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THE STATE'S VOICE IN THE NATIONAL HEALTH CARE DEBATE BY CHRISTINE WILSON A Thesis Submitted to the Division of Social Sciences New College of Florida in partial fulfillment of the requirements for the degree Bachelor of the Arts Under the sponsorship of Dr. Keith Fitzgerald Sarasota, Florida May, 2012
II A CKNOWLEDGMENTS This thesis is dedicated to: my parents and brother, who have always taught me that through hard work anything is possible; my grandparents, whose love I will never forget; and my boyfriend, whose love and support has been never ending. Also, I would like to thank Professor Fitzgerald, a s my thesis advisor, for the encouragement and guidance that made this study happen; and Professor Cooper for assisting me with the statistical analysis. I would like to thank Professor Hicks for all her assistance throughout the two years at New College, especially her assistance with applying to law schools. Her support was immeasurable. To Professor Alcock for being on my committee, and to the entire political science faculty that have helped me along the way. I dedicate this thesis to my grandmother, Maria Biris, and my grandfather, George Biris. Not a day goes by that I don't think of you, and I know that you would be proud of all tha t I've done with my life.
III TABLE OF CONTENTS ACKNOWLEDGMENTS ................................ ................................ ............................... II LIST OF TABLES ................................ ................................ ................................ ........... V ABSTRACT ................................ ................................ ................................ ..................... VI INTRODUCTION ................................ ................................ ................................ ............. 1 CHAPTER 1 : CURRENT INFORMATION ................................ ................................ 6 INTRODUCTION ................................ ................................ ................................ .. 6 PROBLEM OVERVIEW ................................ ................................ ....................... 7 Elderly Population = Increased Health Care Costs ................................ ... 8 Technological Costs ................................ ................................ .................. 10 Prescription Drug Costs ................................ ................................ ........... 12 Uninsured Problems ................................ ................................ ................. 15 Overview ................................ ................................ ................................ ... 19 THE PATIENT PROTECTION AND AFFORDABLE CARE ACT OVERVIEW ................................ ................................ ................................ ............................... 20 Better Health Care Outcomes ................................ ................................ ... 24 Alterations in Private Insurance ................................ ............................... 28 How Will Expansion of Coverage be Paid? ................................ ............. 30 Overview ................................ ................................ ................................ ... 33 THE REPUBLICANS AND THE RYAN PLAN ................................ ................ 33 Ramifications of the Ryan Plan ................................ ................................ 36 Overview ................................ ................................ ................................ ... 38 FLORIDA'S HEALTH CARE SYSTEM ................................ ............................ 39 Florida's Medicaid Reform ................................ ................................ ....... 39 Changes for Beneficiaries ................................ ................................ ......... 41 Overview ................................ ................................ ................................ ... 43 CHAPTER CONCLUSION ................................ ................................ .................. 43 CHAPTER 2 : HEALTH CARE CONCERNS AND ISSUES ................................ .... 46 INTRODUCTION ................................ ................................ ................................ 46 CONSTITUTIONALITY ................................ ................................ ..................... 49 The Individual Mandate and the Commerce Clause ................................ 50 Congress's Powers to Tax and the Affordable Car e Act .......................... 54 The Necessary and Proper Clause and the Affordable Care Act ............. 56 Severability of the Individual Mandate from the Affordable Care Act ..... 59 Constitutional Overview ................................ ................................ ........... 61 FINANCIAL BURDEN ................................ ................................ ........................ 66 State Concern Overview ................................ ................................ ........... 69 FLORIDA REFORM PROGRAM CONCERNS ................................ ................. 70 Choice and Information Impacts ................................ .............................. 73 Provider Participation ................................ ................................ .............. 75 Access to Services Concerns ................................ ................................ ..... 77 Overview of Florida Reform Concerns ................................ ..................... 79
IV CHAPTER OVERVIEW ................................ ................................ ...................... 80 CHAPTER 3 : WHY HAVE STATES REFUSED TO IMPLEMENT? .................... 82 INTRODUCTION ................................ ................................ ................................ 82 STATISTICAL ANALYSIS ................................ ................................ ................ 83 CASE STUDIES ................................ ................................ ................................ ... 93 Hypothesis ................................ ................................ ................................ 94 Case Selection ................................ ................................ ........................... 94 FLORIDA AND CALIFORNIA: Large State Differences ................................ .. 96 NORTH DAKOTA AND WEST VIRGINIA: United Small St ates .................. 104 Overview ................................ ................................ ................................ 108 CHAPTER CONCLUSION ................................ ................................ ................ 110 CHAPTER 4 : HOW STATES CAN IMPLEMENT ................................ ................. 112 INTRODUCTION ................................ ................................ .............................. 112 THE STATE TO DO LIST ................................ ................................ ................. 114 Health Insurance Exchanges ................................ ................................ .. 114 Medicaid Expansion ................................ ................................ ................ 118 Insurance Reforms ................................ ................................ .................. 119 Overview ................................ ................................ ................................ 122 KEY ISSUES WHILE FACING IMPLEMENTATION ................................ ... 122 Fiscal and Administrative Capacity ................................ ........................ 124 Provider Capacity ................................ ................................ ................... 129 Specialists Capacity ................................ ................................ ................ 133 Transformative Medicaid Program ................................ ........................ 133 Interest in Policy Innovation, Demonstrations, and Pilots ..................... 134 Overview ................................ ................................ ................................ 135 APPROACHING IMPLEMENTATION ................................ ........................... 136 Knowledge ................................ ................................ ............................... 136 Executive Branch Leadership ................................ ................................ 137 Strategic and Operational Plan ................................ .............................. 137 Needs Assessment ................................ ................................ .................... 138 THE CASE OF FLORIDA AND IMPLEMENTATION ................................ ... 139 Medicaid in Florida ................................ ................................ ................ 140 Can Florida Afford Reform? ................................ ................................ ... 140 Potential Savings and Economic Benefits ................................ ............... 143 Physician/Provider Capacity and Expansion of Medicaid ..................... 147 Administrative Capacity and Implementation ................................ ........ 148 FLORIDA ACTIONS ................................ ................................ ......................... 149 Florida Overview ................................ ................................ .................... 151 CHAPTER CONCLUSION ................................ ................................ ................ 152 CHAPTER 5 : CONCLUSION ................................ ................................ ..................... 154 WORKS CITED ................................ ................................ ................................ ............ 160
V LIST OF TABLES Table 2.1: Affordable Care Act Cases ................................ ................................ .............. 62 Table 3.1: State Actions Implementing Affordable Care Act ................................ .......... 84 Table 3.2: Party Identification of State Legislatures and Governors ................................ 88 Table 3.3: Other Factors that May Influence State Actions ................................ ............. 91 Table 3.4: Case Variation ................................ ................................ ................................ 96
VI THE STATE'S VOICE IN THE NATIONAL HEALTH CARE DEBATE Christine Wilson New College of Florida, 2012 A BSTRACT This thesis sets out to analyze the states' role in implementing health care reform in the United States. Many may believe that the Affordable Care Act is a federal takeover of health care, but the states will actually be implementing most of the provisions and managing reforms Through the expansion of Med icaid, the creation of a State Exchange, and the reform of the insurance industry, states will play a vital role in the reform process. V arious states have resisted the Affordable Care Act by claiming that it is unconstitutional or that it places a monumen tal financial burden on the states. However, while analyzing both of these claims it seems that they are unfounded and mainly used as a political tool against the Act. Thus, it is important to look into why some states are moving forward with implementati on, and some have largely refused to implement any reforms. The question that looms is whether the states are refusing only for political reasons or could other factors be playing a large role as well? It seems that larger states may be influenced by the p olitics behind health care reform, while smaller states are influenced not by political factors, but instead by what is best for the state. The needs of a smaller state seem to triumph in the political landscape of that state. To conclude, states
VII must be a ware of what needs to be accomplished in order for reform to be successful, as success largely rests in the hands of state leaders. States will need to build their administrative capacity, fiscal capacity, and physician capacity in order to effectively ref orm their health care system s State actions with regard to the Affordable Care Act will play a vital role in the health care debate and ultimately, shape the countr y' s response to an un sustainable health care system. Dr. Keith Fitzgerald Division of Social Sciences
1 INTRODUCTION In the United States, health care reform has been attempted numerous times, but it has mainly been terminated in Congress Presidents, both Republican and Democratic, have attempted to refo rm the health care syste m but have been overwhelmingly unsuccessful. While President Obama was successful in passing the Affordable Care Act, many of his predecessors have failed. Nonetheless, President Obama's success did not come without obstacles As w ill be examined in this assessment, the states will play a significant role in the health care debate and reform. Particularly, state leaders are vital in the implementation pr ocess and through this process they will determine whether or not the Affordable Care Act succeeds in reforming the American health care system In Chapter 1, information concerning the Affordable Care Act and its provision s will be analyzed as well as the Republican alternative. This chapter will display the American health care syst em as it currently stands, along with the impending problems in lieu of a reform Florida's health care system will be analyzed further, as it is a large state that has been attempting to reform its health care system. Florida's actions of reform do not appear to be yielding their intended results. Consequently, it is crucial that the state further examine its own reform policies, while implementing the Affordable Care Act. In Chapter 2, the issues and concerns facing the Affordable Care Act will be exami ned, i n particular, the issues that states have against the Affordable Care Act. In this chapter, a s well as in Chapter 4, it becomes apparent that most of the issues and concerns facing the
2 Affordable Care Act are not definitive, n amely, the states' comp laint of financial burden The un constitutionality claim against the Affor dable Care Act as a whole is unfounded. However, the Supreme Court could possibly find the individual mandate unconstitutional Still by analyzing precedent, it is unlikely. Chapter 3 will analyze why certain states are moving toward the process of implementation, while others are refusing. Whether or not this is a completely political decision will be discussed in further detail in this chapter. Finally, Chapter 4 will focus on what states need to accomplish in order for the Affordable Care Act to be successful. Many believe that the Affordable Care Act greatly expands the role of the fed eral government in health care. W hile, to an extent, this is true, the role of the state is expa nded upon even further T he f ate of the Affordable Care Act ultimately rests in the hands of the states and their leaders. That is, the system will succeed only if properly implemented and managed by the states. Thus, the state, as well as the actions and concerns of the state will be the focus of this assessment Florida will be employed as an example throughout, as it provides an interesting example of a state attempting to reform its own health care system. A dditionally Florida stands at the forefront of the opposition against the Affordable Care Act, while it simultaneously possesses a faltering health care system. Although the role of the state in national health care reform will be the focus of analysis, it is first importa nt to investigate the history of reform in the United States. An array of different proposals have been advanced by different Presidents or members of Congress. In order to gain a better understanding of the American health care system throughout t he years, a few o f these proposals will be discu ssed here. While proposals
3 were brought to life prior to the creation of Medicare and Medicaid, this analysis will look at proposals after Medicare and Medicaid. As Medicare and Medicaid were passed in 1965, it seemed that America's health care system might be moving toward national health insurance. European nations had begun their national health insuranc e programs by providing insurance to a specific population and increasing it over time. Medicare and Medi caid seemed to follow that trend. After Medicare and Medicaid passed Senator Edward Kennedy and Representative Martha Griffiths drafted legislation that would insure the whole population through a national health insurance program. The 1970 Kennedy Griffi ths Health Security Act called for a unified federally run health insurance system that would remove all public and private health insurance plans. However, the Kennedy Griffith Health Security Act died in Congress, as there was strong opposition from spec ific stakeholders. The American Medical Association and the private insurance industry strongly opposed this Act as they did many others that called for a federally run health insurance system. 1 Interest groups in the health care arena have for years been against reform, and only agreed to the Affordable Care Act because they would benefit from its provision s as well. After the Kennedy Griffith Health Security Act, bills began focusing on using privately administrated national health insurance instead of pu blicly administrated. President Nixon actually proposed an employer mandate, which would require employers to purchase private health insurance for their employees. The Nixon proposal altered the political landscape for public health insurance, as it took debate away 1 Thomas S. Bodenheimer and Kevin Grumbach, Understanding Health Policy: A Clinical Approach (New York: McGraw Hill Medical, 2009), 183 84.
4 from a federally operated health care system. Interestingly, fol lowing employer based proposals, plans including an individual mandate were presented. 2 While many believe that the individual mandate is a D emocratic idea, it actually appeared from the conservative Heritage Foundation and many Republicans supported it previously The Heritage Foundation's 1989 report, written by Stuart Butler, is deemed to be the origin of the individual mandate. 3 The Heritage plan called for the feder al government to requi r e all United States residents to purchase individual hea lth insurance policies. The main difference between the Affordable Care Act and the Heritage Foundation plan is that the Heritage plan called for tax credits to individuals and families too poor to afford health insurance premiums 4 On the other hand, the Affordable Care Act expands Medicaid to cover a larger proportion of people and uses Exchanges in order to help people purchase health insurance. In response to Clinton's propos ed health care bill in 1993, a group of Senate Republicans int roduced their own plan, based on the Heritage Foundation plan Their plan was meant to rid the United States of Clinton's employer mandate and instead put in an individual mandate. 5 Advocates fo r the Heritage plan included Orrin Hatch (R UT), Charles Grassley (R IA), Robert Bennett (R UT), and Christopher Bond (R MO). Furthermore in 2007 and 2009, bills were introduced that 2 Ibid., 184 85. 3 ProCon.org, History of the Individual Health Insurance Mandate, 1989 2010: Republican Origins of Democratic Health Care Provision." ProCong.org, http://healthcarereform.procon.org/view.resource.php?resourceID=004182 (accessed October 10, 2011). 4 Bodenheimer and Grumbach, Understanding Health Policy 185. 5 Angie Drobnic Holan, "Switching sides on the individual mandate," PolitiFact.com, March 5, 2 012, http://www.politifact.com/truth o meter/article/2012/mar/25/switching sides individual mandate/ ( April 2, 2012 ).
5 were sponsored by both Democrats and Republicans, that included the indiv idual mandate 6 Thus, it is interesting to see that Republicans prior to the Affordable Care Act actually supported the individual mandate As one can see from this relatively brief historical analysis, many different proposals have been introduced into Congress over the years, but only a few have actually survived. Moreover, many of the elements of the Affordable Care Act have a long and often bipartisan history. To provide a starting point for the discussion of reform, the next chapter presents an overview of the current United States health care system. 6 ProCon.org, History of the Individual Health Insurance Mandate, 1989 2010: Republican Origins of D emocratic Health Care Provision, htt p:// healthcarereform.procon.org/view.resource.php?resourceID=004182 (accessed October 10, 2011).
6 CHAPTER 1 CURRENT INFORMATION INTRODUCTION Before analyzing state issues and state politics behind implementation it is important to understand the current American health care system and what the Affordable Care Act entails. There are numerous problems with the current health care system that the Affordable Care Act attempts to repair. Through the Act, states will play a vital role in the reform process. The Affordable Care Act ultimately expands access to health care, attempts to improve the quality of care provided, all while holding costs down. President Obama and Democrats worked with stakeholders in order to pa ss this monumental health care reform bill. However, Republicans seem to have their own idea of what reform should be brought to the health care system. Even though Republicans in the past have proposed similar reforms, they denounced the Affordable Care A ct. They formulated their own health care reform proposal that has largely been forgotten now, as it seemed to be unachievable, due to the fact that it got rid of Medicaid and Medicare in their current form After reviewing the national system and reform p roposals this chapter introduces Florida's Medicaid reform program, as it will be further analyzed in Chapter 2 and Florida will be used in further discussions in Chapters 3 and 4.
7 PROBLEM OVERVIEW For many years now, h ealth care in the United States (U.S.) has been a controversial issue that many politicians have attempted to repair. Due to problems present in the health care system, politicians have often preoccupied themselves with constructing solutions. Health care costs have been rising for a num ber of years, exceeding $2.3 trillion in 2008. Health care expenditures have more than tripled from the $714 billion spent in 1990, and amounted to about eight times more than the $253 billion spent in 1980. However, these numbers are not adjusted for infl ation. Reducing the rate at which health care costs are escalating has become a key concern for the government, employers, and consumers. Everyone is striving to keep up with the pace of health care costs. Additionally, U.S. health care spending amounted t o about $7,681 per resident and 16.2% of the nation's Gross Domestic Product (GDP). These figures are among the highest of the industrialized nations. Most alarmingly, health care costs have been growing at rates higher than inflation and the growth in the national income. If reform is not implemented in the near future it is expected that health care costs will only continue to escalate. 7 Some analysts believe that by controlling health care costs, the United States will grow and reach further economic sta bility. While government programs, such as Medicare and Medicaid, amount to a substantial share of health care spending, they have increased at a lower rate than private insurance. Medicare per capita spending has 7 Kai serEDU, "U.S. Health Care Costs," The Henry J. Kaiser Family Foundation, March, 2010, http://www.kaiseredu.org/Issue Modules/US Health Care Costs/Backgrou nd Brief.aspx (accessed January 8, 2012).
