legislative power.  Indeed, four Justices would have struck down the ACA in whole, and the Court’s opinions indicate that a majority of the Justices presently on the Court have a relatively restrictive view of Congress’s commerce and spending powers.  While these two powers have expanded without much impediment since the New Deal, a majority of Justices have made it clear, at the least, that federal regulation of commercial inactivity and large monetary grants to the States with onerous conditions will be viewed through a jaundiced eye.

James Dowden is a government enforcement partner with Ropes & Gray and concentrates his practice on advising organizations and individuals in a wide variety of investigations and enforcement proceedings brought by federal, state and foreign government agencies.  Jim has extensive experience in white collar criminal, as well as civil and administrative matters involving the regulation of the health care, life sciences, pharmaceutical and medical devise sectors.  Jim is also a member of Rope & Gray’s Appellate and Supreme Court practice.  Prior to rejoining the firm in January 2012, Jim served as an Assistant United States Attorney in the Economic Crimes and Public Corruption Units in the U.S. Attorney’s Office for the District of Massachusetts.  He also served as a law clerk to Associate Justice Stephen G. Breyer during the United States Supreme Court’s 04-05 Term.

Douglas Hallward-Driemeier is a partner and leads Ropes & Gray’s Appellate and Supreme Court practice. Doug has presented more than 40 appellate arguments, including arguments before the U.S. Supreme Court and every federal circuit court of appeals. He has briefed and argued both civil and criminal matters covering a wide range of subjects and has particular experience in the areas of federal preemption, the False Claims Act, securities litigation, and intellectual property. Doug has extensive experience litigating issues of concern to multinational corporations and other businesses with international activities, including the Alien Tort Statute, the Foreign Sovereign Immunities Act, private enforcement of treaties, and forum non conveniens. In addition to handling appeals, Doug works closely with trial court colleagues to present the most compelling dispositive motions and to preserve our clients’ rights to appeal if necessary. Earlier in his career, Doug was an Assistant to the Solicitor General, where he briefed and argued cases on behalf of the United States before the Supreme Court

Brendon Carrington is a litigation associate at Ropes & Gray, where he defends companies in shareholder class actions, derivative lawsuits, and government investigations.  Brendon also works on federal and state appellate matters, and he devotes significant time to pro bono family law litigation.  He received his J.D., magna cum laude, from Harvard Law School and his A.B. from Princeton University.  Before entering private practice, Brendon spent a year clerking for the Honorable Patrick E. Higginbotham of the U.S. Court of Appeals for the Fifth Circuit.

Health Care in Massachusetts 2012: The Way I See It

 By Governor Deval Patrick

This month, we celebrate the sixth anniversary of Massachusetts health care reform.  Our reforms are an expression of values, a codifying of our belief that health is a public good and that everyone deserves access to affordable, high-quality care.

Like President Obama’s Affordable Care Act, we took a hybrid approach, relyingmainly on private insurance provided through the workplace, with varying degrees of public subsidy, depending on a person’s ability to afford private insurance.

It’s working.  Today, more than 98% of Massachusetts’s residents have health care coverage, including 99.8% of children. No other state in America can touch that. More companies offer their employees insurance today than before the bill was passed.  More than 90% of our residents have a primary care physician and four out of five have seen their primary care doctor in the last year.  Emergency room visits for primary care are down and spending on the uninsured and underinsured has dropped by nearly half.

We’re healthier, too.  For example, because of access to screenings, we’ve seen a 36% decrease in cervical cancer in women.

All of this while adding about 1% to state spending on health care.

Those are the numbers; but policy matters most when it touches people.  And this policy touches people.I remember meeting a young woman named Jaclyn Michalos, a cancer survivor who got the care she needed through the Commonwealth Connector, our version of the Exchange. She had no affordable way to receive the care she needed before Massachusetts’ health care reform – it saved her life.  People no longer have to fear having their insurance cancelled when they get very sick and need it most, or that a serious illness will leave them bankrupt.  Health care reform in Massachusetts is helping people in profound ways.

Our next challenge is slowing the growth in health care premiums.  This is a national problem, one neither caused by our reform nor unique to Massachusetts.  Spending on health care makes up 18% of all spending in the United States and is projected to reach 34% by 2040 if costs continue to grow at historic rates.  In recent years, growth in health care costs has outstripped growth in GDP even as the share of Americans with health insurance has fallen.  In many ways, this will be harder to solve than universal access.  But we need to solve it.

As spending on health care programs and emergency care grows, it weakens our ability to compete and slows job growth.  In budgets everywhere – families, businesses and governments alike – spending on health care comes at the expense of spending on education and other basic needs. Left unchecked, health care costs threaten our fiscal integrity and our ability to provide future generations with the services we have enjoyed.

Just as we in Massachusetts have provided the national model for universal access, I believe we are on track to crack the code on cost control.

We have already seen significant progress.Two years ago, I directed the state’s Commissioner of Insurance to disapprove excessive premium hikes.  While an admittedly blunt tactic and not in and of itself a long-term solution, it was a necessary step to galvanize the market to act.  Massachusetts is home to an innovative, world-class health care community and they have responded with real solutions.

Hospitals and insurance carriers have reopened their contracts and cut rate increases, in some cases by more than half.We’ve created limited network health plans to give consumers opportunities to get great care in neighborhood settings at lower cost.  There are new plans coming out tailored for small businesses that promise to be as much as 20% cheaper than current rates.  Our new Wellness Track program offers a 15% rebate for certain small business owners who take part in the wellness program.  We are also ending administrative duplication by requiring common codes and forms from insurers and providers.  And with the help of the Affordable Care Act, more and more providers are piloting medical home or accountable care models that manage wellness for the whole person, and deliver both better care and more cost-effective care.

All of this is making a difference.  In the last two years, average premium increases have since dropped from over 16% to less than 2% today.Our focus now is on making these gains last.

There are a number of strategies we are pursuing, including putting an end to the “fee-for-service” model wherever practicable, to stop paying for the amount of care and start paying instead for the quality of care.  We need to empower doctors to coordinate patient care and to focus on wellness rather than sickness.

