Politics, Public Affairs, Communications and the Affordable Care Act Decision

What does it all mean?

A lot is being written about the Supreme Court decision upholding the Affordable Care Act – more than we can digest. There is a good deal about the politics of the matter and several really good guides and tools written about what it means for individuals.

And in addition to all of the analyses and commentary, a number of organizations issued their own statements and ones from the medical products industry were reviewed here yesterday. In addition, it may be interesting to view others such as this one from the American Hospital Association, and this one from the American Medical Association or this one from the American Nurses Association.

I also wanted to share some of the perspective of three of my colleagues at Fleishman-Hillard, Bill Black, Claire Sheahan, and Kip Piper, author of The Piper Report who together provide some insight into the public affairs and practical outcomes of the decision.  They take note of something in the beginning that I would just want to emphasize – the role of communications.  Because almost universal throughout the many statements and points of view issued since yesterday, including especially those from the health care community,  is this fact – no one believes this to be over.  There are a number of outstanding issues moving forward toward fuller implementation and multiple stakeholders.  That means that the communications and public affairs  opportunities here abound because in the end, those who are best able to effectively message and communicate their points of view are the ones who will prevail as the process moves forward.

From my colleagues:

THE ACA DECISION: WHAT DOES IT MEAN?

There is no doubt that in times of change and uncertainty, communications is the most powerful tool to ensure that organizations can move forward together. While much of the focus of the news stories on the Supreme Court has been on the political impacts, and in particular, the affect on the November elections, our clients have a different question. Our communications colleagues working across industries want to know: What is impact of today’s decision on their business, and what role communications has in successfully that process?

There are two major parts of today’s opinion.

Individual Mandate

The controversial individual mandate was upheld as a Constitutional use of Congress’ broad taxing powers.

In the Affordable Care Act, Congress premised the individual mandate on federal authority to regulate the economy.  Congress has wide authority to impose taxes but limited authority to regulate the economy under the Constitution’s Commerce Clause.  The Court agreed with states that Congress lacked the authority under the Commerce Clause but agreed with the Administration that the individual mandate may proceed under Congress’ taxing power.

What does it mean?

The individual mandate will go into effect in 2014 as originally planned in the ACA, barring any legislative changes by a future Congress.  Candidate Romney and Republicans in Congress have promised to repeal the bill.  However, if the Democrats retain the presidency or either House of Congress, the likelihood of repeal is low to non-existent.  However, if the Republicans sweep in November, repeal of the bill will be their first priority and Democrats may be unable to stop them.

The ACA fundamentally transforms the U.S. health insurance market.  Having been cleared by the Supreme Court, all of the insurance provisions of the ACA will proceed.  This includes health insurance exchanges, employer mandate to provide health coverage, federal premium subsidies for about 16 million individuals under 400% of poverty, guaranteed issue, and adjusted community rating.

For most businesses, the question is whether they will provide employee coverage, buy employee coverage through the health insurance exchanges, or pay a penalty, with employees buying their own coverage through exchanges.

Many analysts think that employers in the retail, restaurant and other sectors with large numbers of low-wage workers will choose to stop providing their employees coverage directly and encourage them to purchase their own care through the exchange. These changes are likely to necessitate large scale internal communications efforts to educate employees about any changes in coverage.

ACA implementation and complexity continues to create significant challenges. Now that the Supreme Court has ruled, states will reassess their plans for health insurance exchanges.  If a state is unable or unwilling to implement an exchange, the federal Centers for Medicare and Medicaid Services (CMS) will do so.

As of today, fewer than 15 states are on path to implement a federally compliant exchange.  Perhaps another 10 states may share exchange functions with CMS.  This means that to ensure people in every state have access to an exchange, CMS may need to setup and operate 25 or more exchanges, at least in the first year.  In early 2013, depending on progress, we expect a debate over a one year delay to exchanges.

Medicaid Expansion

The ACA required states to expand Medicaid programs in 2014 to most individuals and families with incomes under 138% of poverty.  If a state failed to comply, it risked losing all federal Medicaid funding, not merely federal funding for the expansion population.

The Court ruled that the Medicaid expansion mandate on states and the threat of losing federal funds was coercive and violated state independence under the Constitution.

What does it mean?

The Medicaid eligibility expansion in ACA is now optional for states.  If a state opts to implement the expansion, they must follow ACA rules and will receive federal funding for the new Medicaid enrollees.  If a state declines, they are no longer at risk of losing any existing federal matching funds for Medicaid.

Today, the $460 billion Medicaid program covers about 68 million Americans.  Under the ACA eligibility expansion, Medicaid enrollment was expected to increase by 40% or more nationally – with 24 million new enrollees by 2016 and 28 million by 2019.

Each state will now have to decide whether to implement Medicaid expansion.  If a state opts for Medicaid expansion, the ACA provides for enhanced federal matching funds.  The federal government picks up 100% of the cost of expansion enrollees for 2014-2016 and up to 90% thereafter.

If a state declines, those same individuals and families may buy coverage from the health insurance exchange and may receive federal premium subsidies on a sliding scale. However, most will not benefit from cost sharing caps available to others receiving subsidized premiums.

Some states, particularly some of the 26 states that challenged the ACA in court, may decide to not expand Medicaid and encourage low income individuals to seek federally subsidized coverage in the exchanges.  To the extent this happens, the overall number of persons newly insured could be significantly less than originally projected.

Hospitals and health systems, Medicaid health plans, advocates, and many employers will lobby hard for their states to opt for expansion and accept the federal money.  But this could be a battle in a dozen or more states.

Upholding the ACA

The Court upheld the ACA.

What does it mean?

That means that all entities in the health care system- states, health companies, and employers – are bound by the requirements in the law to make changes to the way they deliver and administer health care and coverage. The timeline in the law was already aggressive, and those that chose to “wait and see” will need to move at a breakneck pace to comply with operations requirements.

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