8 increased at a bit of a lower rate than p rivate health insurance spending, 6.8% vs. 7.1%, respectively. Not surprising, hospital care and physician/clinical services amount to about 51% of the nation's health expenditures. While dental care, home health, nursing home care, and Rx drugs only amoun t to about 23% of the nation's health expenditures. 8 A number of factors are increasing the health care costs in the United States : greater demand by a growing elderly population as well as population in general, new technology, and prescription drugs. Whi le other factors may have an impact on cost s, these have been recognized as some of the most prominent factors. Elderly Population = Increased Health Care Costs The growing elderly population as well as the increasing population in general places a large strain on the health care system Older adults consume a significantly large share of American health care services. The aging population will have a substanti al e ffect on the services that are provided as well as the settings in which they are provided. T he number of Americans age 65 and older will increase by about 19 million to 54 million in 2020 from 35 million in 2000 The "baby boom" generation, people born between 1946 and 1964, is producing an incremental cost effect on the health care system and it is only presumed to become worse. Additionally, from 2000 to 2050, the number of older adults as a percentage of the U.S. population will increase from 12.5% to 20%. 9 8 Ibid.. 9 Center for Health Workforce Studies School of Public Health, "The Impact of the Aging Population on the Health Workforce in the United States: Summary of Key Findings," March
9 Older adults possess fundamentally different health c are needs than younger age groups. This increase will cause a shift in the amount of services and it will alter the services that are performed. Older adults are significantly more likely to suffer from chronic illnesses, such as cancer and diabetes, than younger age groups. Around 84% of citizens 65 and older suffer from at the minimum one chronic condition, while only about 38% of those aged between 20 and 40 possess a chronic condition. The chances of older adults requiring services of health professiona ls as a result of injury and illness attributed to physical vulnerability are notably greater. Older adults are more likely to fracture bones in falls, and they are also more likely to develop pneumonia as a result of influenza. Since older adults are much more likely to suffer from illnesses and injury, they are subsequently more likely to consume prescription medications than younger age groups. 10 Additionally, older adults receive more ambulatory care, hospital services, nursing home services, and home h ealth care services than younger age groups. Hospital services are also considered one of the most expensive types of health care, thus adding to the increased costs. Older adults, age 65 and older, average about 706 ambulatory care visits per 100 people, while younger adults only average 291 visits per 100 people. They also amount to about 70% of all home health care patients. Another interesting aspect of the "baby boomer" older adults is that they have fewer family caregivers than current older adults. T he baby boomers had fewer children than their parents, and are much more 2006, http://www.albany.edu/ news/pdf_files/impact_of_aging_excerpt.pdf (accessed October 10, 2011), 2. 10 Ibid., 6.
10 likely to not have any children that could potentially help with their health care services. Unfortunately, they are also more likely to be divorced and be living alone than current o ld adults. Thus, the baby boomers will not only increase health care services, but shift services towards certain proce sses 11 Technological Costs New technology has also led to increased health care expenditures, and it will most likely continue to do s o in the near future. Technological advances may lead to new medical services in the future; however, this also increases spending growth. New technology is likely to produce difficult decisions about what health care spending should go towards and what pr iorities should be recognized. As the health care system adopts certain new services swiftly, large increases in health care spending will proceed. However, if new and current costly technological services are utilized more selectively in the future, healt h care spending may increase less. While the health care system has adopted medical technologies that have increased life expectancy and improved the quality of life, the added benefits have not been weighed against the increased costs prior to becoming co mmon practice. In many instances, newer diagnostic and therapeutic services are utilized even though older, cheaper options have produced about equal outcomes. Often new technologies are useful for select patients, but are utilized in cases 11 Ibid., 6 7.
11 where the benef its have not been demonstrated. 12 New curative therapies with a one time cost can reduce spending if they eliminate the need for costlier treatments. Unfortunately, not many new technologies fall into the category of curative therapies Many of the technolo gical advances have taken place as continuous treatment for the management of chronic conditions, such as diabetes. 13 Some medical advances may reduce spending, but these are rather minor compared to the increased costs of many technological advances. For instance, vaccines can offer savings, and some preventive care can assist patients in avoiding costly hospitalizations for acute care. Medical advances have made it possible to treat conditions that were once considered untreatable or that were not intens ively treated. While improvements in medical care can decrease mortality by improving the health of patients, since patients survive longer with significant health problems they ultimately utilize more health care services than before. Future advances in m olecular biology and genetics have the potential to decrease costs by producing curative therapies. Advances in the understanding of genetic origins of disease can potentially provide future health care providers with the ability to predict the health risk s of individual patients. They can subsequently outline therapies tailored distinctly to individuals. Many of the most dangerous illnesses, such as cancer, Lou Gehrig's disease, Huntington's disease, epilepsy, cystic fibrosis, and glaucoma can potentially be targeted at their genetic 12 Congressional Budget Office, "Technological Change and the Growth of Health Care Spending," January 2008, http://www.cbo.gov/ftpdocs/89xx/doc8947/01 31 T echHealth.pdf (accessed September 10, 2011), 2. 13 Ibid., 12.
12 origins. However, even though some technological advances may decreases costs in the future, current new technological advances only increase costs by adding to treatment and increasing the time one spends in expensive health care treatment. 14 Prescription Drug Costs Prescription medicines have also affected the health care industry, including private insurers, public programs, and patients. The increase in costs of prescription drugs has been a significant health care concern for many. The rise in pharmaceutical costs, the aging population, and the rise in costly specialty drugs have only added to the concerns. Recently, increases in prescription drug costs have outpaced other categories of health care spending. Prescription drug prices have escalated throughout the later half of the 1990s and the early 2000s. They are projected to surpass the growth rates for hospital care and other professional services in 2010 15 Many health care problem s are prevented, cured, or managed successful ly through the utilization of prescription drugs. In 2007, an astounding 90% of seniors and 58% of non elderly adults used prescription drugs on a consistent basis. The drug industry's profit margins have alarme d many bystanders, as pharmaceutical manufacturing was considered the most profitable industry in the U.S. from 1995 to 2002. In 2008, while it ranked third among the most profitable industries, 14 Ibid., 13. 15 Eric Kimbuende, Usha Ranji, and Alina Salganicoff, "Prescription Drug Costs," KasierEDU, February 2010, http://www.kaiseredu.org/Issue Modules/Prescription Drug Costs/Background Br ief.aspx (accessed October 20, 2011).
13 its profits stood at 19 percent after taxes. 16 The growth in s pending on prescription drugs can be attributed to a number of factors. For instance, increased usage and demand for prescription drugs took place between 1999 through 2009. The number of prescription drugs purchased in this time period increased 39%, whil e the population itself only increased 9%. Most of the top selling prescription drugs are newer, higher priced brand name drugs, rather than older, less expensive drugs. To top it off, retail prescription prices have increased on average about 3.6% annuall y between 2000 and 2009, much faster than the inflation rate. 17 Manufacture r s have also attempted to recoup the research and development costs for drugs that make it to the market as well as those that never enter the marketplace. It is important to note that only one out of five drugs that make it to the clinical testing process are actually approved by the FDA and introduced into the market. Patent laws have also been a recognized factor in the cost of drugs. Patent protection supplies manufacturers with an exclusive right to sell new drug products for up to 20 years from the date of the patent filing. After the patent expires, the drug can be manufactured in generic versions by a variety of manufactures, therefore reducing the cost of the drug. 18 However, pharmaceutical companies have been criticized for gathering a new patent on a faintly different version of a drug about to go off patent or creating their own "authorized generic" at about the same time when another generic comes to market This has been the case with Allegra, Zithromax, and Pravachol, which make up about 30 to 50% of generic 16 Ibid.. 17 Ibid.. 18 Ibid..
14 drug sales. 19 The companies are doing this in order to continue their advantageous market situation. Unfortunately, this strategy has caused a decrease in competition and has left many life saving medications unaffordable to patients who need them. A ll these factors significantly increase costs of pharmaceutical drugs. While most private health insurance plans cover prescription medicines, there is a wide variation in t he drugs that are covered as well as the costs that must be incurred by the individual. Co payments have increased substantially for brand name products and more expensive drugs. This has become even more of a problem for low income individuals, who cannot even afford to pay the co payments that are required for their prescription medications. 20 For instance, Robin Steinwand, a 53 year old with multiple sclerosis, had been taking the drug Copaxone. The prescription drug cost an outstanding $1,900 per m onth, but she had been able to receive the drug for only a $20 co pay ment since 2000, when she was originally diagnosed. However, out of the blue one day, the insurance company decided to raise the price of the co pay to $325 or $3,900 per year. Unfortunat ely, Steinwand has been charging the medication, which has led her to save less and less for retirement. Steinwand, like many other Americans, is experiencing an increase in co pays, as medications are increasing in cost. 21 19 Richard G. Frank The Ongoing Regulation of Generic Drugs ," The New England Journal of Medicine 303 (November 15, 2007): 1993 96 20 Kimbuende, Ranji, and Salgani coff, "Prescription Drug Costs 21 Stan Reybern, 12 Outrageous Health Care Horror Stories ," Shrinkage is Good Blog, entry posted September 22, 2009, http://www.billshrink.com/blog/5596/health care/ (accessed November 15, 2011).
15 Uninsured Problems While the increased costs of health care have been alarming in recent years, the number of uninsured Americans has also been a cause for concern. The number of non elderly uninsured Americans increased to 50 million in 2009. While Medicare insures almost all of the elders in America nearly 700,000 of the elderly remain uninsured. The decline in employer based health care coverage since 2000 and the c urrent frail job market account for some of the uninsured individuals. Most of the non elderly receive their health ca re coverage through their employer. Medicaid as well as the Children's Health Insurance Program (CHIP) have forestalled an even larger increase in the number of uninsured, and have provided children with coverage during financial hardship. Most alarmingly, about one in five of the non elderly was uninsured in 2009. Even though most people receive health care benefits through their employers, most of the uninsured are working families. 22 Not receiving health insurance often makes a huge difference in that per son's access to medical care and their financial safety. These individuals are often less likely to receive preventive care, and therefore, more likely to be hospitalized for conditions that could have been prevented with adequate ongoing care. 23 While acce ss to health care services is a major problem, the fact that uninsured families often struggle 22 The Kaiser Commission on Medicaid and the Uninsure d, "The Uninsured, a Primer: Key Facts About Americans Without Health Insurance," The Henry J. Kaiser Family Foundation, December 2010, http://www.kff.org/uninsured/upload/7451 06.pdf (accessed October 20, 2011), 1. 23 Ibid. 11.
16 financially is another troublesome aspect. Uninsured families often struggle to meet the ir basic needs. Medical bills can lead to even more financial problems fo r these families 24 Most employers do offer group health insurance policies to their employees and their immediate family members. In 2010, 69% of firms offered coverage to their employees, but the health insurance offers differ among businesses and large firms as well as those that possess high income workers. Also, employer sponsored health insurance is voluntary, therefore, businesses are not required to provide their employees with health insurance, and employees do not have to participate. Many busine sses also do not offer health insurance coverage to part time employees, and many other employees are not able to afford the required employee share of the premium, so therefore they do not sign up. A mong the businesses that did offer health insurance onl y about 79% of their workers were eligible for the benefits. Furthermore, only 5% of people under 65 years of age directly purchase private policies. It is often difficult for an individual to receive health insurance benefits because of their age or prior health problems. In 2008, 29% of individuals between 60 and 64 were denied coverage because of prior health problems. Even when people with prior health concerns ar e offered health insurance, they will pay substantially more for health insurance coverage 25 Adults are often the ones that are uninsured because they are not eligible for Medicaid. In particular, young adults are more likely to be uninsured because of the 24 Ibid., 1. 25 Ibid., 2.
17 inability to afford coverage. 26 Many times these adults are unable to seek clinical care because of the inability to afford such care. For instance, a young Ohio woman by the name of Trina Bachtel, who was experiencing problems while pregnant, attempted to seek out at help at a local cl inic. However, Bachtel had previously gone to the clinic as an uninsured individual and still retained a significant unpaid balance. This clinic would not provide her with any services if she did not pay $100 for the visit, which she was unable to provide While, Bachtel eventually sought care at a hospital about 30 miles away, it was too late by the time she arrived. Bachtel's pregnancy problems were seri ous, and the consequence of being uninsured. Sadly, Bachtel was unable to receive care in time and sh e and her innocent, unborn baby passed away at the hospital. While to many this might seem like a radical and secluded case, these types of cases happen way too often 27 A high unemployment rate coupled with increases in the number of people living below t he poverty line have placed employer sponsored coverage out of reach for many individuals in the United States. About 61% of uninsured individuals are from families with one or more full time workers and 16% are from families with part time workers. While workers usually enroll in health care coverage if they are eligible, it has become more and more difficult for employees to afford the employer based coverage. The average annual total cost of employer sponsored family coverage is $13,770 as of 2010, and t he share paid by workers increased to 30% as well. Overall, most of the uninsured are in low or moderate income families; this means they are below 400% of the poverty 26 I bid., 5. 27 Paul Krugman, "Health Care Horror Stories," Health Care Horror Stories," The New York Times April 11, 2008.
18 level. Low income individuals under the age of 65 normally do not qualify for Medicaid u nless they are disabled, pregnant, or possess dependent children. Thus, they make up a large portion of the uninsured pool 28 Another serious aspect that affects the uninsured is that 63% of them have no education beyond high school. This in turn makes them even more likely to not receive employer based health insurance coverage. These individuals are much more likely to be uninsured for large periods of time. Additionally, minorities are distinctly more likely to be uninsured than white individuals. About 3 3% of minorities are uninsured while about only 14% of whites are left uninsured. Racial and ethnic minorities often co me from extremely poor families; however many are unable to receive Medicaid or any government benefits 29 Not surprisingly, uninsured i ndividuals are in worse health than the privately insured. Uninsured adults are about twice as likely to report being in fair or poor health than those who possess private insurance. Most alarmingly, about half of all the uninsured possess a chronic condit ion. Nearly 25% of uninsured adults have gone without needed care in the past year because of the potential cost, while only 4% of adults with private coverage have refrained from needed care 30 Health care providers are not required to provide care to the uninsured. Emergency departments are the only providers required by federal law to screen and provide necessary services to all individuals, even the uninsured. Often the uninsured are unable t o pay for care in full, and they are turned away when follow up care is required. Even after uninsured adults receive 28 The Kaiser Commission on Medicaid and the Uninsured, "The Uninsured, a Primer," 5. 29 Ibid., 6. 30 Ibid., 10.
19 medical care, they often do not follow up with the required treatments. Another key consequence of being uninsured is that they do not rec eive preventive care. If adults are uninsured for many years, they are about three to four times more likely to not have checked their blood pressure and to not have received necessary screenings for illnesses such as breast cancer. Thus, they are much mor e likely to be diagnosed in severe stages of diseases and die ahead of those individuals with insurance 31 Overview It is clear that many problems presently face the United States health care system. Health care costs have been skyrocketing in recent year s, with the costs exceeding $2.3 trillion in 2008. Furth er more, the growing elderly population places a huge strain on the health care system. Elderly individuals consume a significant amount of health care services, as they are obviously more prone to dis eases and accidents. Also, new technological advances have increased the cost of health care services. In many instances, new technology outcomes are about equal t o the older technology utilized; however, they can cost significant ly more than the prior tec hnology. Often, the benefits of the new technology are not weighed against the costs of that technology. Individuals and physicians must learn to analyze the outcomes as well as the costs of services and technology utilized. Even more alarming is the rate at which prescription drug prices have been rising. Elderly individuals often do not have the resources to pay the co pays, and are forced to dip into their retirement savings. Overall, the costs of services in all 31 Ibid., 10 11.
20 areas of health care have been increasing at an astonishing rate. While the cost of health care has been increasing, the number of uninsured individuals has also been escalating. The feeble job market will only continue to leave individuals uninsured, as many companies are looking to hire only pa rt timers who do not receive any benefits. The rise in the level of uninsured individuals coupled with the increasing costs of health care services will only lead to further breakdown of the health care system. THE PATIENT PROTECTION AND AFFORDABLE CARE A CT OVERVIEW Since health care costs have been increasing and the number of uninsured has been escalating as well, the government has attempted to mend many of the problems with the Patient Protection and Affordable Care Act. In March of 2010, Congress pa ssed and the President signed into law the Affordable Care Act, which will fundamentally increase coverage to the uninsured, improve the quality of health care services, and contain the rising costs of health care. Realistically, without the Affordable Car e Act, costs will only increase in the future and more people will subseq uently become uninsured. While the Affordable Care Act has been controversial the Congressional Budget Office (CBO) estimates that the bill will not only sustain itself, but also cut the deficit by $143 billion over the next 10 years and by an astounding $1.2 trillion in the next decade. Additionally, the CBO calculates that families will pay lower premiums for
21 similar coverage under the new bill. 32 One of the major features of the Affordable Care Act is that there is an individual mandate, which requires that U.S. citizens and legal residents possess adequate health care coverage. Those without coverage will be penalized through a tax penalty of $695 a year and up to three times th at amount or 2.5% of household income for families. The penalty will be phased out from 2014 to 2016, at which time it will hit the $695 flat fee or 2.5% of taxable income. Exemptions are provided for individuals with economic hardship, religious objection s, American Indians, incarcerated individuals, those below the tax filing threshold, undocumented immigrants, individuals for whom the lowest cost plan exceeds 8% of that individual's income, and those without health care coverage for less than three years There are additional requirements for employers to offer coverage. The new employer mandate is called a free rider penalty because it concentrates on uninsured employees who purchase insurance with assistance from the federal government, through a premiu m tax credit. The penalty is only applied to employers who possess more than 50 employees. If an employer with more than 50 employees does not offer any insurance, and one of their full time employees qualifies for the premium assistance and utilizes the p remium assistance to purchase a plan on the new exchange, the employer must subsequently pay 32 The Offi ce of the Speaker, "Health Insurance Reform at a Glance: Strong Cost Containment Measures," March 21, 2010, under "Affordable Health Care for America," http://docs.house.gov/energycommerce/COST_CONTAINMENT.pdf (accessed January 8, 2012 ).