We are working with our health care community to accelerate this transition to innovative models for delivering health care, in which incentives are realigned to reward integrated care that emphasizes wellness and lowers costs for everyone.  For example, Blue Cross Blue Shield has persuaded some of the state’s biggest hospitals and thousands of doctors to accept a fixed amount each month per patient rather than receive payment for each individual procedure.

In state government, by using these new tools and new approaches to how we pay for care, we will avoid nearly a billion dollars in cost increases in this fiscal year and another several hundred million more next year.Our goal is for integrated, cost-efficient caregiving to predominate throughout Massachusetts by 2015.

This is a complex challenge but we are making great progress and will be successful in the end.We have no choice.  For us, and for this country, solving the health care challenge has everything to do with fulfilling our generational responsibility – that old-fashioned idea that each of us in our time must do all we can to leave things better for those who come behind us.  This challenge belongs to all of us, from whatever party or no party.  We owe it to our future to get this right.

National Health Care Reform Comes Home: Massachusetts’ Implementation of the Affordable Care Act

By Michael T. Caljouw and Sarah G. Gordon


On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (hereinafter the “ACA”).1 The law has been characterized as the most sweeping reform act since the implementation of Medicare and Medicaid. ACA goes beyond these historical areas of federal involvement in health care and impacts how insurance products are sold to employers and consumers.

At a very basic level, ACA increases access to health insurance cover-age through broadened Medicaid eligibility, the Children’s Health Insurance Program (“CHIP”), and subsidized premium assistance for certain lower-income individuals. These costs are intended to be met by increased insurer, employer, and pharmaceutical taxes; reduced Medicare and Medicaid spending; and other revenues. The law also includes important measures designed to enhance the delivery and quality of health care. While some provisions of ACA became effective shortly after passage in 2010, most provisions do not take effect until 2014, and others will be phased in over the next few years.

Four years earlier, in the Spring of 2006, Massachusetts enacted its own version of health care reform when then-Governor Mitt Romney signed Chapter 58 of the Acts of 2006 (“Chapter 58”). Chapter 58 increased health insurance coverage through a combination of Medicaid expansions, subsidized private insurance programs, and insurance market reforms. This expansion of coverage was financed through an individual mandate to purchase health cover-age, redirected Uncompensated Care Pool and Disproportionate Share Hospital funds, and requirements that employers either make a “fair share contribution” to their employees’ health insurance or pay a “free rider surcharge.” Since enactment of Massachusetts health care reform, over 98% of the Commonwealth’s residents have health insurance coverage, including 99.8% of children.2

ACA follows the Massachusetts model in many important ways. While many have noted that both pieces of legislation include individual mandates to purchase health insurance, there are many other similarities, ranging from insurance exchange structures to new rules for insurers and employers. Despite these thematic parallels, Massachusetts policymakers have much work to do implementing the thousands of pages of federal laws and regulations within an existing state framework.3 Harmonizing the two laws will be a painstaking, multi-year process involving every major health care stakeholder: Massachusetts and federal governments, employers, insurers, consumers and health care providers. While some states have chosen to challenge ACA pro-visions, Massachusetts policymakers and stakeholders have instead already commenced the implementation process. Accordingly, the following article examines five key features4 of ACA that must be addressed during Massachusetts implementation:

  1. The Individual Mandate to Purchase Health Insurance Coverage;
  2. Employer Responsibilities;
  3. Individual and Employer Subsidies;
  4. Essential Health Benefits and Minimum Credible Coverage Requirements; and
  5. Medicaid Expansions and Basic Health Plan Coverage Options.

1. The Individual Mandate

The major expansion and reform provisions under ACA occur in 2014. Beginning that year, ACA mandates that individuals must purchase insurance coverage if they can afford it – meaning that there are affordability exemptions from ACA’s individual mandate based on limitations in income.5 Otherwise, a qualifying individual must demonstrate that cover-age exists (through either private or public insurance programs), or face a federal penalty. This penalty gradually increases over a three-year period, from a maxi-mum of $285 per family (or 1% of family income, whichever is greater) in 2014 to a maximum of $2,085 per family (or 2.5% of family income, whichever is greater) in 2016. The penalty will be prorated by the number of months without coverage, and post-2016 penalty amounts will increase annually by the cost of living. Chapter 58 includes a conceptually similar mandate. Massachusetts residents are required to obtain health insurance coverage only if affordable coverage is avail-able. The Massachusetts Health Connector (the “Health Connector”) annually sets a schedule of affordability based on income levels and defines the minimum level of required or creditable cover-age. The affordability schedule is progressive, with the percentages of income people are expected to pay for coverage rising over time. Individuals with incomes under 150% of the federal poverty level (“FPL”) and those with valid religious exemptions are exempt from the Massachusetts individual mandate. Otherwise, Chapter 58 establishes fiscal penalties for qualifying adults who do not purchase health insurance that meets the standards of minimum creditable coverage. Penalties are assessed through the Massachusetts Department of Revenue tax filing process and are based on the affordability and premium schedules. As a general matter, penalties are lowest for those ages 18–26 and for anyone with income below 300% of FPL. While the penalty was phased in over time, the penalty for non-compliance can now reach up to half the cost of the lowest available yearly premium.

In light of the operational differences between the Massachusetts and federal mandates, Massachusetts policymakers must resolve certain key issues. First, different income exemption standards mean that there are different standards of who is subject to being penalized. There is also conflict in the amount of the penalty and how it is phased in over time. Because the federal individual mandate has somewhat different provisions and does not appear to preempt the state man-date, Massachusetts legislative action is likely required to prevent uninsured Massachusetts residents from facing both state and federal penalties.6 To illustrate the real conflict between the laws, in 2016 and beyond, uninsured people who earn less than 250% of FPL are subject to higher penal-ties under ACA than under Chapter 58.7 Meanwhile, individuals with more moderate income levels are penalized less under ACA than under Chapter 58. Indeed, unless reconciled, uninsured individuals may face both state and federal mandate penalties for the same period of time.

