Health Care Reform Bulletin #2

From: Jim Gallic [mailto:jgallic@businessolver.com]
Sent: Friday, March 30, 2012 5:31 PM
To: Team
Subject: Health Care Reform Bulletin #2

Four Major Issues

Here is a summary of the four issues being argued in front of the Supreme Court this week. Each issue has its own unique argument and impact to the future of the bill so they are broken out below. Over the coming days, we will delve deeper into each of the issues and their impact.


Issue 1 – Anti-Injunction Argument

Meaning
Part of the PPACA legislation includes penalizing or taxing employers if they do not provide benefits or if the benefits are not up to a certain standard. Our governmental rules do not allow court challenges to tax code changes until they go into effect. There are some exceptions to the rule and the Supreme Court will decide whether this is one of those exceptions.

Analysis The courts really do not have an option of waiting until 2014 when the law becomes official as there are so many other underlying constitutional issues that need to be decided prior to Jan 1, 2014. Most of the experts agree that this is one of the easier arguments for the Supreme Court. They will most likely decide that they have to rule on the other arguments because of the amount of time required to put the law into effect.

Issue 2 – Minimum Coverage Question

Meaning Does Congress have the power under Article I of the Constitution to enact the minimum coverage provisions (everyone must have a base insurance plan)? PPACA requires everyone to have insurance even if they don’t want it, need it or can afford it. The underlying issue being debated is whether the government can force you to buy something.

Analysis
Aside from the more comical quotes from the Supreme Court Justices (“Can the government also mandate that everyone buys broccoli, cell phones or t-shirts?”), the issue being debated is a fundamental argument over individual freedom granted by the Constitution. The new law is not a tax code change but rather one rooted in power of the government to create and regulate commerce. Without going to deep, this would be the first time ever in our history that the government requires you to do something that wasn’t tied directly to the tax code. The other issue would be the ramifications for non-compliance. Would there be a COBRA jail if you don’t pay your healthcare premiums?

Issue 3 – Severability Question

Meaning The other major issue is the impact of the overall law if the individual mandate (Issue 2) is removed by the courts. If you take the heart out of a person, would they be able to still function?

Analysis
The only way that insurance works in the long term is if there is appropriate risk management controls in place. If you have a group of only sick and no healthy people, what will happen? Utilization will be too high which will devalue the insurance which will raise the rates until it becomes less expensive to not have the insurance than to be in the pool. The removal of the individual mandate will create a benefit for all with no real ability to fund it.

Issue 4 – Federalism and Medicare

Meaning
Medicare is an insurance program for those less fortunate and not able to provide for themselves. Medicare is run by the state with heavy financing from the federal government. PPACA provides for a greater number of people to be included as eligible for coverage. States have the right to refuse Medicare money if they don’t want to run a program.

Analysis
This issue seems to be the least likely of the issues to be removed or challenged by the Supreme Court. As the states have the ability to opt in or not in, the addition of other “classes” of eligible members is within their powers. The major argument against it is that the reimbursement rates to the state are so strong that they don’t really have an option. Without the federal funding, the state plans will collapse so they are at the mercy of the federal government.


Learn More

[http://beyondhealthcarereform.com/2012/03/the-first-day-of-supreme-court-arguments-on-the-affordable-care-act-focuses-on-the-anti-injunction-act][2]
[http://ebn.benefitnews.com/news/supreme-court-ppaca-individual-mandate-injunction-act-delay-ruling-2723364-1.html?ET=ebnbenefitnews:e3634:2448099a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=EBN_Legal_Alert_032912][3]

Have a question, thought or insight? Send me an email at jgallic@businessolver.com and I will use it help educate everyone!