22 $750 annually for each of their full time employees. Interestingly, the CBO estimates that the penalty payments amount to $28 billion between 2014 and 2019. 33 The re are many different aspects of the Affordable Care Act, but one of the major aspects is that Medicaid will also be expanded to all non Medicare eligible individuals under the age of 65 with incomes up to 133% of the federal poverty level. This is one of the major provisions that s tates will carry out themselves. States will be able to do this in a manner that best fits their needs. All eligible adults will be provided the standard coverage package through the e xchanges. States will receive federal funding in order to provide for the extra individuals in Medicaid. States may already expand Medicaid, but beginning on January 1, 2014 all children, parents and childless adults who are not able to receive Medicare and possess in comes up to 133 percent of the f ederal poverty l evel will be provided Medicaid. Between 2014 and 2016, the federal government will pay the full cost of covering the new Medicaid population. 34 Federal financing in 2017 will be 95% then will decrease 1% in subsequent years until 2020 at wh ich time it will be 90%. Federal financing for 2020 and all years after will be 90%. 35 Additionally, states will be required to continue present income eligibility levels for CHIP through September 30, 2019. From 2014 through 2019, states will receive a 23% increase in the CHIP federal 33 United States Ch amber of Commerce, "Employer Mandate," 2010, http://www.uschamber.com/sites/default/files/chambers/files/newemployermandates010710.pdf (accessed January 8, 2012), 2. 34 Democratic Policy Committee, "The Patient Protection and Affordable Care Act: Detailed S ummary," under "Responsible Reform for the Middle Class," December, 2011, http://dpc.senate.gov/healthreformbill/healthbill04.pdf (accessed December 15, 2011), 3. 35 The Henry J. Kaiser Family Foundation, "Summary of the New Health Care Reform Law," under Focus on Health Reform," April 15, 2011, http://www.kff.org/healthreform/upload/8061.pdf (accessed January 8, 2012), 3.
23 match rate, of course only up to 100% maximum. 36 States will also have the option of providing community based attendant services and support for Medicaid beneficiaries with disabilities through the Community First Choice Optio n. 37 These individuals might otherwise require expensive benefits such as hospital care, nursing facility care, or intermediate facility care for the mentally disabled. 38 The Affordable Care Act also enacts tax credits in order to make coverage more affordable for middle class Americans. Refundable tax credits will be made available to Americans with incomes between 100 and 400 percent of the federal poverty line (FPL), whi ch is equivalent to about 88,000 for a family of four. The credit is provided on a sliding scale starting with two percent of income at 100% FPL and continuing to 9.8 percent of income at 300 400 percent of FPL. If an employer provides coverage wh ich exce eds 9.8% of the family's income, or the employer reimburses less than 60 percent of the premium the worker can enroll in the e xchange and obtain credits. Credits are made available to both eligible citizens and legally residing aliens. Additionally, a new credit will be provided to small businesses with fewer than 25 workers for up to 50% of the entire premium expenditures. 39 Individuals and small businesses will be able to purchase h ealth care coverage through an exchange at the state level. The creation o f an exchange at the state level places another provision in the hands of state leaders. By 2014, each state will have to create an exchange in order to assist individuals and small employers in 36 Ibid. 2. 37 Ibid., 11. 38 Democratic Policy Committee, The Patient Protection a nd Affordable Care Act," 4. 39 Ibid., 2 3.
24 purchasing health care coverage. Plans that will be in presen t in the e xchange are analyzed for quality and standardization. 40 Also, the exchanges will constr uct an easy enrollment process by which only one simple enrollment form will be utilized for all plans. The health pl ans made available through the e xchange mus t provide some standard health benefits. Coverage will be presented at four levels with actuarial values defining how much the insurer pays out of pocket. The four plans that will be present include a Platinum plan, a Gold plan, a Silver plan, and a Bronze plan. The Bronze plan can be regarded as the minimum credible coverage, which provides the standard health benefits and covers 60% of the benefit costs of the plan. The Silver plan provides the necessary health care benefits and covers 70% of the coverage costs. The Gold plan also provides the vital health care benefits, but it covers 80% of the coverage costs. The Platinum plan, which is the highest plan available, covers 90% of the costs while providing the critical health care benefits. A lower benefit catastrophic plan will be made available to those citizens under the age of 30 and to those who are exempt from the individual responsibility mandate. 41 Better Health Care Outcomes While the Affordable Care Act attempts to curtail the costs of health care coverage and provide all citizens with coverage, the bill also looks to improve public health and preventive measures. A new interagency council will be created in order to 40 The Henry J Kaiser Family Foundation, "Summary of the New Health Care Reform Law," 4. 41 Ibid., 5.
25 advocate healthy policies to construct a national prevention and health promotion strategy. A Prevention and Public Health Investment Fund has been established in order to supply national investment in prevention and public health. The act constructs a number of n ew programs and benefits connected to preventive care and services. 42 For instance, School Based Health Clinics (SBHC) will be developed and opera ted through the act. Currently, more than 1,900 school based health centers across the country provide a number of health services, including preventive services, to children and adolescents. The Affordable Care Act provides $50 mi llion a year for four years as one time funding for the SBHCs. The federal funding provided will be allocated towards construction, reno vation, and equipment for SBHCs. Current SBHCs provide numerous primary care and pr eventive services, that include comprehensive health assessment, treatment for acute illness, asthma treatment, dental screenings, prescriptions for medication, and oral hea lth education 43 Another major feature for increasing access to preventive services in the Affordable Care Act is that there will be no co payments or deductibles for an annual wellness visit that provides a personalized prevention plan for Medicare coverage. A personalize d prevention plan for an individual takes into account a health risk assessment and other factors such as family history, body mass index ( BMI ) measurement and other 42 Ibid., 10. 43 National Assembly on School Based Health Care, "The Facts: Funding f or Sch ool Based Health Centers Under t he Affordable Care Act ," http://www.nasbhc.org/atf/cf/%7BCD9949F2 2761 42FB BC7A CEE165C701D9%7D/SBHC%20PPACA%20FACT%20SHEET%203.8.11.PDF (accessed October 20, 2011)
26 important screenings. The personalized health advice would be based on the risks discover ed and would create a screening schedule dedicated to that individual s needs. The plan is ultimately meant to establish self management and wellness. Coinsurance requirements for most preventive services under Medicare will be removed. Medicare will have to cover 100% of the costs for most preventive services. The services that will require no coinsurance or deductible include the prevention plan service, an initial preventive physical examination, and any service that is recommendation with a grade of A o r B by the U.S. Preventive Services Task Force. Cancer screening such as mammograms and colonoscopies will be included as services with no co payments or deductibles. 44 Medicare beneficiaries have already begun to access preventive services and lower costs. It has been reported that more than 150,000 Medicare beneficiaries have already received an annual wellness visit. Also, this measure has created extensive savings for seniors as a wellness visit in a physician's office can cost as much as $160 for the fi rst visit and $105 for any subsequent visit. Preventive measures will ultimately improve the quality of life, produce healthier individuals, and lower Medicare costs as a result of a decrease in preventive illnesses. The value of preventive services for se niors is extremely high. The obesity problem and growing levels of preventive diseases a s well as chronic conditions have caused a surge in the costs of health care. For instance, immunizing individuals over the age of 65 against pneumococcal disease has b een declared a cost effective practice, but still these vaccines are not popular, as only 58% of 44 The Henry J. Kaiser Family Foundation, "Summary of the New Health Care Reform Law," 10 11.
27 Americans over 65 have received the vaccination. It is estimated that if all seniors received the pneumococcal vaccine, health care costs would decline by abou t $1 billion each year. Management of diseases such as hypertension can also have a positive outcome not only for seniors but also for the cost of health care spending. It is estimated that managing certain diseases such as hypertension can reduce health c are spending by an astounding $890 billion. Currently, the utilization of preventive services stands at only about half the recommended rate. In 2008, about 43% of female Medicare beneficiaries did not receive a mammogram. Ultimately, eliminating co paymen ts for Medicare beneficiaries will reduce costs while i mproving the quality of life for many individuals. 45 While coverage of preventive services can produce better outcomes in public health, wellness programs and nutritional information can further const ruct superior outcomes. Thus, a number of wellness and nutritional provisions are included in the Affordable Care Act. One of the public health provisions constructs nutrition labeling of standard menu items at chain restaurants. Thus, chain restaurants wi ll be required to disclose calories on menu boards. Additionally, a written form must be made available that contains information on amounts of fat and saturated fat, cholesterol, sodium, total and complex carbohydrates, sugars, dietary fiber, protein, and calories from fat. Grants will additionally be provided for up to five years to small employers that construct their own wellness programs. Employers will also be able to offer employees rewards such as 45 The U.S. Departmen t of Health & Human Services New Medicare Preventive Benefits Begin ," HealthCare.gov, March 16, 2011, http://www.healthcare.gov/law/resources/reports/prevention03162011a.html (accessed November 2, 2011).
28 waivers of cost sharing requirements, premium discou nts, or other benefit s up to 30% of the cost of coverage for wellness programs 46 Alterations in Private Insurance The Affordable Care Act attempts to improve quality and health care system performance in the long term. However, in order to improve healt h care in the United States while providing service to everyone, alterations to private insurance were required. The Affordable Care Act will create "qualified health plans" (QHPs), which will be subject to a variety of requirements associated with marketi ng, choice of providers, plan networks, required benefits, and other attributes. A QHP issuer must be licensed and in good standing in each state in which it offers coverage Additionally, it must offer the same premium for a plan even if it was provided o ut of the exchange, for instance, through an insurance agent. 47 Plans that are already in existence may be offered as grandfather plans for individuals a nd group markets. Acceptance in to such plans will be restricted to those currently enrolled, their families, or new employees and their families with grandfathered employer sponsored coverage. Additionally, enrollees will be able to renew enrollment in a grandfathered plan indefinitely. 48 The new plans will be subject to a number of requirements. For i nstance, group health plans and issuers in the individual and group markets will not be able shut out 46 The Henry J. Kaiser Family Foundation, "Summary of the New Health Care Reform Law," 11. 47 Ibid. 4 5. 48 Hinda Chaikind, Bernadette Fernandez, Chris L. Peterson, and Paulette C. Morgan, "Private Health Insurance Provisions of H.R. 3200," under "Congressional Research Service," July 27, 2009, http://fpc.state.gov/documents/organization/127386.pdf (accessed November 5, 2011), 1.
29 individuals with preexisting health conditions. A preexisting health condition is considered a medical condition that was in existence prior to the date o f enrollment for health coverage. 49 In many instances, insurance companies are able to claim that the illness one is incurring was a preexisting condition, and therefore, not under the coverage of health insurance. A prime example of how insurance companies attempt to weasel out of bills occurred with Pat Tumulty. Tumulty had been working at jobs that did not provide health insurance for about six years; however, he had been paying premiums to Assurant Health, purchasing six month medical policies. The polic ies required that he pay a high deductible for basic health care services, out of his small salary. Thus, Tumulty waited until he was in dire need of a doctor before going in for services. Tumulty found out that he was suffering from kidney failure, only t o have Assurant find a loophole in which they could classify his illness as a preexisting condition. Many Americans, just like Tumulty, find that their insurance is worthless when they truly are in dire need of it. 50 Additionally, issuers and group health plans will not be able to base eli gibility for coverage on health related factors. Health status, medical conditions, claims experience, receipt of health care, medical history, genetic information, evidence of insurability, and disability will no longer b e considerations for coverage. However, issuers will be able to offer premium discounts to enrollees who engage in wellness programs. Issuers and group health plans will also not be able to introduce a waiting period greater than 90 49 Ibid. 7 8. 50 Lawrence R. Jacobs and Theda Skocpol, Health Care Reform and American Politics: What Everyone Needs to Know (New York: Oxford University Press, 2010), 18 19.
30 days. The waiting perio d is the period of time that must pass before enrollees are able to receive the health benefits 51 Additionally, insurance companies will not be able to cancel coverage once a person become s sick, if that person or their employer accidentally made a mistake on the paperwork. The only time insurance companies will be able to cancel coverage is if individuals or groups of people intentionally misrepresented themselves, or in cases of fraud. Even in such cases, insurers plans must provide individuals with at least 30 days to appeal. Another consumer protection provision is that there will no longer be lifetime limits on coverage. Millions of Americans who suffer from extremely costly medical conditions may find that their cost of treatment hits the lifetim e limit placed by their insurers and plans. Limits on coverage may come at time s where individuals need that coverage more than ever before. Thus, the usage of limits in all health plan s and insurance policies issued as well as those renewed after Septembe r 23, 2010 will be restricted. 52 How Will Expansion of Coverage be Paid? While the Affordable Care Act brings about a number of beneficial changes, one of the looming questions that remains is how will everything be paid for. In essence, how will the Uni ted States afford all of this? The design of the Affordable Care Act places the burden on the most affluent individuals, most prosperous businesses, and established 51 The Henry J. Kaiser Family Foundation, "Summary of the New Health Care Reform Law," 11. 52 The U.S. Department of Health & Human Services, "Fact Sheet: The Affordable Care Act's New Patient's Bill of Rights," HealthCare.gov, June 22, 2010, http://hea lthreform.gov/newsroom/new_patients_bill_of_rights.html (accessed January 30, 2012).
31 medical providers. While people making more than $250,000 will share in the advanced outcom es, they are asked to foot some of the bill. However, many of these individuals place a high value on an improved health care system in the United States and many want to pay so that their children will grow up in a much healthier United States. Many of th ese individuals do not mind pay ing for something that will help future generations as well as their neighbors. 53 Since there has been much speculation on the increase in taxes and fees, it becomes important to state clearly what the new taxes and fees are a nd how they will influence each income group. The Affordable Care Act brings about higher taxes for married couples with incomes greater than $250,000 a year and for individuals with incomes greater than $200,000. These individuals will now pay 2.35% of t heir wages in Medicare taxes, up from 1.45%. Additionally, a new tax of 3.8% on investment income from the stock market, real estate, and other forms of high finance will be placed on those few Americans. Millionaire families will foot most of the bill, by paying about three quarters of the new taxes, about $46,000 more a year by 2012. F amilies that earn from $200,000 to $500,000 a year will pay about $560 more on average each year. Thus, it is clear that those who can afford to pay more are the ones who wi ll be asked to help build a better health care system in the United States. The top 3% are the only ones who will have to contribute to the health care system. It is clear that the health care bill will not increase taxes on everyone, and it on ly really a f fects the very wealthy Middle class Americans 53 Jacobs and Skocpol, Health Care Reform and American Politics 133.
32 will not be asked to pay the new Medicare taxes and thus, will mainly just benefit from the Affordable Care Act. 54 While taxes and fees will bring money in, the business models for insurers and pharmaceutical s will be altered in order to control costs. Additionally, by reducing the overuse of medical care costs will greatly decrease Cost cutt ing measures will greatly help i nsurers, drug and medical device manufactures, and health care providers who must decrease their charges Furthermore, the health care e xchanges will provide small businesses and individuals with the ability to compare coverage and costs in health plans, which will create a more competitive market in which private health insurance companies attempt to deliver superior health care insurance at the lowest cost. Insurance companies also must alter their business practices in order to ensure that 80 85% of their premiums are spent on medical care and not admi nistrative and marketing co sts 55 Reducing the overuse of medical care can significantly cut costs in the health care realm, as many of the procedures incurred are not necessary. The new law will impose an excise tax on insurers for expensive employer s ponsored health insurance plans T hese plans are priced at over $10,200 for individuals and $27,500 for family coverage. 56 The "Cadillac tax," as it is known, will not only raise extra income but it will ask the question of whether it is worth it to receive unnecessary care. The Afforda ble Care Act will also introduce cost awareness, as W 2 forms will list employer's contributions toward premiums. While 54 Ibid., 133 34. 55 Ibid., 139 40. 56 Jenny Gold, "'Cadillac' Insurance Plans Explained," Kaiser Health News, March 18, 2010, http://www.kaiserhealthnews.org/Stories/2010/March/18/Cadillac Tax Explainer Update.aspx (accessed November 23, 2011).