2. Employer Responsibilities

ACA, like Chapter 58, relies on the central premise that the majority of individuals will obtain their insurance through employer-based coverage. Accordingly, employer responsibilities are central to the success of both statutes. Under ACA, businesses with fifty or more employees must offer coverage that meets minimum standards beginning in 2014, or face two types of penalties.8 First, businesses that do not offer cover-age are fined $2,000 per full-time employee (after the first thirty employees). Second, businesses that offer coverage to employees who receive a public subsidy based on affordability are fined the lesser of $3,000 per employee receiving the subsidy or $2,000 multiplied by the total number of employees. Chapter 58 establishes a separate set of standards, requiring that businesses with more than ten full-time-equivalent employees bear a “fair and reasonable” contribution to the insurance premiums of their employees. The annual assessment is $295 per employee (verified by prorated quarterly filings).9 Compliance with the so-called “fair share contribution” is determined through two tests:

  • Percent of Full-Time Employees Enrolled: Are at least 25% of “full-time” employees enrolled in a qualifying employer-sponsored health plan? O
  •  Premium Contribution Levels: Does the business pay at least 33% of the cost of individual coverage for its “full-time” employees who have been employed for at least ninety days?10

As of 2009, Massachusetts businesses with fifty or fewer employees needed to meet only one of these two prongs. Larger employers (those with at least fifty-one employees) automatically comply if 75% of their “full-time” employees are enrolled in a qualifying employer-sponsored health plan. Larger employers with less than 75% enrollment must meet both prongs of the test to be exempt from the assessment. Chapter 58 also establishes a Free Rider Surcharge on businesses.11 This surcharge is different from the state’s fair share contribution. The surcharge is applied when a qualifying employer (with eleven or more employees) does not arrange for a pre-tax payroll deduction sys-tem for health insurance and has employees who receive care paid for by the Health Safety Net.12

Massachusetts officials are currently working to reconcile many differences between the state and federal health care reform laws relating to employer obligations. At a basic level, ACA imposes significantly higher penalties but also exempts more businesses. ACA exempts all small employers (with fifty and fewer employees) while the state law applies to businesses with eleven or more full-time employees. The state and the federal laws also use different definitions of “full-time” employment.13 Another key difference between the state and federal rules is that under ACA, full-time equivalent employees (FTEs) are used only to determine if the employer has a sufficient number of employees to be subject to the coverage requirements while Chapter 58 uses employee thresholds to calculate the assessment as well. Since the federal law becomes effective in 2014, Massachusetts legislative action is needed in 2012 or early 2013 to allow adequate time for administrative agency and business operational compliance.

3. Essential Health Benefits and Massachusetts Minimum Creditable Coverage

ACA, like Chapter 58, sets baseline requirements in order to ensure that individuals receive access to (and health insurers offer) a comprehensive set of benefits and services. The federal baseline coverage requirements are called Essential Health Benefits (“EHB”),14 while the state baseline coverage requirements are called Minimum Creditable Coverage (“MCC”).15 While both laws set forth basic requirements for coverage of benefits and services as well as cost sharing, the laws differ in both scope and applicability.16

A.     Federal Essential Health Benefits (“EHB”)

The federal EHB requirement applies to all individual and small group coverage offered in a state’s commercial health insurance market. Fully insured large group health plans, grandfathered health plans, and certain self-insured health plans17 are exempt from the requirements to provide EHB.

Health plans subject to the federal EHB requirement must provide an “Essential Benefit Package” (which must include EHB as defined by the Secretary of Health and Hu-man Services (“HHS”)), annual limitations on cost sharing, and offer coverage in one of the “tiers” – Bronze, Silver, Gold, or Platinum — available through the exchange.18 While ACA grants the Secretary of HHS broad authority to define the EHB requirements, ACA establishes ten categories of benefits that must be included within any final EHB rule. These include emergency services, maternity care, prescription drugs, preventive care and pediatric services.19 ACA also caps total annual out-of-pocket costs for these plans (equal to the out-of-pocket limit in Health Savings Account qualified plans), and sets annual limits on deductibles for employer-sponsored health plans.20

B.     Benchmark Plans and State Implementation of EHB

In order to provide the states with flexibility to implement ACA EHB provisions, HHS issued a bulletin on December 16, 2011.21 ACA requires that the scope of EHB benefits be equal to the scope of benefits covered under a typical small group employer plan avail-able in the state. Rather than set forth a prescriptive regulatory scheme for the initial years of implementation (2014 and 2015), HHS offers states broad flexibility in selecting a “benchmark” plan, which will define the benefits (but not the cost-sharing requirements) that each individual and small group health plan must provide.22 The bulletin provides four alternative benchmark plan options:

  • The largest plan by enrollment in any of the three largest small group insurance products in the state’s small group market;
  • Any of the largest three state employee health benefit plans by enrollment;
  • Any of the largest three national Federal Employee Health Benefits Plan (“FEHBP”) options by enrollment; and
  • The largest insured commercial non-Medicaid HMO operating in the state. 23

HHS intends to assess the bench-mark plan selection process and is expected to issue subsequent guidance for EHB for years 2016 and beyond. This later approach may ultimately exclude some state mandated benefits from inclusion in the EHB package.

The interplay between state and federal mandated benefits and the state selection of a benchmark plan will be key implementation issues. Currently, Massachusetts has 58 mandated benefit laws on the books, none of which are pre-empted by ACA,24 and ACA requires states to defray the costs associated with coverage of any state-man-dated benefit that is in excess of the EHB for individuals enrolled in a qualified health plan (“QHP”).25 At the same time, of the plans that could potentially be selected as the “benchmark” plan in Massachusetts, only the health plans offered in the small group market and by HMOs are required to cover all of the state mandated benefits. This is important because, if the state selects one of the State Employee Health Benefit plans or the FEHBP, only those mandated benefits that are included as part of that “benchmark” plan become part of the EHB package. The state would then become responsible for funding coverage associated with the remaining benefits mandated by state law. Finally, the guidance further clarifies that if a state enacts additional mandated benefit legislation after December 31, 2011, and those new mandated benefits are not included as a covered benefit within the benchmark plan, the state is responsible for the cost of covering those benefits as well.

As part of the state implementation activities in Massachusetts, the Division of Insurance and the Health Connector are examining the implications of each potential benchmark plan on the state’s commercial market. The Division of Insurance is collecting data on the benefits and services provided by health plans within each category. While meaningful similarities exist between the health benefit plans offered in the small group and the largest HMO plan, there are important differences between these offerings and the state employee health benefit plans in terms of covered benefits.26 The most striking differences however are between the FEHBP and the state plans. The FEHBP does not cover some of the state’s mandated health benefits, including those mandates that are the most expensive.27 The federal guidance recommends that states select a benchmark plan by the third quarter of 2012, and Massachusetts is expected to make its decision by this fall.

C.     EHB and Minimum Creditable Coverage (“MCC”)

Finally, many questions have been raised regarding the intersection between the federal EHB requirements and Chapter 58’s requirement that individuals purchase coverage meeting MCC requirements – and whether Massachusetts will eliminate or modify Chapter 58’s MCC rule. The Board of the Health Connector has promulgated regulations requiring that an MCC-compliant health plan cover a broad range of medical services, include limits on the out-of-pocket costs for individuals and families, and not include limits or caps on certain benefits.28 Unlike EHB, the Massachusetts rules govern out-of-pocket spending such as deductibles and co-payments, and set a basic actuarial value as a floor for minimum cover-age. While the requirements for obtaining MCC-compliant health care coverage apply to individuals, health plans writing coverage in Massachusetts provide cover-age that is consistent with these requirements.

By contrast, EHBs apply to non-grandfathered plans in the individual and small group markets both inside and outside of the Exchanges, Medicaid benchmark and benchmark-equivalent, and Ba-sic Health Programs.29 Large group (both fully- and self-insured), and grandfathered health plans in existence as of the effective date of the federal law, are exempted from the EHB requirements. While Massachusetts law does not reach those employers subject to ERISA, most Massachusetts employers nevertheless offer coverage that enables their employees to comply with the requirements of the Massachusetts mandate. There is some concern that if Massachusetts eliminates its own requirements for comprehensive coverage, individuals employed by large employers will lose access to MCC-compliant coverage.

Massachusetts individual mandate and MCC requirements are not preempted by ACA. Massachusetts is therefore permitted to continue to enforce its own individual man-date and baseline requirements for coverage. This will continue to be an important discussion during the forthcoming year as the state con-siders legislation designed to bring the state into compliance with ACA.

4. Individual and Employer Subsidies

ACA expands access to health insurance coverage through the establishment of premium credits, available to both individuals and to small employers purchasing cover-age through the exchange. Massachusetts health care reform took a similar approach through subsidies for individuals below a set income threshold who purchase coverage through the Health Connector; however, Massachusetts did not provide corresponding subsidies for small employers. The upcoming sections discuss the intersection between the Federal assistance provided to individuals and employers and the subsidies provided through Massachusetts health care reform.

A. Individual Premium Credits

ACA provides individuals without access to Medicare, Medicaid, or affordable employer-sponsored insurance the opportunity to purchase coverage through the Exchange with premium and cost sharing assistance, provided that certain income criteria are met.30 The ACA premium credit program provides refundable and advance-able premium credits to eligible individuals and families with house-hold incomes between 100% and 400% of FPL. Individuals seeking premium credits are restricted to purchasing a QHP through the state’s exchange. At the time an individual seeking assistance enrolls in coverage through the state exchange, the exchange is required to determine the individual’s eligibility for advanced tax credit.31 The expected individual premium contribution will be set on a sliding scale, ranging from 2% of income for individuals earning up to 122% FPL and 9.5% of income for individuals earning between 300%-400% FPL.

ACA makes the premium credit advanceable and paid directly to the health plan in which the individual enrolls. However, the state ex-change is required to annually reconcile these advanced payments against the actual credit for the taxable year. Unlike the structure of the Massachusetts premium assistance models, individuals obtaining ACA premium credits could receive additional credits over the course of the year should their income status change (through a loss of employment or wages); conversely, such a scheme could potentially result in individuals owing additional income tax liability should their income status improve mid-year.32 In addition to premium credits, ACA provides cost-sharing subsidies to eligible individuals and families to assist in payment of an individual or family’s out-of-pocket costs, including co-payments and deductibles.

In Massachusetts, the most significant aspect of Chapter 58 was arguably the eligibility expansion of the publicly-subsidized MassHealth and the establishment of the publicly-subsidized Commonwealth Care program. Commonwealth Care provides individuals earning up to 300% FPL with access to comprehensive and affordable coverage. Unlike the federal premium tax credits, however, individuals enrolling in Commonwealth Care enroll in one of the four “Plan Types” and pay a discounted monthly premium on a sliding scale that is based on income. There is no reconciliation at the end of the year, thus no opportunity to either receive additional subsidies or be responsible for tax liability. How-ever, the Health Connector does conduct regular reconciliations to redetermine eligibility.

By 2014, federal premium tax credits will become available and could replace state subsidies for current Commonwealth Care members who earn between 133% and 300% FPL.33 These federal subsidies will provide less assistance to individuals than is currently provided by Common-wealth Care. Critical decisions still need to be made by Massachusetts officials as to how to address this overlap and whether to continue to provide state assistance to individuals who are now enrolled in this program at the amount currently available. A discussion of current options for providing continued assistance for Commonwealth Care enrollees is contained in subsequent sections.

State fiscal considerations may resolve many of the questions concerning restructuring state programs, and the Commonwealth is in the process of conducting an analysis of different options for restructuring the programs and the impact on the state budget going forward. However, if the Health Connector does not provide for additional “wrap” subsidies, Commonwealth Care enrollees could have to pay higher premiums and out-of-pocket expenses than they do now.

B. Employer Subsidies

ACA created a new premium tax credit to enable small businesses to purchase health insurance coverage for their employees.34 This credit, unlike the individual premium credit, became effective immediately upon enactment of ACA in 2010. For years 2010 through 2013, the tax credit is worth up to 35% of a taxable eligible small employer’s premium payments. During those years for eligible small employers, the maximum amount is 25% of the employer’s premium payments. That amount increases to 50% in 2014. In order to qualify for the credit, an employer is required to meet three qualifications. The first is to have fewer than twenty-five FTEs during the taxable year. Second, the annual average wage for all employees during the taxable year must be less than $50,000. Finally, the employer must have in place a “qualifying arrangement.”35

Currently, Massachusetts offers an assistance program for eligible small employers and self-employed individuals to provide health insurance coverage for employees. Similar to ACA’s small employer tax credits, the Massachusetts Insurance Partner-ship Program provides premium subsidies for small employers with between two and fifty FTEs, provided that the employer offers comprehensive coverage to employees and contributes at least 50% of the costs of the premi-ums.36 MassHealth is authorized to provide as much as $1,000 per year for each qualified employee.37

An open question remains as to the fate of the Insurance Partnership Program, given the new insurance tax credits made avail-able by ACA for small businesses that are in effect today. Much will be contingent upon the status of the Massachusetts Section 1115 federal Medicaid waiver and avail-ability of state and federal dollars as the current public insurance programs are reorganized to satisfy the new coverage requirements contained within ACA and maximize new federal matching funds.