33 these co ntributions will not be taxed, they are meant to remind individuals how much they pay as well as how much they are giving up in wages in order to have health insurance. The transparency of cots will provide individuals with a chance to look at costs when choosing a health care insurance plan. Overview Overall, it is clear that the Affordable Care Act attempts to bring about posi tive change in the health care system of the United States. As health care costs are rising and the number of uninsured individuals is going up as well, it becomes of the utmost importance to change the current, broken system. The Affordable Care Act attem pts not only to decrease costs but to provide better health care outcomes for the citizens of the United States. Families and individuals who were previously unable to afford health care insurance will not only receive health care insurance, but receive a higher level of quality health care. Even as the United States spends much more than other countries on health care the country does not possess better health care outcomes. The Affordable Care Act attempts to alter the health care system in a manner that holds private health insurance companies in check, and provides increased quality at a lower cost. THE REPUBLICANS AND THE RYAN PLAN The Ryan Plan is a health care proposal by the Republican U.S. Congressman Paul Ryan. Ultimately, it is the endorsed Republican plan for health care reform. In the Ryan Plan, every American (except those in Medicare or a military plan) will have the
34 option to accept a refundable tax credit of $2,300 for individuals and $5,700 for families to pay for health care coverage. The tax credit is only available to purchase health care. The payment will go directly to the health care plan chosen by the individual. Everyone is eligible for this tax credit without any regard for income or employment. The proposal will also establish state health insurance high risk pools, which will make coverage available to individuals who presently are denied coverage. These individuals are denied coverage because of pre existing medical conditions. Also, each individual will have a chance to cho o se plans from a state based e xchange. The plans that are to be offered through the e xchange are to present the same standard utilized for health benefits provided to members of Congress. Also, the e xchange will require that all insurance providers provide coverage to any individual despite any pre existing conditions or the age of the individual. 57 A non profit, independent board will be created that will penalize insurance companies that participate in cherry picking healthy patients and reward companies that admit individuals with pre existing conditions. While individuals would not be requi red to p urchase insurance, the e xchanges are meant to provide individuals with easy access to insurance. The plan would also allow individuals and families to purchase health insurance in any state. Presently, individuals and families can only purchase health insu rance in their home state. Ideally, this would increase competition between insurers and provide individuals with a greater variety of choices. 58 57 The Budget Committee Republicans, "The Roadmap Plan," 2011, http://www.roadmap.repu blicans.budget.house.gov/plan/ (accessed April 24, 2011). 58 Ibid..
35 Medicaid and Medicare Reform While every detail of the Ryan Plan is not yet set into place, the major changes from the status quo are proposed in Medicaid and Medicare reform. As of 2013, the federal share of all Medicaid payments would be provided in the form of block grants to stat es. The total amount of money allocated by the grants would increase annually with population growth, as well as with growth in the Consumer Price Index for all urban consumers ( CPI U ) Starting in 2022, Medicaid block grant payments would be lowered to ex clude projected spending for acute services of elderly Medicaid beneficiaries. While utilizing block grants, states would have more flexibility in determining how to provide health care to beneficiaries. 59 Additionally the Ryan Plan eliminates the CHIP pro gram by allowing its population to receive a health care tax credit. Ultimately, Medicare is to be completely reformed as well. Medicare beneficiaries who are currently under 55 years of age are to receive a standard Medicare payment to utilize in purchasi ng private health insurance. Medicare beneficiaries and those eligible within the next 10 years will receive the same Medicare benefits as presently offered. In 2022, the Ryan Plan would provide $8,000 to individuals per year to purchase private insurance. The premium support payments are to increase each year. The increase amount will reflect both the costly health care age of beneficiaries, and the increase in the consumer price index, for all urban consumers. The support payments received by beneficiarie s would also vary depending on the income of the beneficiary. People in the top 2% of income distribution 59 Congressional Budget Office, "Long Term Analysis of a Budget Proposal by Chairman Ryan," April 5, 2011, http://www.cbo.gov/ftpdocs/121xx/doc12128/04 05 Ryan_Letter.pdf (accessed April 15 2012), 9.
36 of the Medicare eligible population would only receive 30% of the support payment. Individuals in the next 6% of the distribution would receive 50% of the support payment and people in the remaining 92% of the income distribution would receive the full payment. It would also r ais e the age of eligibility for M edicare from 65 to 67 in 2033 60 Additionally, as of 2022, the federal government would establis h a medical savings account (MSA) for low income beneficiaries The federal government, on the basis of income in proportion to the federal poverty threshold, would decide eligibility for MSA payments Ultimately, the Ryan Plan would bring an end to Medica id, Medicare, and SCHIP in their current form s The Ryan Plan would also repeal the most important provisions of the Affordable Care Act. For instance, the requirement that most legal U.S. residents acquire health insurance would be repealed. Also, the expansion of Medicaid coverage to include non elderly people with inco me below 138% of the federal poverty level will no longer occur. The tax credits for small employers who offer health insurance will be end ed as well. 61 Ramifications of the Ryan Plan The Congressional Budget Office (CBO) has recently released a report o n the Ryan Plan that states the "federal budget would show a deficit of about 2% of GDP in 2022, a slight surplus in 2040, and a surplus of about 4% of GDP in 2050." Also, the ratio 60 Ibid., 7 9. 61 Ibid ., 9 10.
37 of debt to GDP would decline sharply from 70% of GDP in 2022 to about 10% in 2050. 62 Under the Ryan Plan, federal spending on Medicare, Medicaid, and CHIP would decline sharply to about only 5.5% of the GDP in 2022. 63 However the increasing number of Medicare beneficiaries would have to endure a much larger share of their health care costs than under the original Medicare program. The burden of cost would lead to a reduction in usage of health care services, and also, a reduction of spending on other goods and services in order to save for health care. This proposal would lead ind ividuals to save less prior to retirement. Federal payments for Medicaid would also be much smaller than currently projected. Most likely, the large reduction in federal payments would require states to minimize payments to providers, reduce eligibility fo r Medicaid, provide less coverage, or pay a larger share of the cost of health care for Medicaid beneficiaries. 64 The CBO further estimates that a private health insurance plan that covers the standard bene fits for Medicare beneficiaries would be more expe nsive than the current Medicare program. Average spending in traditional Medicare is 11% less than the spending that would occur if that same package of benefits were from a private insurer. The average beneficiary would spend more for health care under th e Ryan Plan than under the current Medicare program. Private plans not only cost more than traditional 62 Ibid., 15. 63 Ibid.. 64 Ibid., 19.
38 Medicare, but the government's contribution would also grow slower than health care costs, producing further costs for beneficiaries. 65 Overview Overal l, the Ryan Plan, while still not fully a developed will cause major changes to Medicaid, Medicare, CHIP, and to the Affordable Care Act. The Ryan Plan can be considered a plan that was constructed solely for political purposes, not one that will ever be put into place. The major alterations from the status quo take place within Medicaid and Medicare. The federal share of all Medicaid payments w ould be handed out in the form of block grants to states. Additionally, Medicare beneficiaries who are currently under the age of 55 years of age would receive a standard Medicare payment to be used towards purchasing private health insurance. In ten years the Ryan Plan would provide only $8,000 to individuals per year to purchase private health insurance. Thus, it is clear that the Ryan Plan would have a number of effects on individuals and their health care services. Medicare beneficiaries would have to withstand a much larger share of their health care costs than under the current Medicare system. While the Ryan Plan attempts to deal with health care costs by switching the burden of the cost from the government to the individual, it does not deal with th e core problems of the health care system in the United States. 65 Ibid., 21.
39 FLORIDA'S HEALTH CARE SYSTEM Florida w ith its large population and the Florida Medicaid Reform Pilot Program has gathered some significance in the health care debate. The Florida Agency fo r Health Care Administration (AHCA) was created by Chapter 20 of the Florida Statutes as the main health policy and planning entity of Florida. It is chiefly responsible for the administration of the Medicaid program in Florida that serves about three mill ion Floridians. Also, it is responsible for the state's 41,000 health care facilities and the coordination of health care data through the Florida Center for Health Information and Policy Analysis. 66 Medicaid, which is a partnership between the states and t he federal government, is run in Florida under a state plan that is approved by the federal Centers for Medicare and Medicaid Services (CMS). Florida is attempting to alter the manner in which the Medicaid program is administered in the state in order to p ay fewer costs f or the service Florida's Medicaid Reform While Florida has implemented a Medicaid Pilot Program in the state it is still unclear as to wha t benefits this has produced, if any. 67 Florida's Medicaid Reform is an 66 Florida Agency for Health Care Administration, About the Agency for Health Care Administration ," AHCA, http://ahca.myflorida.com/Inside_AHCA/index.shtml (accessed November 26, 2011). 67 Health Poli cy Institute, "Medicaid Changes: What will they mean for Broward and Duval Counties, and Beyond," Georgetown University, September 2006, under Assessing Florida's
40 all inclusive demonstration that attempts to improve Medicaid's delivery system. In 2006, Florida began a pilot program that would offer Medicaid rec ipients coverage through private insurance plans. Beneficiaries now must choose between managed care plans that are prov ided in their counties. However, only five counties are currently part of the reform program. The program is operated under 1 115 Research and Demonstration Waiver approved by CMS on October 19, 2005. The pilot program was first implemented in Broward and D uval Counties on July 1, 2006, and the program has subsequently expanded to Baker, Clay, and Nassau Counties. Eligible beneficiaries choose one plan from a variety of plans offering different benefit packages. The state than pays a premium amount that is a djusted for the age, sex, and the health status of each beneficiary. Thus, the program shifts critical decisions about people's access to medical services from the government to private insurance companies. 68 Although the implementation of such a reform seems straightforward, the structure of the reform is rather complicated. Children and pregnant women will continue to be assured a comprehensive benefits package. In the pilot countries, Medicaid beneficiaries will be required to choose from a variety of health plants that are taking part in the new health care system. If they do not make a choice, the state will automatically assign them to one of the private health insurance plans. Plans have the ability to structure the benefit packages for non pregnan t adults in a manner that best suits them. Medicaid Reform, http://hpi.georgetown.edu/floridamedicaid/pdfs/briefing1.pdf (accessed Nov ember 24, 2011). 68 Ibid..
41 Medicaid benefits, such as prescription drugs, physical therapy, and medical equipment can be limited under the adjustable plans. However, plans are also able to add some specific extra benefits that were not prov ided under Medicaid prior to the pilot program. Another prime feature of the reform is the construction of Enhanced Benefits Accounts to encourage enrollees to participate in healthy behaviors. Under the program, parents are able to take their child to wel l child visits, or partake in a we ight management program, and the n receive credits for such things as bandages, aspirin, and dental floss. Families are able to receive up $125 a year in credits if their plan endorses that they are eligible. Also, benefici aries will be able to opt out of the program and utilize their premium for employer sponsored or other private coverage of their choice. Fortunately, a choice counseling system has been constructed by the state to assist beneficiaries in selecting the most appropriate plan for t heir specific health care needs 69 Changes for Beneficiaries The beneficiaries of Medicaid in the reform counties will incur a number of changes to their coverage. The pilot program enrollees are no longer allowed to enroll in MediPass. MediPass is a primary care case management program that reimburses providers on a fee for service basis with only some coordination by a primary care physician. Beneficiaries in this case are not constricted to the narrow network of a particular plan. Additionally, i ndividuals, who are either enrolling in Medicaid or re enrolling after losing coverage, will only be entitled to emergency services until the plan 69 Ibid..
42 is carried out. Finally, everyone will encounter some alterations to their networks of p roviders, as plans are continuously conferring with hospitals, doctors, clinics, and others in order to formulate their networks. 70 In particular, adults, other than pregnant women, will experience a number of modifications in their coverage. Adults will be constrained by a n ew annual maximum benefit limit of $550,000. A maximum benefit limit has never been in place in the Medicaid program nationwide. While this limit might only affect a few individuals, it is still unfortunate that Florida looks to imple ment an annual maximum limit. Additionally adults will experience significant variation concerning their benefit plans. Services that are considered mandatory under the original Medicaid program are also deemed mandatory under the new reform system. O ther benefits that are not considered mandatory can be limited and varied among the plans offered. However, the value of the benefits package must satisfy the actuarial equivalency test, which means that the dollar value of the benefit package should be equal to the value of the prior Medicaid benefit package of the average individual. Plans still have flexibility concerning the limit of medical equipment, home health services, outpatient hospital services, and prescription, but they must satisfy the equivalenc y test overall. 71 70 Ibid.. 71 Ibid..
43 Overview It is clear that the Medicaid reform program has brought some major changes to the state health care system in Florida Medicaid enrollees in the specific counties will now have to choose between private insurance plans. The state pays a premium that is adjusted for the age, sex, and health status of each beneficiary. The beneficiaries of Medicaid in the reform counties will experience a number of alterations to their coverage. One o f the major alterations is that there will now be an annual limit which may come into affect if individuals gather more than $550,000 worth of expenses in one year. Additionally, while there are mandatory benefits, individuals may witness some great disti nctions between what plans offer. The Medicaid reform program will be analyzed further in the upcoming chapters as the issues and politics behind such a program come to light. Also, while Florida may not be planning to implement the Affordable Care Act, it will soon have to tackle the new additions to the Medicaid pr ogram. CHAPTER CONCLUSION The United States health care system is clearly in need of some alterations, as people are suffering from increased technological costs and medical drug costs. While health care costs are clearly rising at an alarming rate, th e number of uninsured individuals is also increasing. Outrageous costs coupled with no insurance or inadequate insurance can lead to shocking levels of debt for individuals who are not able to pay such bil ls. In some cases, individuals are cutting back on retirement savings and vacations because of the inflating health care costs. Finally, the growing elderly population, which
44 consumes a great portion of health care services, is yet another strain on the current system of the United States. However, the Aff ordable Care Act attempts to curb the increases in health care costs, while insuring all Americans. Families and individuals who have been unable to afford health care insurance will receive insurance, as well as better health care services. The Affordable Care Act attempts to alter the health care system in a manner that not only insure s all but offers better health care outcomes through the usage of preventive health care services. However, as Democrats placed the Affordable Care Act into law Republicans may have felt that it was necessary to construct a health care reform proposal of their own. The Ryan Plan truly alters Medicaid, Medicare, CHIP, and the Affordable Care Act. The Ryan Plan's major modifications take place within Medicaid and M edicare. The federal share of all Medicaid payments would be given out in the form of block grants to states. Furthermore, Medicare beneficiaries under the plan would only receive an established Medicare payment to utilize towards purchasing health care in surance. Although Republicans have endorsed this plan in the political arena, it seems that it might be for only political reasons. Republicans and Democrats both map out decisions on health care in a manner that they anticipate will benefi t them in the po litical arena. However, the states will play a fundamental role in the implementation of health care reform in the United States. As was discussed in this chapter, the Affordable Care Act attempts to mend some major probl ems with the health care system; however, the states will actually be implementing most of these provisions and managing reform. Thus, it becomes important to analyze the issues and concerns that are facing the Affordable Care Act, especially at the state level. As Florida is a state wit h a significant population of
45 elderly and uninsured individuals, it can be helpful to see how Florida can implement the Affordable Care Act. While Florida has implemented its own Medicaid reform program in some counties, it is of value to see how Florida c an combine the health care reform system with the implementation of the Affordable Care Act. Also, other states have implemented their own reforms and have begun to implement the Affordable Care Act. Thus, Florida can learn to alter its health care system by analyzin g the examples of other states.
46 CHAPTER 2 HEALTH CARE CONCERNS AND ISSUES INTRODUCTION As discussed in Chapter 1, the Affordable Care Act seems to provide the health care system with much needed change. The problems facing the health care sy stem in the United States are becoming incre asingly overwhelming for policy makers. Change must occur at the state level as well as the federal level, an d that is ultimately, what the Affordable Care Act is attempting to accomplish. Historically health care system changes have occurred gradually over large periods of time. Thus, as policymakers at both the federal and state level look to implement reform t hey must be aware of concerns and issues that are relevant to the discussion. The constitutionality debate of the Affordable Care Act must be analyzed carefully, as many states have already begun implementation and the decision brought down by the Supreme Court may drastically affect them. Also, it seems that the constitutionality of the Act has become somewhat of a political maneuver against beginning implementation. Policymakers at the federal level must have a backup plan ready, just in case the Supreme Court finds some part of the Act unconstitutional. Furthermore, policymakers at the state level must be aware of how reform is affecting their citizens, especially in a state such as Florida which has many uninsured individuals Florida's Medicaid reform program must be analyzed closely and the concerns and issues
47 facing the reform program must be taken into account. States are fundamentally worried about the cost of reform in the state, but as will be discussed in later chapters, the federal government co vers most of the increased cost. Lastly, policymakers at the federal level must be aware of state concerns, as they are ultimately implementing a large portion of the reform. Without the states working to implement the Act, health care reform will be unsuc cessful. However, it seems that states' main claims against the Affordable Care Act will be unable to stop the implementation process. Concerns and i ssues regarding the development of adequate policy have arisen in the United States health care debate. Numerous problems concerning the constitutionality of the health care law passed have been debated There have been a number of decisions brought down relating to the constitutionality of the Affordable Care Act by district judges. These district judges ha ve come down with opposing rulings, as some judges believe that the individual mandate is constitutional while some believe that the constitution does not provide Congress with such powers as to create an individual mandate. Naturally, the constitutionalit y of the individual mandate is an extremely important factor in the debate. The Supreme Court has agreed to hear a challenge to the Affordable Care Act in 2012, which allows them to issue a decision by late June. 72 The Supreme Court decision should be deliv ered just in time for the key 2012 presidential campaign months. Thus, the Supreme Court decision will definitely influence the presidential campaign in some manner. While the constitutionality of the Affordable Care 72 Adam Liptak, "Justices to Hear Health Care Case as Race Heats up," The New York Times November 14, 2011.