5. Medicaid Expansion and the Basic Health Plan

One of the centerpieces to Chapter 58 was its expansion of Medic-aid eligibility and the creation of subsidized coverage through the Commonwealth Care program – and these will be impacted by the mandatory Medicaid expansion included within ACA. In particular, Massachusetts will likely need to reorganize several existing public programs due to changes in eligibility criteria created by ACA. Although by no means an exhaustive list, the analysis below illustrates just a few ways in which the Massachusetts landscape may change in the coming year.

First, ACA expands mandatory coverage of Medicaid eligibility to individuals who earn up to 133% FPL.38 This change will allow most legal residents with incomes up to 133% FPL to qualify for MassHealth. One of the key features of ACA is that it simplified Medicaid eligibility by removing

categorical eligibility requirements. Coverage provided to expansion population is not required to comply with the Medicaid benefit requirements that are required for other mandatory populations; how-ever coverage must at least equal benchmark or benchmark equivalent coverage.39 ACA allows states the option of developing a Basic Health Plan, which covers eligible individuals with incomes between 133% and 200% FPL and allows legal immigrants with incomes up to 133% FPL to receive coverage through this plan.40

In Massachusetts many of these individuals within the mandatory expansion population may already be covered through the MassHealth Basic, MassHealth Essential or Commonwealth Care programs.41 Members enrolled in either the Commonwealth Care program or MassHealth experience significant churn between programs as their individual eligibility status changes. Moving these individuals into MassHealth will simplify the program and reduce churn. However, as with all of the new federal rules, ACA’s Medicaid expansion provisions bring about new and important policy considerations that the state will have to address. During the coming months, Massachusetts will need to sort through the existing state coverage programs and determine how to incorporate the new classification of eligible individuals and how to fully take advantage of opportunities to receive enhanced federal matching dollars. The Patrick Administration has announced its recommendation to establish a Basic Health Plan within MassHealth for this population.42 Many of the individuals who will become eligible for the Basic Health Plan are currently enrolled in Commonwealth Care today, including legal immigrants.

Finally, Massachusetts must determine how to cover those individuals who currently receive insurance or subsidies through Commonwealth Care and earn 200% -300% FPL along with those earning up to 400% FPL. The Patrick Administration has announced recommendations to provide individuals with incomes between 200% and 300% FPL who receive a premium tax credit with additional state subsidies.43 This population will be transitioned to the ACA-mandated exchange and receive premium tax credits. However, premium tax credits and cost sharing subsidies will not pro-vide the same level subsidies that individuals within this population receive through Commonwealth Care today. The Patrick Administration further announced its recommendation to provide additional assistance to those between 200% and 300% FPL with “wrap” coverage. The amount is currently estimated to cost the Common-wealth $187 million.44 Both ACA and Massachusetts health care reform contain provisions that expand affordable health care options for the state’s most vulnerable populations. Important decisions need to be made at the state level as to how best to transition this population in a manner that maintains coverage for this population and ensures that Massachusetts is in full compliance with the new federal rules.


Much of the public’s attention on national health care reform, including much legal analysis, has been focused on Washing-ton, D.C. With a United States Supreme Court challenge and a national election in which health reform is center stage, that is quite understandable. However, there are very significant challenges related to federal health reform facing Massachusetts today. Policymakers are confronting the hard task of reconciling a federal law which – in many important ways – differs from its older sister in Massachusetts.

Massachusetts has convened a dedicated workgroup to address these and the many other issues presented by ACA. The group has met several times since September 2010, and consists of state officials from the Executive Office of Health and Human Services, the Massachusetts Health Connector, the Massachusetts Division of Insurance, the Massachusetts Department of Public Health, MassHealth, other relevant state agencies, health plans, providers, employer groups, consumer groups and other interested parties.45 In addition, smaller state-led workgroups have commenced more focused discussions with stakeholders.46 Led by the Massachusetts Division of Insurance and the Massachusetts Health Connector, these groups have included the so-called “Three R’s” Workgroup addressing implementation issues centering on reinsurance, risk adjustment and risk corridors. The separate Insurance Market Reform Workgroup has focused on essential health benefits, catastrophic health plans, child-only health plans, group market size and rating issues and enrollment matters. As of April 2012, no workgroup sessions have begun to address the many issues presented by the individual mandate or employer responsibility issues.

This article illustrates that there are difficult legal, policy and operational issues to face from ACA’s implementation in Massachusetts. Much of the work has already begun in earnest. However, with many of the major provisions effective in 2014, state lawmakers and agency officials will need to continue with careful deliberation and timely legislative and regulatory actions.

Michael T. Caljouw is Vice Presi­dent of Public Government and Regulatory Affairs for Blue Cross Blue Shield of Massachusetts. Mr. Caljouw directs the leading Massachusetts-based health plan’s activities in a wide range of policy, legislative and regu­latory issues including major health care reform matters in Massachusetts. Prior to join­ing Blue Cross, he was Senior Counsel at a national law firm, Holland & Knight, within their Boston office. In this capac­ity, Mr. Caljouw represented national and local clients in the administrative law, regulatory compliance, licensing and insur­ance law fields.