48 Act has been a main challenge and issue there are other concerns and issues that have been recognized. Some states are fundamentally worried that the Affordable Care Act will place more of a burden on state budgets, which are already facing financial turmoil. Governors in a number of states ha ve spoken out against the Affordable Care Act, claiming that it places an overwhelming burden on the state. For instance, in Florida Governor Rick Scott has continuously condemned the Affordable Care Act. Florida's state legislature is attempting to disregard the passage of the Affordable Care Act until it no longer can ignore its' existence. However, while analyzing the Affordable Care Act, it seem s that states will actually save money by enforcing the provisions Most of the claims brought against the Affordable Care Act seem to be untrue, and just a political maneuver by the states. Furthermore, while there are concerns and issues surrounding th e passage of the Affordable Care Act and the national health care system there are concerns and issues surrounding the Medicaid Reform program in the state of Florida. The main concern surrounding the Medicaid Reform program is that it allows private heal th insurance companies to provide the services provided by Medicaid. Thus, it is difficult to discern whether or not allowing private health insurance companies to control services is cost effective. People are skeptical about whether contracting out to pr ivate insurance costs more money. Additionally, the question of whether or not individuals are receiving equal and adequate health care under the plans has become of importance. Individuals are worried that private health plans don't provide them with equa l coverage as under the conventional Medicaid program. Hence, there are many concerns not only with the Affordable Care Act, but concerning the reform program in Florida. As the Affordable
49 Care Act becomes law, further questions concerning the implementati on of the law will begin to appear. CONSTITUTIONALITY The constitutionality of the Affordable Care Act has been one of the main issues brought up when analyzing the A ct. Opponents of the Affordable Care Act have directed their attention to the federal courts in order to challenge the constitutionality of the legislation. The central point of contention is located with the individual mandate provision, which requires th at all legal r esidents of the United States purchase at least minimum essential health insurance coverage for each month. This provision, which goes into effect in 2014, states that individuals who refuse to purchase the health coverage will pay a penalty that will be included in the individual's federal tax return. While there have been a number of constitutional arguments concerning this provision, there are four main issues that have been recognized. The main constitutional argument is whether the indivi dual mandate is a permissible exercise of Congress's powers under the Commerce Clause in Article 1 of the constitution Also, whether the individual mandate is permissible under Congress's powers to tax for the general welfare in Article 1 of the Constitut ion and whether it is permissible under the Necessary and Proper Clause in Article 1 of the Constitution. Lastly, if the individual mandate is found to be an impressible exercise of Congress's power, it has been questioned as to whether or not the
50 mandate can be taken out of the legislation, leaving the rest of the Act's provisions in place 73 Thro ugh the analysis of the different constitutional arguments, it seems that the Supreme Court will most likely side with President Obama and the Affordable Care Act. While this analysis does not provide definitive answers, it does provide some insight into the defense of the indiv idual mandate. No one can be certain as to what the Supreme Court ruling will be on the individual mandate, but it seems that by looking at precedent there is a strong case for upholding the individual mandate. The Individual Mandate and the Commerce Clause While analyzing the Commerce Clause a nd the individual mandate, i t is important to look at the Commerce Clause and what powers th is clause provides Congress The Supreme Court has maintained that the Commerce Clause provides Congress with three regulatory groupings, which includes the regulation of the channels of interstate commerce, the regulation and protection of the instrumentalities of interstate commer ce and of persons or things in interstate commerce, and lastly, the regulation of activities that substantially affect interstate commerce Most important, it is the last regulatory grouping that has come into play with the individual mandate provision. In the past, Congress has sketched a clear line as to what it views as Congress going to o far in an effort to regulate non economic activity. For instance, in United States v. Lopez the Court ruled that Congress could not prohibit possession of a firearm wi thin a school zone 73 Healthcare Financial Management Association, "Legal Challenges to the Affordable Care Act," u nder "Health Care Reform," December 15, 2010, http://www.hfma.org/Templates/InteriorMaster.aspx?id=24263 (accessed January 3, 2012).
51 under the Commerce Clause, as it could not regulate non economic activity. Additionally, in United States v. Morrison Congress's efforts at utilizing the Commerce Clause to supply a federal civil cure for victims of gender motivated vio lence was struck down as it was viewed as an effort to regulate non economic activity However, the constitutionality of the individual mandate provision will be concluded mainly from the interpretation of two crucial Commerce Clause precedent cases, Wicka rd v. Filburn and Gonzales v. Raich In Wickard the Supreme Court held that Congress was able to regulate the production of home grown wheat that was solely for personal use under its Commerce Clause power. The Court established that even though Filburn's activities were local, taken in the aggregate, the activities could have a significant effect on the national market for wheat. Wickard v. Filburn exemplifies the high degree of Congressional power. Furthermore, in Gonzales v. Raich the Supreme Court det ermined that Congress, under the Commerce Clause, was able to prohibit the possession of homegrown marijuana intended solely for personal use, even when state law allowed such possession As with the Wickard case, the Raich Court established that the produ ction of marijuana in one state could affect the supply and demand in the national market. Therefore, in both cases the Court found that the regulation was within Congress' commerce power, and issued a wide ranging and broad reading of Congress's p ower und er the Commerce Clause 74 However, no case has ever erected the question of whether Congress can force an 74 Mitchell Fuerst and Andrew Ittleman, "Patient Protection and Affordable Care Act Challenges Often Turn on Interpretation of the Court's Commerce Clause Jurisprudence," Fuerst Ittleman Blog, entry posted September 20, 2011, http://www.fuerstlaw.com/wp/index.php/20/patient protection and affordable care act challenges often turn on interpretation of the courts commerce clause jurisprudence/ (accessed January 3, 2012).
52 individual to purchase a good or service available in the market, even a regulated market as under the Affordable Care Act. 75 One of the main focuses of the Affordable Care Act cases is how to represent the decision not to purchase insurance coverage. While the government contends that the healthcare market is unique in that nobody can permanently opt out of the market, one question still remains. How will an individual decide to pay for the expenses that are incurred through the market? Will they pay t hrough health insurance, out of pocket payment, or refuse to pay thus funding it through third parties through cost shifting in the health care market? The judges who have upheld the constitutionality of the individual mandate hold that an individual's dec ision not to purchase health insurance is an economic decision that can influence the health care market. In Thomas More Law Center v. Obama Judge George Caram Steeh wrote that, "by choosing to forgo insurance plaintiffs are making an economic decision to try to pay for heath care services later, out of pocket, rather than now through the purchase of insurance, collectively shifting billions of dollars... onto other market participants 76 Thus, it is to no surprise that Judge Steeh rejected the argument th at the Commerce Clause cannot be utilized to persuade people to purchase health insurance because that would be regulating inactivity 77 It is 75 Katherine Hayes and Sara Rosenbaum, "Legal Challenges to the Affordable Care Act," Health Reform GPS December 14, 2010, http://healthreformgps.org/resources/health reform and the constitutional challenges (accessed January 3, 2012). 76 Healthcare Financial Management Association, "Legal Challenges to the Affordable Care Act." 77 Bara Vaida and Karl Eisenhower, "Scoreboard: Tracking Health Law Court Challenges," Kaiser Health News, November 14, 2011, http://www.kaiserhealthnews.org/Stories/2011/March/02/health reform law court case status.aspx (accessed January 3, 2012).
53 clear that by not purchasing health insurance individuals are affecting the health care market, as many choose not to pay for services, which in turn only raises the prices for individuals that are willing to pay. While there are cases in which the constitutionality of the individual mandate has been upheld, there are judges who view the individual mandate as unconstitutional. However, these arguments seem to be lacking enough substance. These judges argue that the Supreme Court precedent on the Commerce Clause requires an economic ac tivity for Congress to regulate and that t his activity must call for some form of voluntary action. They hold that the Affordable Care Act's individual mandate requires an unwilling person to perform an involuntary act and thus, cannot be formed under the Commerce Clause. In Commonwealth of Virgin ia v. Sebelius Judge Henry E. Hudson argued against the individual mandate as an unconstitutional exercise of congressional power, breaking off the individual mandate and penalty from the Affordable Care Act, however, leaving the rest of the Act together. Judge Hudson, from U.S. District Court, Eastern District of Virginia, found that no power under the Commerce Clause for Congress "compels an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market." Additio nally, Judge Vinson from State of Florida v. U.S. Dept. of Health and Human Services found that the constitutionality of the mandate relies on whether or not a decision not to buy health insurance can be considered an "activity," and determined that "the individual mandate seeks to regulate economic inactivity, which the very opposite of economic activity." Furthermore, Judge Vinson held that health care does not represent a unique market, as held by supporters of the provision and the Act. Judge Vinson wrote "Uniqueness is not an adequate limiting principle [with respect to
54 Congress's Commerce Clause powers] as every market p roblem is, at som e level and in some respects, unique." Additionally, he wrote that "if Congress asserts power that exceeds its enumerated powers, then it is unconstitutional, regardless of the purported uniqueness of the context in which it is being asserted 78 Clearly, t hese district court decisions have varied concerning the constitutional challenge of the individual mandate in the Affordable Care Act. Congress's Powers to Tax and the Affordable Care Act Additionally, the government cites Congress's extensive powers "to lay and collect Taxes, Duties, Imposts and Excises, to....provide for the...general Welfare of the United States 79 The tax argument provides the government with another source of congressional authority to implement the individual mandate as w ell as the penalty. Also, the tax argument provides the g overnment with an argument under the Anti Injunction Act, which states "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against who such tax was assessed." The government could argue that under the Anti Inj unction Act challenges to the individual mandate are forbidden presently. A number of the courts that upheld the constitutionality of the individual mandate thus far have found that it was not necessary to determine Congress's power to impose the individua l mandate and penalty under its tax authority. These courts determined it was 78 Healthcare Financi al Management Association, "Legal Challenges to the Affordable Care Act." 79 U.S. Constitution, art. 1, sec. 8.
55 unnecessary to determine because they already established that Congress has full authority to act under the Commerce Clause. However, in Thomas More Law Center v. Obama Judge St eeh maintained that the government did not possess authority to apply the Anti Injunction Act to bar a lawsuit since there was no effort by the IRS to collect. Additionally, in Liberty University, Inc. v. Geithner Judge Moon notes that Congress did not de monstrate that it was exercising its taxing authority to apply the penalties Judge Moon maintained that the Anti Injunction Act was not relevant as the individual mandate involved regulatory penalties not taxes. 80 According to some federal judges, the individual mandate and penalty are not authorized by Congress's taxation powers. However, one recent law journal article, truly exemplifies the degree to which the individual mandate can be seen as constitutional under Congress's pow ers of taxation. While reading the individual mandate provision, it is true that the failure to obtain insurance is called a "penalty" in some places. However, the claim that only a statute labeled as a "tax" can be defended under the taxing power is not true. Actually, the Supreme Court has held that is the effect of a statute as a tax that determines whether Congress can invoke its taxing power. For instance, the Supreme Court determined that a federal requirement to obtain a license to engage in certain immoral activities was in fact within Congress's taxing power. In this instance, the word "tax" was not used, just as with the individual mandate. The Florida district court's claim that if Congress does not use the word "tax," the enactment is not a tax is based on a logical fallacy. The logical fallacy known as denying the antecedent is present in this case, as even if it is not 80 Healthcare Financial Management Association, "Legal Challenges to the Affordable Care Act."
56 mentioned as a tax, it does not mean it is not a tax. Congress does not have to use the word tax in order to use its taxing po wer; this does not prove its intent. It seems that individual mandate can be considered an income tax, as those that are subject to the tax pay a percentage of their income. 81 Those without coverage pay a tax penalty of at least $695 and up to $2,085 per family or 2.5% of household income. 82 The individual mandate seems to be clearly constitutional by analyzing Supreme Court precedent. It seems that Republicans are using constitutional avenues just to unde rmine the Affordable Care Act. The Necessary and Proper Clause and the Affordable Care Act Closely associated with the Commerce Clause challenges are arguments that Congress has misused the Necessary and Proper Clause by requiring individuals to purchase health insurance. 83 The Necessary and Proper Clause provides Congress with authority to enact laws which are not formerly authorized by the Constitution's specific enumerated powers, but are "necessary and proper" to the exercise of those powers. 81 Brian Galle, The Taxing Power, The Affordable Ca re Act, and the Limits of Constitutional Compromise ," The Yale Law Journal 2011, http://yalelawjournal.org/the yale law journal pocket part/tax law/the taxing power, the affordable care act, and the limits of constitutional compromise/ (accessed January 4 2012). 82 Kaiser Family Foundation, "Summary of the New Health Reform Law," The Henry J. Kaiser Family Foundation, April 15, 2011, http://www.kff.org/healthreform/upload/8061.pdf (accessed January 8, 2012). 83 Matthew Bobby, Robert Greenwald, Alexandra Hur d, and Faina Shalts, "Constitutional Challenges to the Patient Protection and Affordable Care Act: Four Questions for the Supreme Court," under "Treatment Access Expansion Project," Harvard Law School Center for Health Law and Policy Innovation, December 2 011, http://www.taepusa.org/LinkClick.aspx?fileticket=BYlU7OsQ3eA%3D&tabid=41 (accessed January 28, 2012), 8.
57 Almost two hundred years ago, i n McCulloch v. Maryland the Court ruled that this provision must be presented with a broad reading, allowing any laws that are "convenient" or "rationally related" to the advancement of an express power. In McCulloch v. Maryland the Court protected Congr ess's production of a national bank, even if Congress was not provided the authority to create such a bank expressly in the constitution. A national bank was clearly related to Congress's other powers, such as its power to coin money, tax, and spend. Thus, some argue that the individual mandate is related to Congress's conceded power to regulate health insurance, and is "necessary and proper." The extensive reach of the Necessary and Proper Clause was further reaffirmed in 2010, when the Supreme Court uphel d a federal law authorizing civil commitment of federal prisoners who are sexual predators, although no provision authorizes Congress to do this. The Court concluded that the Necessary and Proper Clause authorizes even actions that are far removed from tha t power. 84 However, when looking at the context of the Affordable Care Act the question that appears is whether an individual mandate is necessary to assist in the regulation of the health insurance market. According to congressional findings and economic studies it seems that without the individual mandate the insurance industry wo uld most likely be unsuccessful under other provisions of the Affordable Care Act. Furthermore, the bar for which necessity is found under the Necessary and Proper Clause has not been set high in order for Congress to utilize its enumerated powers. The reg ulation under question should 84 David Cole, "Is Health Care Reform Unconstitutional," The New York Review of Books, January 27, 2011, http://www.nybooks.com/articles/archives/2 011/feb/24/health care reform unconstitutional/?pagination=false (accessed January 10, 2012).
58 be able to meet the necessity standard. However, individuals against the individual mandate seem to hold that it is not "proper" use of congressional powers. Economic mandates such as this one are extremely rare, and thus, som e argue that because it is unprecedented, it is therefore "improper". However, the bar for prosperity has been set ra ther low, and just because the individual m andate is unheard of, that reason on its own is not likely enough to cause it to be unconstituti onal. Mandates from Congress are scarce, but th ey are not unheard of. For instance, the Militia Act of 1792 required that men purchase goods that would help them prepare for a militia. Additionally, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) requires that landowners rectify certain environmental problems. The individual mandate is not likely to be found unconstitutional based on propriety either, however, many individuals may argue that it would 85 While the argument for utilizing the Necessary and Proper Clause seems strong judges have already ruled that the Necessary and Proper Clause cannot be used to validate the construction of the individual mandate. Judge Hudson from Commonwealth of Virginia v. Sebelius as wel l as Judge Vinson from State of Florida v. U.S. Department of Health and Human Services have rejected Congress's authority to pass the individual mandate and penalty under the Necessary and Proper Clause. Judge Hudson declared that "because an individual's decision to purchase or decline to purchase health insurance from a private provider is beyond the historical reach of the Commerce Clause, the 85 Bobby, Greenwald, Hurd, and Shalts, "Constitutional Challenges to the Patient Protection and Affordable Care Act," 8 9.