Sarah G. Gordon is Vice President of Legal Affairs for the Massachu­setts Association of Health Plans. Ms. Gordon joined MAHP in 2006, shortly following passage of Mas­sachusetts Health Care Reform, Chapter 58 of the Acts of 2006. Sarah brought with her two years of litigation experience in criminal, financial, and insurance litigation. Since joining MAHP, Ms. Gordon was extensively involved in implementa­tion of Massachusetts Health Care Reform, working with issues related to commercial, Medicaid and Con­nector programs. Ms. Gordon is responsible for coordinating MAHP’s public policy agenda, including all issues related to Medicaid and MassHealth and MAHP’s payment reform and cost control policies. Ms. Gordon is MAHP’s representa­tive to the Advisory Committee to the Health Care Quality and Cost Council, where she has served as both Vice Chair and Chair for the Committee. Ms. Gordon also serves as MAHP’s general counsel and advises MAHP on compliance with state Ethics laws and regulations. Ms. Gordon currently serves on the MWPC PAC Board, and also serves as the co-chair for the MassGap Health and Human Services and Elder Affairs Task Force. Ms. Gordon received a BA, Honors, in Environ­mental Policy from the University of Kansas and holds a JD from Vermont Law School.

Boston University Law Class Files Affordable Care Act Amicus Briefs with the U.S. Supreme Court

By Valerie Moore and Frederick Thide


On March 23, 2010, following nearly a year of congressional debate, President Obama signed the Patient Protection and Afford­able Care Act (the “ACA” or “Act”) into law.1 The Act is the most sig­nificant piece of social welfare legislation since the Great So­ciety, redefining the boundaries between the federal government and the states in the regulation and finance of health insurance.2 Congress relied on the Commerce Clause, the Taxing and Spending Clause, and the Necessary and Proper Clause to enact various pieces of this comprehensive so­lution to the nation’s health care crisis.

The ensuing litigation over this landmark law may redefine the reach of Congress’s regulatory powers. On March 26-28, 2012, the Supreme Court heard six hours of oral arguments on four issues briefed by the parties and amici. First, the Court considered the threshold question whether the minimum essential coverage provision in Section 1501 (the so-called “individual mandate”) was a tax for the purposes of the Anti- Injunction Act. If so, federal juris­diction over the individual man­date will be deferred until at least 2015, when individuals who have paid the penalty may sue for a re­fund. The Respondents and the Government both argued against this result; however, the Court ap­pointed an amicus to brief and argue that the Anti-Injunction Act bars jurisdiction.3 Second, assuming the Anti-Injunction Act does not apply, the Court heard argument on whether the indi­vidual mandate exceeded con­gressional power under Article I of the Constitution. Third, the Court considered severability: if the Court were to hold that the individual mandate is unconsti­tutional, should any part of the ACA be left standing?4 Finally, the Court considered whether the Act’s Medicaid expansion uncon­stitutionally coerces the states.5

This high-profile litigation has sparked public interest across the nation, including at Boston University School of Law, where Professors Kevin Outterson and Abigail Moncrieff created a spe­cial class, Constitutional Health Care Litigation. Law students from both Boston University and Boston College participated and submitted several amicus curiae briefs to the Court.6 Outterson and Moncrieff were joined by pro­fessors from other law schools in Boston and across the nation.

This Article examines the nearly yearlong effort in this class to craft arguments to aid the Court in adjudicating a wide-ranging dispute about the proper role of the federal government in health care. In Part I, this Article sketches the basic structure of the ACA. Part II provides a brief procedural history of ACA-related ligation. Part III and IV then ex­amine the law students’ efforts to craft arguments before the Court to place them within the broader context of the ACA litigation and the recent oral arguments

I. Structure of the Act

The ACA’s primary focus is expand­ing access to health care cover­age. The Act achieves this objec­tive through several mechanisms. First, the Act reforms the small-group health insurance market by greatly restricting medical un­derwriting.7 In its place, the Act establishes a system of adjusted community rating coupled with guaranteed issue and renewabil­ity reforms.8 To compensate for the influx of riskier individuals into private health insurance markets, the Act mandates that qualifying individuals maintain “minimum essential coverage” or pay a so-called “penalty.”9 In addition, the Act eliminates certain health in­surance industry practices identi­fied as unfriendly to consumers, including rescissions and caps on coverage.10 Second, the Act provides tax incentives to encour­age small businesses to provide coverage to their employees and mandates that certain large em­ployers provide coverage.11 Thus, the Act builds upon the existing system of employer-sponsored health insurance. Third, the Act expands eligibility for Medicaid, thereby creating a uniform health care entitlement for more of the poor.12 Congress provided that the federal government would shoulder all expansion costs ini­tially, requiring the states to grad­ually assume a maximum of ten percent of the costs associated with the newly eligible population by 2020.13

The balance of the ACA contains an assortment of health care pol­icy provisions, including public re­porting of company payments to physicians, longer data exclusivity for large molecular weight drugs, and many attempts to control the increasing costs of health care. Although these provisions were not directly challenged in the liti­gation, their fate will nonetheless hang in the balance as the Court considers whether, in light of any constitutional infirmities, the bulk of the Act can be salvaged under the doctrine of severability.

II. Taking the Battle to the Courts

On March 24, 2010, only a day after President Obama signed the Act, fourteen states filed a lawsuit in federal district court in Florida. Among other things, the states al­leged that the minimum essential coverage provision exceeded the Article I powers of Congress and that the Medicaid expansions were coercively unconstitutional. Numerous lawsuits followed in various federal district courts, challenging everything from the constitutionality of Medicaid it­self to whether President Obama was a citizen born in the United States. Constitutional challenges to the minimum essential cover­age provision have garnered the most attention, as opponents of the Act have attacked this “pay or play” provision as a mandate that invades personal liberty.14 While these cases were litigated across the country, the case that ulti­mately made it to the Supreme Court originated in Florida and was heard on appeal at the Elev­enth Circuit Court of Appeals.

The Eleventh Circuit held that the individual mandate imper­missibly regulates individuals by forcing market entry.15 Accord­ingly, the court concluded that the mandate is an exercise of the general police power, which is expressly reserved to the states by the Constitution.16 The court further held that the mandate was not essential (i.e., necessary and proper) to implementation of Congress’s broader regulatory scheme.17 Rather, the Eleventh Circuit reasoned that the numer­ous exemptions and exceptions to the individual mandate and the associated penalty would, in fact, frustrate Congress’s objective of growing the insurance risk pool.18 Thus, the court opined that Con­gress included the mandate merely to compensate insurance companies for their compliance with the new federal regulatory scheme.19

As to the Medicaid expansion, the Eleventh Circuit held that al­though the Supreme Court has yet to formulate an administrable test for coercion, the ACA’s expan­sion of Medicaid falls short of the point where “‘pressure turns into compulsion.’”20 In reaching its holding, the Eleventh Circuit found several factors particularly com­pelling. First, the court reasoned that the states impliedly waived such challenges because, prior to joining the optional Medicaid program, the states were placed on notice that Congress reserved the right to alter, amend, or re­peal the Medicaid Act.21 Second, the court found that the states’ coercion claims were belied by the federal government’s deci­sion to shoulder nearly all costs associated with the ACA’s Medic­aid expansion.22 Third, the court noted that Congress had provided the states with reasonable notice to adjust their budgets and, if required, to raise additional rev­enue to support the expansion.23 The court took pains to note that the states would not be required to provide any funding for the ex­pansion until nearly seven years after enactment, in 2017.24 Fur­ther, the court reasoned that the states were left with ample time to arrange for an orderly exit from the federal-state Medicaid part­nership by devising alternative healthcare programs.25 Finally, the court observed that the Med­icaid Act provides the Secretary with discretion regarding funding decisions related to non-compli­ance, and thus deeply discounted petitioners’ claim that all Medic­aid funding would automatically be lost for failure to comply with the expansion.26 Therefore, con­sistent with all prior court chal­lenges to Medicaid amendments, the Eleventh Circuit found the states’ claim that the ACA’s Med­icaid expansion would leave the states without a real choice un­persuasive.27

III. Briefing the Issues

The goal of making an original contribution drove the search for amicus brief topics in our class. Over 150 briefs were filed with the Supreme Court in this case, many reiterating similar points on the issues. In such a crowded field, we wanted to avoid repeating ar­guments made by the parties or other amici. The topic that gar­nered the most attention in the media and in the quantity of am­icus briefs filed below was the in­dividual mandate. The Supreme Court surprised most observers when it also granted certiorari on the challenge to the Medicaid ex­pansion because there had been no circuit split on this issue. Accordingly, fewer amicus briefs addressed this topic. The granting of certiorari on the Medicaid expansion also raised concerns for many Medicaid scholars, as there would be no reason for the Court to accept the challenge unless it was seriously considering invali­dating the expansion.

When the Supreme Court set the briefing schedule for the chal­lenge to the ACA, it set the dead­line for Petitioners to brief the challenge to the individual man­date in early January, followed by severability in early February, and the Medicaid expansion in mid February.28 Three teams from our class wrote individual mandate briefs; our team settled on Medic­aid. Professor Outterson reached out to several Medicaid scholars and formed a group of profes­sors who wanted to work with us on the brief. They were eager to provide an amicus brief on this is­sue because Medicaid has a long history of being expanded by Con­gress and upheld by the courts without any constitutional con­troversy at all, which is precisely the point that we chose to make in the brief.

All of the Medicaid briefs filed on behalf of the Petitioner states fo­cused on the financial burdens of Medicaid and general complaints about the program.29 Few offered any substantive legal argument or direct attack on any particular section of the ACA. In writing an appellate brief, one is inherently torn between writing to advance the argument one wants to make, and responding to the arguments made by the other side. Because our brief was in support of the Government as Respondents, we had the advantage of filing after the Petitioner states’ Merits Brief and their amici. After reading what we considered to be gross factual distortions of the pro­gram, a major focus of our brief became a factual statement of the history of the Medicaid pro­gram, together with the legal precedents for Medicaid expan­sion. We decided not to respond to some of the more provocative and extreme amici, as this could only give more traction to some of their more audacious claims.

Because many other ideas were floating around, the approach we took was to have various teams write up short 2,000 to 3,000 word sections on various ideas as to what should be in the brief, and then to decide which ones were the most important points to get across and then tie them together. With a strict word limit of 9,000 words, many excellent pages were cut.

One section that survived the ed­iting process looked carefully at the text of the Medicaid expan­sions in the ACA. This section focused on the structure of the amendments, looking at the way the law was written to try to parse out exactly what part of the stat­ute the states objected to. Be­cause the states did not identify which precise part of the Title II expansion was coercive, part of the brief walks through the ele­ments of the expansion they do mention and explains why each provision is not coercive.

Throughout assembling the brief, the group informally consulted with other groups who were writ­ing amicus briefs in support of Respondents, as well as attorneys at the Department of Justice. While we were solely responsible for writing our brief, coordinating with other groups was essential to make sure that we were not repeating arguments that they would make. We also wanted to avoid unknowingly undermining arguments made by the Respon­dents, who had to file their brief only a week before ours. By the time their Merits Brief was filed, it was too late to make any chang­es to our brief, except for small changes at the margin.

After many drafts, our nearly fi­nal brief was circulated to health policy scholars across the coun­try in the first week of February. More than 50 signed on to the brief, which was filed on February 17, 2012. At oral arguments on March 28, 2012, several ques­tions seemed directly taken from our brief, although the Justices did not mention it by name.

IV. Oral Argument

The provision of the Social Securi­ty Act which gives the Secretary of Health and Human Services the discretion to withdraw some or all of a state’s Medicaid funding if the state does not comply with the program requirements re­ceived a lot of attention from the Justices.30 Justice Breyer ques­tioned the Petitioners on how the provision could be an issue when it had been in the Social Security Act since 1965, while Chief Jus­tice Roberts and Justice Kagan questioned the Respondents on how the Secretary had exercised that discretion in the past and how the Secretary might use it in the future.31 Justice Ginsburg asked the Petitioners whether it mattered that some states liked the Medicaid expansion and wanted to keep it, an argu­ment that we made in our brief.32 Some of the material from our brief also appeared in a question by Justice Breyer, when he asked how the current expansion could be found unconstitutionally coer­cive without jeopardizing the past expansions.33 Justice Kennedy questioned the Respondents on the Maintenance of Effort provi­sion, which we had discussed at some length.34

V. Conclusion

From the months of heated de­bate leading up to its passage, to the challenges to the ACA filed immediately after the legislation was passed, to the extraordinary volume of amici the case has at­tracted at every stage of litigation, the story of healthcare reform is replete with voices from every part of the ideological spectrum. Our brief is one voice in a discus­sion that will continue long after the Supreme Court hands down its opinion in June and will hope­fully inspire others to engage in a conversation that affects every resident of the United States. We are grateful that Boston Univer­sity School of Law offered this unique class this year.