59 Necessary and Proper Clause does not provide a safe sanctuary." Judge Vinson goes on to proclaim that "the Necessary and Proper Clause cannot be utilized to pass laws for the accomplishment of objects' that are not within Congress' enumerated powers." On the other hand, Judge Kessler from Mead v. Holder has found that Congress has the full authority to constru ct the individual mandate under not only the Commerce Clause but the Necessary and Proper Clause as well. 86 Of course, this is another subject that has been contested in the courts and has not produced a universal answer. Severability of the Individual Ma ndate from the Affordable Care Act The last constitutional question that remains, is if the individual mandate is found unconstitutional is that provision severable from the rest of the Affordable Care Act. Severability is the test utilized by a court t hat determines whether the full act has to fail, if one part is found unconstitutional Can the rest of the Affordable Care Act provisions be carried out if t he individual mandate is found unconstitutional ? When determining whether a provision is severable, a court looks into whether the statue is "a bundle of legislative enactment(s)" or a "carefully balanced and clockwork like statutory arrangement comprised of pieces that all work towa rd one primary legisl ative goal 87 The Affordable Care Act does not possess a severability clause, which leaves the decision of severability mainly up to the courts The test which is used to determine severability is composed of two parts Initially the court looks into whether the remainder of statute 86 Healthcare Financial Management Associ ation, "Legal Challenges to the Affordable Care Act ." 87 Bobby, Greenwald, Hurd, and Shalts, "Constitutional Challenges to the Patient Protection and Affordable Care Act," 9.
60 could be fully operative as a law, without the unconstitutional provision. Additionally, the courts must look into Congress's intent regarding severability. In es sence, what are the thoughts of the Le gislature regarding severability of the individual mandate? 88 A number of judges have ruled that the individual mandate is severable, however, one judge has ruled that it is not severable. For instance, Judge Hudson ruled that individual mandate is sever able and cited a Supreme Court precedent from 2010. In Free Enterprise Fund v. Public Company Accounting Oversight Board, the Supreme Court wrote that "general speaking, when confronting a constitutional flaw in a statute, we try to limit the solution to t he problem,' severing any problematic portions while leaving the remainder intact.'" Judge Conner additionally ruled that individual mandate provision is severable, but he maintained that some provisions must also fail along with the individual mandate. S ince the individual mandate is heavily connected with two provisions these provisions must fail as well. The provisions are the provisions preventing health insurers from denying coverage on the basis of pre existing conditions and the "community rating" provision, which prevents insurers from varying rates founded on location, gender, or health status. In contrast to Judge Hudson and Judge Conner, Judge Vinson ruled that the individual mandate is not severable from the remainder of the Act. Judge Vinson n oted how Congress acknowledged how essential the individual mandate is to the Act's overall goal. Judge Vinson applied a different precedent when determining the severable of the individual mandate, Ayotte v. Planned Parenthood of Northern New England Judge Vinson found that since the individual mandate was intertwined with 88 Ibid., 10.
61 many other provisions directly and indirectly, the courts could not attempt to draw a line in the Act, without invading the legislative domain 89 While the Supreme Court is left to d ecide whether or not the individual mandate is constitutional, if found unconstitutional, the Supreme Court will have to determine how essential the individual mandate is to the rest of the Act. Constitutional Overview A number of decisions have bee n handed down concerning the constitution ality of the individual mandate in the Affordable Care Act. Judges had to rule on a number of different constitutional issues and concerns regarding this mandate. On the next page, Table 2.1 displays all the court cases that have dealt with the Affordable Care Act and their current status. The judges have handed down decisions concerning the Affordable Care Act and the commerce clause, Congress's powers to tax, the Necessary and Proper Clause, as well as the severability of the individual mandate. The decisions concerning the constitutionality of the Affordable Care Act and the individual mandate have been conflicting. However, there are strong arguments for acceptin g the constitutionality of the individual manda te and the Affordable Care Act. 89 Healthcare Financial Management Association, "Legal Challenges to t he Affordable Care Act ."
62 Table 2. 1: Affordable Care Act Cases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obby, Greenwald, Hurd, and Shalts, "Constitutional Challenges to the Patient Protection and Affordable Care Act," 16 20.
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`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
64 =)59//!01! 4*3*?95' L1R1!2Q?&1 8141!($/9$.!/$! R9'%9''!79?*:`! &,&9/9.A!>$5)/! :*>9'9$. -$%%*)>*!-?&5'*!&.:!/#*! 9.:909:5&?!%&.:&/* Y)E&./!01! N$?:*) 41R1!(9''1 45%%&)E! D5:A%*./! %$/9$.'!:5*! M*3)5&)E!K'/ KO/#!H%*.:%*./B!X/#! H%*.:%*./!/&Q9.AB!7)**:$%! $7! >$./)&>/B!9.:909:5&?!%&.:&/*!&'! 5.>$.'/9/5/9$.&?!:9)*>/!/&WB! 7*:*)&?9'% -&?0*E!01! 23&%& a1R1!2Q?& 45%%&)E! D5:A%*./! 3)9*79.A S*?9A9$5'!7)**:$%B!K'/! H%*.:%*./B!*]5&?!6)$/*>/9$.`! :5*!6)$>*'' H''^.!$7!H%1! =#E'9>9&.'!&.:! 45)A*$.'!01! 4*3*?95' R1R1-1 8141! ($/9$.!/$! R9'%9''!79?*:`! &,&9/9.A!>$5)/! :*>9'9$. -$%%*)>*!-?&5'*!&.:!/#*! 9.:909:5&?!%&.:&/*B!G*.*)&?! a*?7&)*!-?&5'*B!:9)*>/!/&W*' Y$E?*!01! 4*3*?95' -1R1!-&?1 -$%6?&9./!79?*: \/#!H%*.:%*./B!-$./)&>/'! -?&5'* H.:*)'$.!01! 23&%& !"#$"!%&'# ()*+,& # !/*#$0 I :9 '%9''*:!&.:! >*)/1!:*.9*: 4*6&)&/9$.!$7!6$,*)'B! $)9A9.&/9$.!>?&5'*B! 39>&%*)&?9'%!&.:!6)*'*./%*./ (&>Q*.Z9*!01! 4#**. !"#$"!%&'# ()*+,& # !/*#$0 I :9'%9''*: 456)*%&>E!>?&5'*`!'/&.:9.A 4#)**0*!01! 23&%& !"#$"!%&'# ()*+,& # !/*#$0 I :9'%9''*:B!.$! '/&.:9.A KO/#!H%*.:%*./B!-$%%*)>*! -?&5'*!&.:!/#*!9.:909:5&?! %&.:&/* Y5)?',$)/#!01! N$?:*) !"#$"!%&'# ()*+,& # !/*#$0 b! :9'%9''*:!3E! 6?&9./977'! 0$?5./&)9?E H./9 I J.D5.>/9$.!H>/B!-$%%*)>*! -?&5'*!&.:!/#*!9.:909:5&?! %&.:&/*B!G*.*)&?!a*?7&)*! -?&5'*B!KO/#!H%*.:%*./B! G5&)&./**!-?&5'* Y5)?',$)/#!01! N$?:*) !"#$"!%&'# ()*+,& # !/*#$0 b! :9'%9''*:!3E! 6?&9./977'! 0$?5./&)9?E H./9 I J.D5.>/9$.!H>/B!-$%%*)>*! -?&5'*!&.:!/#*!9.:909:5&?! %&.:&/*B!G*.*)&?!a*?7&)*! -?&5'*B!KO/#!H%*.:%*./B!
65 G5&)&./**!-?&5'* 4$??&)'!01!S*9: !"#$"!%&'# ()*+,& # !/*#$0 b! :9'%9''*:! ,9/#$5/! 6)*D5:9>* 4/&.:9.A Y*??$,!01!NN4 !"#$"!%&'# ()*+,& # !/*#$0 b! :9'%9''*:B!.$! '/&.:9.A -$%%*)>*!-?&5'*!&.:!/#*! 9.:909:5&?!%&.:&/*B!KO/#! H%*.:%*./B J.:909:5&?! %&.:&/*!&'!5.>$.'/9/5/9$.&?! :9)*>/!/&WB!6)90&>E =*/*)'$.!01! 8.9/*:! 4/&/*' !"#$"!%&'# ()*+,& # !/*#$0 b! :9'%9''*:B!.$! '/&.:9.A -$%%*)>*!-?&5'*!&.:!/#*! 9.:909:5&?!%&.:&/*B!J.:909:5&?! )9A#/' J.:*6*.:*./! H%1!=&)/E!$7! P*0&:&!01! 23&%& !"#$"!%&'# ()*+,& # !/*#$0 b! :9'%9''*:B!?&>Q! $7!'*)09>*!$7! 6)$>*'' -$%%*)>*!-?&5'*!&.:!/#*! 9.:909:5&?!%&.:&/*B!9.:909:5&?! )9A#/' M$5./&9.!N9??'! "*&!=&)/E! =&/)9$/'!01! 4*3*?95' !"#$"!%&'# ()*+,& # !/*#$0 b! :9'%9''*:B! 7&9?5)*!/$! 6)$'*>5/* -$%%*)>*!-?&5'*!&.:!/#*! 9.:909:5&?!%&.:&/* While opponents and defenders of the individual mandate, have battled it out in court, the Supreme Court will ultimately decide its fate in 2012. The Supreme Court will hand down a decision just in time for the Pr esidential Election of 2012, ma king it an i mportant election decision. President Obama will either be able to hail the Affordable Care Act as constitutional or he will have to come out with a plan that leaves out the individual mandate. However, in analyzing Supreme Court precedent it seems that the individual mandate should be found constitutional. It seems that Republicans and
66 Republican state leaders are using a constitutional argument in order to undermine the Affordable Care Act. FINANCIAL BU RDEN Many individuals have proclaimed the Affordable Care Act a burden on the state even though it bec omes clear with further reading that this is not the case In many states, state officials have spoken out against t he Affordable Care Act and the e ffe ct it will produce on their state. For instance, Lt. Governor Mary Taylor, who serves as director of Ohio Department of Insurance, has strongly opposed the Affordable Care Act. He has stated, "The Patient Protection and Affordable Care Act would be a great title if it actually protected patients or made health care more affordable. The trouble is, President Barack Obama's health insurance plan does neither." Additionally, Taylor has implied that covering more people under Medicaid is not a good thing. 91 Wisc onsin Governor Scott Walk er h as also been a prime opponent of the Affordable Care Act. Governor Walker rejected $37 million from the federal government to reform health care in Wisconsin. Governor Walker stated that he was informing the federal government that Wisconsin was turning down the Early Innovator Grant since it did not make sense to reform something "that could have a devastating eco nomic impact However, it seems that Allison Miller the Wisconsin government relations director for the American Cancer 91 Cathy Levine, Lt. Governor Swings at the A ffordable Care Act and misses," Universal Health Care Action Network of Ohio July 4, 2011, http://uhcanohio.org/content/lt governor swings affordable care act %E2%80%93 and misses (accessed January 8, 2012).
67 Society disagreed with Governor Walker. Miller stated that, "A robust, consumer friendly health exchange designed specifically for Wisc onsin would greatly expand access to care to those who need it most, while preserving what already works. It's unfortunate the administration is deciding to ignore this reality." Clearly, it seems that individuals in different states disagree about the pot ential impact of the Affordable Care Act and whether or not it will possess a positive impact. 92 Additionally, Governor Ri ck Scott of Florida has turned away large sums of money in opposition of the Affordable Care Act. Governor Scott has been an unwaveri ng foe of the Obama administration's health care bill, turning away more than $37 million dollars that would have assisted disabled individuals in Florida and others as well. Scott stated that, "the state should never accept money for programs that create dependency and aren't sustainable over the long term." However, Floridians can expect to experience the Affordable Care Act's insurance reforms regardless of state cooperation as the federal government has set up a high risk insurance pool for states that have not created it on their own. Currently, the high risk pool is providing insurance to 2,381 Floridians who have pre existing conditions that previously made coverage unattainable. Also, about 78,000 young adults are now eligible for coverage through t heir parents' health plan in the state of Florida, and there are 250,000 seniors who have obtained rebate checks and are receiving medication discounts as a result of exceeding their Medicare drug benefit and falling into the "doughnut hole." However, the last word on whether or not Florida 92 William, Wisconsin Governor Scott Walker Rejects $37 Million To Reform Health Care ," Alan Colmes Presents Liberaland January 19, 2012, http://www.alan.com/2012/01/19/wisconsin governor scott walker rejects 37 million to reform health care/ (accessed January 29, 2012).
68 has to obey the law does not stand with Governor Scott but with the courts. 93 Furthermore, in Chapter 4, it will become clear that states will not be placed under a great financial burden, as the federal government is pa ying for the majority of the expansion and provisions. State governments will have to pay more, since Medicaid will be expanded greatly, however, this cost is not worrisome. Unfor tunately, the looming question is what affect the refus a l to implement the Af fordable Care Act will have on the state of Florida. Health care reform in states can be considered in three separate parts, as states must establish one or more health insurance exchanges, expand Medicaid and conduct health insurance regulatory reform. The implementation of all necessary components of health care reform necessitates policy making, planning, resource allocation and infrastructure development by the state. States manage most features of hea lth insurance coverage that is sold to individuals as well as small businesses. The largest changes to health care in the United States will become effective on January 1 st 2014, which means that there are only a few years left for states to finalize all t he work. Many states have already begun preparing themselves for the full implementation of the Affordable Care Act, Florida being one of the few states not taking any action. Not only has Florida refused to acknowledge the act and the necessary activities but also the state has declined a large amount of federal funding that othe r states are welcoming. Florida's refusal to deal with the Act has cost the state millions of dollars in federal funding, and that total 93 Stacey Singer, Gov. Scott, federal officials at odds over Affordable Care Act ," The Palm Beach Post November 26, 2011.
69 could reach hundreds of millions if the st ate remains resistant. Other states that have taken part in the legal challenge acknowledge that the likelihood that the entire law is brought down is low, and these states have been getting ready to implement the act, even if they do not agree with it. Th ese states recognize that inaction could endanger needed benefits to families and businesses, which federal dollars are willing to fund. Florida still has pl enty of time to complete the tasks that are required in order to implement the Act by 2014. However the state will face only more challenges as time continues to dwindle, the governor as well as the legislature will have to step up in order to bring the Act to life in the state. In order to guarantee that coverage, subsidies, and other necessary tools are in place by 2014, Florida must have its exchange federally certified by January 1, 2013. States can continue to apply for federal funding for the construction of the exchange, but that deadline is soon approaching as well and currently stands at July 2 012. The legislature needs to pass legislation that will permit the required coordinated interagency planning and groundwork laying 94 While much more must be done for Florida to implement the Affordable Care Act, it will be further discussed in Chapter 4. State Concern Overview Many states are clearly willing to work with the federal government towards the full implementation of the Affordable Care Act, however, there are still a few states that 94 Florida Center for Fiscal and Economic Policy, "Already a Lap Behind: A Closer Look at Florida's Refusal to Implement the Affordable Care Act," under "Publications," November, 2011, http://www. fcfep.org/attachment s/20111117 -Already%20A%20Lap%20Behind.pdf (accessed December 8, 2011).
70 are truly reluctant to begin any sort of implementation. The elected officials in these states have spoken out against the Act, and in many cases against the President as well The states have claimed that the Affordable Care Act would be a great burden on the state financially, but ther e are also the states tha t have refused federal funding. The Governor of Florida has clearly spoken out against the Affordable Care Act numerous times, and he has also refused any federal money that goes with implementation. However, if the Act is found constitutional (which it mo st likely will be) Florida and any other reluctant states will have to scramble to implement the Act. Of course, this will lead to some controversies as it is always best to have as much time as possible to implement something as important as health care. State officials will have to put aside their differences and carry out what is best for the citizens of their state. While the issue of constitutionality and the financial burden issue have continuously been brought to light by the states, it seems that bo th of these issues lack much substance. The Supreme Court by looking through precedent should uphold the individual mandate and the Affordable Care Act. However, if any portion is found unconstitutional it w ill be the individual mandate, with the rest re maining intact. The constitutional argument by the state s is interesting especially after determining that conservatives originally produced the individual mandate idea The individual mandate is not a liberal idea but was brought to life by Republicans. FLORIDA REFORM PROGRAM CONCERNS The state of Florida, while clearly not willing to implement the Affordable Care Act yet, has created the Medicaid reform program, which has raised a lot of concerns
71 independently. As states begin implementation of the Affordable Care Act, states such as Florida with a Medicaid reform program in place, must decide how to coordinate their reform with the Affordable Care Act provisions. When analyzing the waiver there are some key conc erns that present themselves in the state of Florida. There are both financial concerns as well as concerns regarding the effective provision of services in such a large state as Florida. While analyzing the first two years of reforms in counties that are taking part, Georgetown University's Health Policy Institute was able to uncover some issues with the reform program. However, the University of Florida might have found some positive financial affects from the reform program, but the results are still ver y debatable. However, there seems to be numerous negative findings that have been uncovered after the construction of the reform program. Financial Impacts While looking at the financial side of the reform, it is difficult to determine the full extent o f the financial consequences concerning the reform. In a 2008 study by Georgetown, the financial impact was hard to distinguish. T he financial alterations have been phased in over time, with some parts not yet experiencing financial changes. For instance, Provider Service Networks are still being p aid on a fee for service basis, while only HMOs thus far have been reimbursed on a "per person, risk adjusted basis," without regard to the actual cost of services. The risk adjustment system calculates the health status of each enrollee and adjusts appropriately the per person rate that HMOs obtain. Thus, until risk adjusted per person payments are completely situated, it is too early and too difficult to determine the extent of financial benefits, if any. Also, a s margins narrow
72 and plans begin to feel as if reimbursement is not sufficient they may begin to curb benefits. 95 Furth er more, since 2008, Georgetown has further looked at the financial consequences of the reform program, but has concluded that there is no t enough data available. 96 The University of Florida has also conducted some research into the financial impact of the Medicaid reform program. The study found that Medicaid expenditures in Broward and Duval Counties were lower on a per member per month (P MPM) basis during the first two years of the reform. Additionally, the study found that while both individuals in Health Maintenance Organizations and Provider Service Networks had lower costs, the savings were greater among Provider Service Network enroll ees. However, the University of Florida itself has made it clear that there are great limitations to the study of fin ancial impact. First off, the University of Florida was not able to distinguish whether the lower expenditures were attained through more e fficient provision of care or by a reduction in access and utilization of care. This is of course one of the most important questions that comes out of the reform program, as there should not be a reduction in access or care. Also, at the time o f the repor t there was only data 95 Health Policy Institute, "Florida's Experience with Medicaid Reform: What Has Been Learned in the First Two Years," Georgetown University, October 15, 2008, h ttp://hpi.georgetown.edu /floridamedicaid/pdfs/briefing7.pdf (accessed October 10, 2011). 96 Health Policy Institute, As Legislators Wrestle to Define Next Generation of Florida Medicaid, Benefits of Reform Effort Are Far From Clear ," Georgetown University, April 2011, http://hpi. georgetown.edu/floridamedicaid/pdfs/Medicaid_Reform_FL_2011.pdf (accessed October 10, 2011).
73 available from the first two years of the demonstration, restricting the amount of eval uation that could be conducted 97 Choice and Information Impacts While it is still unclear whether the Medicaid reform program has cut costs in the state, there have been some worrying findings. F irst off, there seems to be a g ap in beneficiary knowledge of the reform program in the counties. According to findings from the Kaiser Family Foundation survey of reform enrollees in Broward and Duval co unties, about 30% were not aware of being enrolled in a reform program. Also, about one in five did not know that they could choose between health plans under the reform, one in three did not know that plans differed, and over half did not know that they h ad choice counseling services available to them. 98 Furthermore, focus groups with beneficiaries conducted by the Georgetown University Health Policy Institute discovered that some enrollees had not even received the state's informational mailing about the reform and did not know they had to choose a health plan. 99 Focus groups even with the University 97 Medicaid Reform Evaluation, An Analysis of Medicaid Expenditures Before and After Implementation of Florida's Medicaid Reform Pilot Demonstration ," University o f Florida, under "Publications," June 2009, http://mre.phhp.ufl.edu/publications/An%20Analysis%20of%20Medicaid%20Expenditures%20B efore%20and%20After%20Implementation%20of%20Floridas%20Medicaid%20Reform%20Pilo t%20Demonstration.pdf (accessed October 7, 2011) 98 Kaiser Commission on Medicaid and the Uninsured "Summary of Florida Medicaid Reform Waiver ," The Henry J. Kaiser Family Foundation, October 2008, http://www.dhcs.ca.gov/provgovpart/Documents/Waiver%20Renewal/Florida%20Medicaid%20 Reform%20Waiver%20Oct2 008%20(2).pdf (accessed November 12, 2011), 4. 99 Ibid..
74 of Florida study found that beneficiaries often had inadequate information about the Medicaid reform. 100 Even as enrollees do not seem to have much information on the reform program, it has been determined that there was a 65% voluntary plan selection rate among reform enrollees during the first year. This rate is among newly applying individuals and not the rate among existing Medicaid beneficiaries who were mo ved into the reform program. However, the Kaiser survey in Broward and Duval counties found that out of existing Medicaid beneficiaries the voluntary selection rate was at about 56%, with 44% being assigned a plan by the state. Also, the Kaiser survey that was conducted in these counties found that many people found it difficult to determine what plan to choose and difficult to understand the information available on the plans. Even more troubling, about a third of respondents said it was not easy to obtain plan information, and about one in five said that they had tried to get help finding health plan information but were unable to. Other analyses found that benefic iaries in Florida were having a difficult time understanding plan information as well as acqu iring it. Georgetown University found that some beneficiaries were not able to comprehend crucial diff erences in the plans and that some were extremely frustrated with the complexity of plan choices and benefit packages. 101 The information may have been a li ttle ove rwhelming for some individuals. Additionally, beneficiary focus groups and interviews from the University of Florida evaluation discovered that choice counselors were not a key source of information for beneficiaries. 100 Ibid.. 101 Ibid., 4 5.
75 It seems that the state must a ttempt to correct some of the informational problems that are present and build on the information that is available for plans. 102 The Kaiser survey a l so uncovered some other concerns with enrollees as at least one in five of reform enrollees had at least one health literacy problem and over one in three had an ongoing health condition. Health literacy problems were more widespread among disabled reform enrollees and about all disabled reform enroll ees had some sort of ongoing health condition. Not surprising these attributes put people at a disadvantage when having to choose a plan. Health literacy problems can hinder an individual's ability to comprehend plan information and an individual with hea lth problems may find it difficult to identify the right plan for them. Individuals must determine what plan covers all needed services, prescription drugs, and providers that they need, which can often be a daunting task. Furthermore, as enrollees in Medi caid have low incomes, it is important that they enroll themselves in a plan that meets all their needs, as they do not have other resources to pay for any uncovered needed care. 103 Provider Participation Provider participation was yet another challenge for the Medicaid program in Florida and nationwide. A goal of the Medicaid reform in Florida was to improve access to specialists. However, it seems that provider participation in Medicaid declined as the pilots began to be implemented. In 2008, the questi on of whether provider participation 102 Ibid., 5. 103 The Kaiser Commission on Medicaid and the Uninsured, "The Uninsured, a Primer."
76 improved was re examined in a survey. It seems that provider participation is somewhat better, but physicians departing from Medicaid are still outnumbering those that are coming in for the first time in the reform coun ties. While analyzing the respondents to the 2008 physician survey, there is 10 percent net decline in the pool of physicians serving Duval and Broward counties Medicaid beneficiaries. For instance, n early one fourth of physician s who participated in Medic aid before the reform reported that they are not in the networks of any reform plans. However, it seems that the departures were somewhat offset by new physicians coming in, but what is worrying is that most of the doctors that dropped out were specialists 104 A troublesome 69% of physicians that are leaving are specialists, while only 31% of those that are leaving Medicaid are non specialists. 105 Thus, the question is what is the source of concern for physicians in the Medicaid reform program. The increased administrative burden and low reimbursement rates seem to be some of the key factors causing the changes in physician participation. Before the implementation of the reform program in Duval County, physicians told Georgetown researchers that they were dissatisfied with the low reimbursement levels in Medicaid, but liked the fact that Medicaid was a quick payer, making it easier on them. However, since the reform has materiali zed, physicians as well as patients are worried about the complexity of the Medicaid program. Physicians in the state seem to believe that the payment for services has worsened under the reform program in Florida. One respondent to the 2008 physician surve y stated that, "Reimbursement is too low for the increased 104 Health Policy Institute, "Florida's Experience with Medicaid Reform," 4. 105 Ibid..
77 work required by physicians and staff to care for these often complex and very ill patients ." While another respondent is worried about the costs of the reform program stating that, "I continue to participate in Medicaid because, as a pediatrician, I feel it is ethically necessary to provide services to all children. 106 The reform has actually cost us money due to the loss of the $3 per child per month, which MediPass paid." Furthermore, physicians be lieve that the paperwork for paying claims has only worsened under the reform. The level of paperwork that is required under the reform program disheartens a number of physicians and claims that go back more than a year are still unpaid in some instances. 107 Many of these physicians did not face these problems under the traditional Medicaid program, which is only more worrisome. The state of Florida needs to take into consideration the affects the reform is having on physicians as well patients. Access to Services Concerns Another w orrisome concern is the impact of reform on patients' access to needed services. It seems that physicians are reporting an increase in problems associated with access to needed services. In 2008, two thirds of surveyed physicians reported that "some" or "many" of their patients are having difficulty with access to needed treatments. The difficulty with access is coming from the plans, which limit their benefits or require prior authorization that has not been received, and is ofte n very difficult to receive. In the 2008 focus groups beneficiaries where able to describe their own experiences with 106 Ibid., 5. 107 Ibid..
78 getting needed services. Several beneficiaries found that their plan provider lists were incorrect or inadequate. Access to dentists was one of the largest concerns. One Broward participant found it particularly difficult to find a dentist that participated in Medicaid. That Broward participant stated that, "When I call up my insurance, they give me a list of dentists and clinics.Half the numbers they give you are disconnected or don't take insurance They'd give me 50 numbers and maybe three of them work." However, some beneficiaries had more positive stories to tell regarding access to care. One woman found it was easier to find a psychia trist under the Medicaid reform than under traditional Medicaid. 108 Beneficiaries experience with acquiring referrals for specialists seem s to be as inconsistent as with access to services. One beneficiary in Broward County said that "referrals are the num ber one problem.Two of the doctors that I was seeing are no longer in the network.[So you] wait weeks for referrals." However, a mother in the county reported that it was easier for her to receive a specialist's referrals for her child after she switched plans. Additionally, some beneficiaries were having problems with physicians that were ultimately affecting their health. The mother of a child with cerebral palsy reported that, "My son was going to have surgery the doctor found out that it was on refor m and said that he wouldn't perform it after reform, because they wouldn't reimburse him what the surgery costs. And it took me so long to find this wonderful doctor." While the doctor in this case did end up performing t he surgery, the doctor did 108 Ibid., 4 5.
79 not prov ide the follow up care. Of course, this occurrence might be relatively rare, but it is still something that is worrisome and should be taken into consideration. 109 Overview of Florida Reform Concerns The main concerns that are present in Florida have to deal with the financial impact of the reform, the information available to individuals and their choices, provider participation rates, and concerns surrounding access to services. The Medicaid reform program in Florida has been in place for years, and has produced some rather conflicting results. It's not clear whether the reform program is successful or a failure as there is often too little information available. Georgetown University as well as the Universi ty of Florida have looked into the financial impact of the reform, but the results are rather unclear. The University of Florida did f ind some positive financial impacts of the reform, but it is still unclear whether it is due to the more efficient provisi on of care or just because of a reduction in access and utilization. Furthermore, there are some serious choice and information concerns that have come up in the counties that the ref orm is taking place in. Many beneficiaries in these counties are still n ot aware of the reform program, and are often provided a plan by the state. While there was a 56% voluntary selection rate among existing Medicaid beneficiaries, that still means that 44% of beneficiaries are having plans assigned to them by the state. Fur thermore, it seems that even when beneficiaries have plan information available to them, they are often finding that the task of choosing a plan is daunting. 109 Ibid., 6.
80 Beneficiaries are often unsure as to what plan best fits their individual needs. Additionally, it seems that physicians are having problems with the reform program in these counties. While some physicians are coming into the program it still does not offset the number of physicians leaving Medicaid in these reform programs. Physicians are having to dea l with great administrative burden and low reimbursement rate. These factors are among the key reasons for physicians not willing to deal with Medicaid altogether. Finally access to services, especially access to dental services, has been rather diff icult The problems with access to health care stem from the plans, which often limit their benefit s or require authorization. It is clear that the state of Florida needs to take into consideration the concerns of individuals and providers in these counties. Fl orida must decide what it n eeds to do in order to improve reform in counties, and hopefully, reach successful reform status. CHAPTER OVERVIEW As policymakers look to improve the health care system they must take into account the concerns and issues that have become intermingled with notion of reform in the United States. The states are claiming that the Affordable Care Act is unconstitutional an d that it places a huge financial burden on the states. However, these two major claims against the Affordable Care Act seem to be unfounded. By analyzing precedent, t he Supreme Court will most likely uphold the constitutionality of the Act. However, just in case, President Obama and the U.S. Congress will have to figure out a way in which the rest of the Act can go on without the individual mandate if it is found unconstitutional
81 This could be a grueling task, as many of the stakeholders agreed to reform because of the reassurance that everyone must acquire coverage. This requirement would bring a lot more customers in to the health care system, even healthy, young citizens. Furthermore, it is i ronic that Republicans are declaring the individual mandate u nconstitutional even though they are the founders of the individual mandate. Thus, it seems that state claims against the Affordable Care Act are not truly grounded in noble arguments, as the Affordable Care Act is most likely here to stay. Thus, the quest ion now becomes why are states even bringing up these claims? What factors are playing a role in how states respond to the Act and to the reform implementation process? This question will be further analyzed in the next chapter.
82 CHAPTER 3 WHY HAVE STATES R EFUSED TO IMPLEMENT THE AFFORDABLE CARE ACT? INTRODUCTION Since the signing of the Affordable Care Act in early 2010, some states have largely refused to implement the provisions of the law. Many have claimed that there are constitutional i ssues, such as the ones discussed earlier. However, there are many questions that come about when analyzing the differences between states' reactions to the law. There has been significant discussion about how Republican state leaders are looking to not im plement the Affordable Care Act. These state leaders believe that Affordable Care Act places a financial burden on the state as was discussed in the previous chapter. Some leaders have refused federal grants for the e xchanges, and many Republican states ha ve questioned the constitutionality of the Affordable Care Act. At the federal level, Republican leaders in the House and Senate have attempted to repeal the Affordable Care Act, mainly through symbolic gestures. The GOP controlled House of Representatives repealed the Affordable Care Act in early 2011. However, the repeal did
83 not stand a chance in the Senate. 110 Thus, this move was largely a symbolic move by Republicans, as they stood against any reforms constructed by President Obama. Nevertheless, the larger question to ask is how do state politics play a role in the implementation of the Affordable Care Act. Also, if politics are not the only factor influencing the implementation of health care reform, what are other possible factors? Policymakers at the federal level must be aware of what factors are influencing states' willingness to reform their health care system. With awareness, policymakers may be better equipped to deal with states that have refused to implement the Act, such as Florida. State actions after all will determine whether the Affordable Care Act is successful in reforming the health care sy stem and holding costs down for future generations. Savings should be incurred once all provisions of the Act are in place. STATISTICAL ANALYSIS In order to analyze whether politics influenced a state's actions towards the implementation of the Affordable Care Act, non parametric statistical analysis was first utilized. However, the results of the non parametric tests were not precise, as more adva nced statistical tests are most likely needed in order to determine what is really going on. The non parametric tests were used to try to determine whether having a Republican or Democratic state Legislature or Governor was connected to the state's actions toward 110 David M. Herszenhorn and Robert Pear, "House Votes for Repeal of Health Law in Symbolic Act," The New York Times January 19, 2011.
84 implementation. Three state actions were included in the analysis. First, one of the actions was whether the state had created an entity to lead or assist in the implementation of the law. This was one of the first actions that most states took aft er the signing of the Affordable Care Act. These entities consisted of task forces, commissions, special committees, and boards, which are responsible for constructing recommendations on how to implement the different provisions. 111 It is rather difficult to determine whether this factor should be used since some states may not need to produce an entity, such as Massachusetts. Massachusetts already has a reformed health care system in the state. The second action that was considered is whether or not the stat e took some sort of action toward implementing an e xchange in their state. This action includes executive branch action, legislative action, pending legislation, as well as intent legislation. Finally, the last action that was included was whether the plan ning grant for exchanges was taken or not. The planning grant was refused by a number of states that clearly were against President Obama's form of health reform. The actions of all states are summarized in Table 3.1 Table 3.2 displays all state l egislatu re political party majorities as well as the political party of the Governor. 111 National C onference of State Legislatures, "2011 State and L egislative Partisan Composition, September 8, 2011, http://www.ncsl.org/documents/statevote/2011_Legis_and_State.pdf (accessed, February 4, 2012).