Valerie Moore is a 2012 gradu­ate of Boston University School of Law. During law school, Ms. Moore worked at the law firm of FerriterScobbo&Rodophele, PC, Tufts Medical Center, and the Access to Justice Initiative of the Massachusetts Trial Court, in addition to performing research on several public health law issues for Professor Wendy Mari­ner. Ms. Moore also served as a Writing Fellow during her second year of law school. She received her undergraduate degree in political science and econom­ics summa cum laude from the University of Massachusetts at Amherst in 2009.

Frederick Thide is a law student at Boston College Law School, where he serves as managing editor of the Boston College Law Review. Mr. Thide recently par­ticipated in a class at BU Law, where he worked with a team of students and professors to pre­pare an amicus brief defending the Affordable Care Act’s his­toric expansion of Medicaid. He served as an intern for the Hon­orable William G. Young of the U.S. District Court for the District of Massachusetts and as a sum­mer law intern with the FTC’s Bu­reau of Competition.


1 Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010), amended by Healthcare and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (2010).

2 See Abbe R. Gluck, Intrastatutory Federalism and Statutory Interpretation: State Implementation of Federal Law in Health Reform and Beyond, 121 Yale L.J. 534, 582-94 (2011).

3 For a thoughtful critique of the Court’s practice of appointing amici to defend orphaned arguments, see Brian P. Goldman, Note, Should the Supreme Court Stop Inviting Amici Curiae to Defend Abandoned Lower Court Decisions?, 63 Stan. L. Rev. 907 (2011).

4 Severability is often described as a doctrine of judicial restraint. See Adrian Vermeule, Saving Constructions, 85 Geo. L.J. 1945, 1946 (1997) (describing severability as “a norm of legislative supremacy positing that statutes should take effect to the full extent the Constitution permits”). When a court finds that part of a statute is unconstitutional, it seeks to preserve the legislative bargain so long as (1) Congress would have passed the statute but for the constitutional defect and (2) the statute is capable of functioning without the severed provision. See Tom Campbell, Severability of Statutes, 62 Hastings L.J. 1495, 1505-06 & n.51 (2011).

5 Although the Court has paid lip service to the concept of coercion, it has never invalidated a federal law on this ground. See, e.g., South Dakota v. Dole, 483 U.S. 203, 211-12 (1987); Steward Mach. Co. v. Davis, 301 U.S. 548, 590 (1937).

6 E.g., Brief of Jewish Alliance for Law & Social Action et al. as Amici Curiae Supporting Petitioners, Dep’t of Health and Human Servs. v. Florida, No. 11-398 (U.S. Jan. 13, 2012) (Individual Mandate), available at; Brief of Health Law & Policy Scholars et al. as Amici Curiae Supporting Respondents, Florida, 11-400 (U.S. Feb. 17, 2012) (Medicaid Expansion), available at

7 See 42 U.S.C.A. § 18091.

8 See id.§§ 300gg-1(a), 300gg-3, 300gg-4(a).

9 26 U.S.C.A. § 5000A (West 2011) (effective Jan. 1, 2014). The individual mandate ensures that the cost of covering higher-risk individuals (e.g., the elderly and chronically ill) is subsidized by lower-risk individuals (e.g., the young). See Roger L. Pupp, Community Rating and Cross Subsidies in Health Insurance, 48 J. Risk & Ins. 610, 610–11 (1981).

10 See, e.g., 42 U.S.C.A. § 300gg-12 (ban on rescissions); id.§ 300gg-11 (no lifetime or annual limits).

11 26 U.S.C.A. §§ 45R, 4980H (West 2011).

12 See 42 U.S.C.A. § 1396a(a)(10)(A)(i)(VIII) (West 2003 & Supp. 2011); Sara Rosenbaum, Realigning the Social Order: The Patient Protection and Affordable Care Act and the U.S. Health Insurance System, 7 J. Health& Biomedical L. 1, 16–17 (2011).

13 See 42 U.S.C. § 1396d(y)(1). To permit the states adequate time to plan for shouldering their relatively modest share of implementation costs, the federal government will pay all expansion costs between 2014 and 2016. Id. Thereafter, the states’ share will gradually increase before reaching a capped contribution of 10 percent in 2020 and subsequent years. Id.

14See Abigail Moncrieff, The Freedom of Health, 159 U. Pa. L. Rev. 2209 (2011).

15 See generally Comment, In Search of Limiting Principles: The Eleventh Circuit Invalidates the Individual Mandate in Florida v. U.S. Department of Health and Human Services, 53 B.C. L. Rev. 359 (2012).

16 Florida v. U.S. Dep’t of Health & Human Servs., 648 F.3d 1235, 1311-13 (11th Cir. 2011).

17 See id. at 1309-11.

18 See id.

19 Id. 1310.

20 See 1265-68 (quoting Steward Mach. Co., 301 U.S. at 590).

21See id. at 1267 (citing 42 U.S.C. § 1304); see also Harris v. McRae, 448 U.S. 297, 301 (1980).

22 Florida,648 F.3d at 1267-68.

23 Id at 1268.

24 See id.

25 Id.

26 Id. (citing 42 U.S.C. § 1396c).

27 See id. (“These factors convince us that the Medicaid-participating states have a real choice—not just in theory but in fact—to participate in the Act’s Medicaid expansion.”);see also Wilder v. Virginia Hosp. Ass’n, 496 U.S. 498, 502 (1990) (noting that participation in Medicaid is voluntary but subject to conditions).

28 Brad Joondeph, A Tentative Briefing Schedule, ACA Litigation Blog (November 14, 2011),

29 E.g., Brief of Indiana State Legislators, the James Madison Institute, and Christopher Conover, No. 11-400 (U.S. Jan. 17, 2012), available at

30 42 USC §1396(c), see generally Transcript of Oral Argument, Florida v. U.S. Dep’t of Health and Human Services (No. 11-400).

31 Transcript of Oral Argument at 12, 49, Florida v. U.S. Dep’t of Health and Human Services (No. 11-400).

32 Id. at 20.

33 Id. at 24.

34 Id. at 52.