85 Table 3.1: State Actions I mplementing Affordable Care Act 112 113 STATE ENTITITES TO LEAD OR ASSIST IN IMPLEMENTATION ACTION TO IMPLEMENT EXCHANGE PLANNING GRANT FOR EXCHANGES TAKEN? Alabama No Yes Executive Branch Action Yes Alaska Yes Executive Branch Entity No No Arizona No Yes Executive Branch Action Yes Arkansas No Yes Executive Branch Action Yes California Yes Executive Branch Entity Yes Enacted Establishment or Intent Legislation Yes Colorado Yes Executive Branch Entity Yes Enacted Establishment or Intent Legislation Yes Connecticut Yes Executive Branch Entity Yes Enacted Establishment or Intent Legislation Yes Delaware Yes Executive Branch Entity Yes Executive Branch Action Yes District of Columbia Yes Executive Branch Entity Yes Legislation Pending Yes Florida No No No Georgia No Yes Executive Branch Action Yes 112 National C onference of State Legislatures, State Actions to Implement Health Insurance Exchanges under "Issues & R esearch," March, 2012, http://www.ncsl.org/issues research/health/state actions to implement the health benefit exch.aspx (accessed, March 11, 2012). 113 National C onference of State Legislatures, Health Reform State Implementation Entities under "Issues & Research," March, 2012, http://www.ncsl.org/issues research/health/state implementation entities to implement the aff.aspx (accessed, March 09, 2012).
86 Hawaii No Yes Enacted Establishment or Intent Legislation Yes Idaho Yes Legislative Entity No Yes Illinois Yes Executive Branch Entity Yes Enacted Establishment or Intent Legislation Yes Indiana No Yes Executive Branch Action Yes Iowa Yes Legislative Branch Entity Yes Executive Branch Action Yes Kansas No Yes Executive Branch Action Yes Kentucky No No Yes Louisiana No No No Maine Yes Executive & Legislative Entities Yes Legislature Created Study Entity Yes Maryland Yes Executive Branch Entity Enacted Establishment or Intent Legislation Yes Massachusetts No Enacted Establishment or Intent Legislation Yes Michigan Yes Executive Branch Entity Legislation Pending Yes Minnesota Yes Legislative Branch Entity Executive Branch Action Yes Mississippi Yes Legislative Branch Entity Legislature Cr eated Study Entity Yes Missouri No Legislature Created Study Entity Yes Montana Yes Legislative Branch Entity Legislature Created Study Entity Yes Nebraska No No Yes Nevada Yes Executive Branch Entity Enacted Establishment or Intent Legislation Yes New Hampshire Yes Legislative Entity No No New Jersey No Legislation Pending Yes New Mexico Yes Executive & Legislative Entities No Yes New York Yes Executive Branch Legislation Pending Yes
87 Entity North Carolina Yes Executive Branch Entity Enacted Establishment or Intent Legislation Yes North Dakota Yes Legislative Entity Legislature Created Study Entity Yes Ohio Yes Executive & Legislative Entities No Yes Oklahoma No No No Oregon Yes Legislative Entity Enacted Establishment or Intent Legislation Yes Pennsylvania Yes Executive Branch Entity Legislation Pending Yes Rhode Island Yes Executive & Legislative Entities Executive Branch Action Yes South Carolina No Executive Branch Action Yes South Dakota No Executive Branch Action Yes Tennessee No Executive Branch Action Yes Texas Yes Legislative Entity Executive Branch Action Yes Utah No Enacted Establishment or Intent Legislation Yes Vermont Yes Executive Branch Entity Enacted Establishment or Intent Legislation Yes Virginia Yes Executive Branch Entity Enacted Establishment or Intent Legislation Yes Washington Yes Executive Branch Entity Enacted Establishment or Intent Legislation Yes West Virginia Yes Executive Branch Entity Enacted Establishment or Intent Legislation Ye s Wisconsin Yes Executive Branch Entity Legislation Pending Yes
88 Wyoming Yes Executive Branch Entity Legislature Created Study Entity Yes Table 3.2: Party Identification of S tate Legislatures and Governors 114 STATE HOUSE OF REP. SENATE GOVERNOR Alabama Republican Republican Republican Alaska Republican Tied Republican Arizona Republican Republican Republican Arkansas Democratic Democratic Democratic California Democratic Democratic Democratic Colorado Republican Democratic Democratic Connecticut Democratic Democratic Democratic Delaware Democratic Democratic Democratic District of Columbia Florida Republican Republican Republican Georgia Republican Republican Republican Hawaii Democratic Democratic Democratic Idaho Republican Republican Republican Illinois Democratic Democratic Democratic Indiana Republican Republican Republican Iowa Republican Democratic Republican Kansas Republican Republican Republican Kentucky Democratic Republican Democratic Louisiana Republican Republican Republican Maine Republican Republican Republican Maryland Democratic Democratic Democratic Massachusetts Democratic Democratic Democratic Michigan Republican Republican Republican Minnesota Republican Republican Democratic Mississippi Republican Republican Republican Missouri Republican Republican Democratic Montana Republican Republican Democratic Nebraska Non partisan Republican 114 National C onference of State Legislatures, "2011 State and L egislative Partisan Composition.
89 Nevada Democratic Democratic Republican New Hampshire Republican Republican Democratic New Jersey Democratic Democratic Republican New Mexico Democratic Democratic Republican New York Democratic Republican Democratic North Carolina Republican Republican Democratic North Dakota Republican Republican Republican Ohio Republican Republican Republican Oklahoma Republican Republican Republican Oregon Tied Democratic Democratic Pennsylvania Republican Republican Republican Rhode Island Democratic Democratic Independent South Carolina Republican Republican Republican South Dakota Republican Republican Republican Tennessee Republican Republican Republican Texas Republican Republican Republican Utah Republican Republican Republican Vermont Democratic Democratic Democratic Virginia Republican Republican Republican Washington Democratic Democratic Democratic West Virginia Democratic Democratic Democratic Wisconsin Republican Republican Republican Wyoming Republican Republican Republican In order to determine whether having a Republican or Democratic state Legislature or Governor could have influenced the state's actions toward implementation of the Affordable Care Act, chi s quare was used as the non parametric statistical test. However, the results were all not signi ficant while utilizing a 95% confidence level. The p value only approached .05 twice, with a p value of .0802 and of a .0903. The p value of .0802 was approaching significance when looking at whether the House party was related to the state taking or retur ning the planning grant for the implementation of the e xchange. The p value of .0903 occurred while looking at whether a state's Senate party leaning was
90 related to the creation of an entity to lead and assist in the implementation process. Although the re sults did not di splay significance while using chi s quare, it is important to note that more advanced statistical tests are most likely needed in this case. Furthermore, some states may need to be taken out of the analysis, especially states that already h ave many of these measures in place. Thus, non parametric tests are most likely not the best method for determining what is going on in the United States and why states are reacting differently to implementation. Furthermore, it might be useful to includ e another factor other than whether a state created an entity to lead or assist in the implementation process. The creation of an entity might not be useful because states may already have another type of entity in place that will be in charge of implement ation. The political leaning of state leaders may still be an important factor to analyze further, however, with other more advanced forms of statistical analysis. In addition, non parametric statistical tests were used to determine whether other non political factors could be affecting the actions of states toward implementation. In this instance, the factors that were looked at included the number of insurance companies in a state, the number of uninsured in a state, and the number of physicians in a state. First off, the number of insurance companies and the number of physicians in a state were analyzed because a state with low numbers in those categories may be looking to increase their capacity to provide insurance and health care access. Thes e states may be more inclined to implement health care reform because they are looking to build the necessary health care infrastructure in the state. The number of uninsured in a state was used in order to determine whether a state with high levels of uni nsured individuals was
91 looking toward implementing the Act in order to lower that number. Table 3.3 displays the factors for each state included in the analysis. Table 3. 3 : Other Factors t hat May Influence State Actions 115 116 STATE NUMBER OF MAJOR INSURANCE COMPANIES/ RANK NUMBER OF PRIMARY CARE PHYSICIANS (PER 100,000 POPULATION)/RANK PERCENT OF INDIVIDUALS UNINSURED/ RANK Alabama 10 99.7/40 15.9/32 Alaska 8 111.5/28 17.6/40 Arizona 17 92.6/44 19/43 Arkansas 14 99.5/41 18.9/42 California 13 119/22 19.4/45 Colorado 15 116.7/25 13.8/24 Connecticut 10 164/6 11.1/9 Delaware 9 108.2/31 12.1/13 District of Columbia 7 330.2 12.4 Florida 16 109.7/ 30 21.3/48 Georgia 16 100.2/38 19.9/46 Hawaii 2 148.6/7 7.5/2 Idaho 8 77.7/50 17.2/36 Illinois 17 129.6/11 14.5/27 Indiana 15 102.5/36 13.6/21 Iowa 11 84.2/47 11.6/10 Kansas 11 102.4/37 12.8/15 Kentucky 9 104.2/35 15.4/31 Louisiana 13 117.9/23 17.2/36 Maine 2 129.3/12 9.7/6 Maryland 8 179.6/2 13.2/18 115 Go He alth, Health Insurance Plans by State ," Go Health Insurance, http://www.gohealthinsurance.com/insurance/states (accessed March 11, 2012). 116 America's Health Rankings, "The Rankings," United Health Foundation, 2011, http://www.americashealthrankings.org/Ra nkings (accessed March 11, 2012).
92 Massachusetts 4 191.9/1 5/1 Michigan 15 117.8/24 13/16 Minnesota 7 140.3/9 8.9/3 Mississippi 10 82.2/48 19.2/44 Missouri 16 106.8/33 14.3/26 Montana 8 100.1/39 16.6/34 Nebraska 14 119.6/21 12.2/14 Nevada 13 85.5/46 21/47 New Hampshire 3 131.7/10 10.1/7 New Jersey 4 142.8/8 15/30 New Mexico 11 113.9/27 21.3/48 New York 6 167/5 14.5/27 North Carolina 13 115.6/26 17.4/38 North Dakota 7 126.9/14 11.7/11 Ohio 18 121.2/19 13.7/23 Oklahoma 13 81.7/49 17.5/39 Oregon 10 126.9/14 16.8/35 Pennsylvania 16 127.8/13 11/8 Rhode Island 2 168.2/4 11.7/11 South Carolina 14 104.6/34 18.7/41 South Dakota 11 110.5/29 13.1/17 Tennessee 14 122.4/18 14.9/29 Texas 17 95.6/42 25/50 Utah 8 88.4/45 13.9/25 Vermont 2 170.3/3 9.5/5 Virginia 14 126.8/16 13.4/20 Washington 6 124.6/17 13.2/18 West Virginia 12 107.2/32 13.6/21 Wisconsin 16 121/20 9.2/4 Wyoming 12 93.7/43 16.3/33 In order to examine how these factors may influence state actions on implementing the Act, the Mann Whitney U Test was used. The Mann Whitney U Test is another non parametric test, and thus, tests that are more advanced should be utilized before concrete conclusions can be made. While attempting to see whether any of these
93 factors were related to the actions that states took, only one analysis was significant and the re were no others that even approached significance. When analyzing whether the number of insurance companies in a state was related to the state creating an entity to lead or assist in the implementation process the p value was .0380. This means that the number of insurance companies in a state is related to whether or not a state creates an entity to lead or assist in the implementation process. However, this factor as stated above may not be one of the best ones to use. Also, this is the only test that comes out statistically significant among all the groupings. It seems that more advanced statistical methods are needed in order to fully grasp why states vary in their implementatio n actions. It does not seem to be as straightforward as to require non parametric tests. There are most likely other factors that must be considered while looking at how states react to implementation and in some instances, these factors may be related to only a few states at a time. CASE STUDIES Thus, it may be useful to use specific state case studies instead of statistical analysis, in order to gather more information about what is causing states to either implement the act or choose to ignore the provisions. While politics may be an important f actor to consider, there are other state specific factors that may be just as important, if not more vital. For the purpose of this project, four states will be analyzed more closely. Two of the states are larger states that have a larger population and a larger health care system as well. The other states chosen will be smaller states that are looking to
94 implement the Act. It is important to analyze both large and small states because states of different sizes may have different needs to consider in the he alth care arena. Larger states most likely already have a large health care infrastructure in place, while smaller states may be looking to expand their health care infrastructure. The cases chosen in this analysis also possess similar uninsur ed rates, wh ich provides a level of similarity However, it is important to note that even with these case studies, there are no definitive answers, as much more research is needed. Hypothesis Large states are influenced more by politics and the political leaning of the state leaders than smaller states, which have a number of factors influencing their implementation process. Case Selection Florida was selected as one of the large states to be analyzed further. Florida's population is estimated to be about 19,057, 542 in 2011, clearly distinguishing it as one of the larger states. 117 Florida also possesses a high percentage of uninsured individuals, with about 21.3% of Florida's population currently uninsured 118 The second large state that will be analyzed is Californi a. California possesses an even larger population than 117 U.S. C ensus Bureau, "Florida Quick Facts from the US Census Bureau, January 17, 2012, http://quickfacts.census.gov/qfd/states/12000.html (accessed February 10, 2012). 118 America's Health Rankings, "The Rankings: Florida," United Health Foundation, 2011, http://www.americashealthrankings.org/FL/2011 (accessed March 11, 2012).
95 Florida, with the 2011 estimate standing at about 37,691,912. 119 However, California also has a high level of uninsured individuals in the state, with about 19.4% of the population currently uninsured. 120 Another large difference between Florida and California is the political party leaning of the state leaders, as displayed in Table 3. 2. In Florida the state l egislature is predominately Republican as is the Governor. On the other hand, in California the l e gislature is largely Democratic and the Governor is a Democrat. This is a key difference between these two states that have begun the implementation process differently. Furthermore, two small states were chosen in order to determine what factors are infl uencin g their implementation process. North Dakota has a population of about 683,932 as of 2011. 121 Clearly North Dakota is a small state in comparison to Florida and California. Additionally, North Dakota has an uninsured rate of about 11.2% of the population. 122 North Dakota is also a Republican leaning state, with both the State House and State Senate largely Republican. North Dakota also possesses a Republican Governor. The other small state analyzed is West Virginia, with an estimated population of about 1,855,364. 123 While this number is a little more than North Dakota it is 119 U.S. Census Bureau, "California QuickFacts from the US Census Bureau," January 1 7, 2012, http://quickfacts.census.gov/qfd/states/06000.html (accesse d February 10, 2012). 120 America's Health Rankings, "The Rankings: California ," United Health Foundation, 2011, http:// www.americashealthrankings.org/CA/2011 (accessed March 11, 2012 ). 121 U.S. Census Bureau, "North Dakota QuickFacts from the US Census Bureau," January 7, 2012, http://quickfacts.census.gov/qfd/states/38000.html (accessed February 10, 2012). 122 America's Health Rankings, "The Rankings: North Dakota," United Health Foundation, 2011, http://www.americashealthrankings.org/ ND/2011 (accessed March 11, 2012 ). 123 U.S. Census Bureau, "West Virginia QuickFacts from the US Census Bureau," January 7, 2012, http://quickfacts.census.gov/qfd/states/54000.html (accessed February 10, 2012).
96 comparable. West Virginia also possesses a comparable uninsured rate of about 13.6% of the population. 124 However, just as with California and Florida, North Dakota has all Republican state leaders while West Virginia possesses all Democratic state leaders. As these four states are c learly different in respect to size and political leaning, their actions concerning implementation o f health care reform also vary. Table 3.4: Case Variation Democratic States Republican States Large States California Florida Small States West Virginia North Dakota FLORIDA AND CALIFORNIA: Large State Differences Florida, as mentioned beforehand, is a state that has been trying to reform the Medicaid system. However, it is also questioning the constitutionality of the Affordable Care Act and refusing to begin the implementation process. While Florida has completed a few tasks concerning implementation, it has largely lagged behind states in the implementation of insurance reform as well as the creation of the exchanges. State 124 America's Health Rankings, "The Rankings: Wes t Virginia," United Health Foundation, 2011, http://www.americashealthrankings.org/ WV/2011 (accessed March 11, 2012 ).
97 leaders have refused to take millions in federal funds for implementation of early provisions, as they believe the law is unconstitutional and will be stricken down by the Supreme Court. Currently, Florida is the lead plaintiff in the 26 state legal challenge against t he Affordable Care Act. Florida's Attorney General Pam Bondi argued in front of the Supreme Court that Congress's individual mandate requirement affects Americans' individual liberty. Additionally, Bondi has asked that the Supreme Court rule on whether the expansion of Medicaid and other provisions are an infringement on states' rights. 125 As was discussed in Chapter 2, there are numerous arguments for the constitutionality of the Affordable Care Act. However, Florida seems to be at the forefront of the argum ents against the Affordable Care Act. Florida's political leaders are clearly against the provisions of the Affordable Care Act, even though there are about 4 million Floridians without health care coverage, and about 156,000 live within Sarasota, Manatee and Charlotte counties. If the Supreme Court does overturn the health care law, uninsured individuals will lose their chances at getting access. As Geoff Simon, administrator of Sarasota's Intercostal Medical Group stated, It's great for those people w ho are healthy and feel they're having their rights imposed on if they're required to buy insurance. But it stinks for those people who have been denied coverage and are priced out of the current market." Also, it is important to note that about a quarter of the young and working age population in Florida is uninsured, while the national average sits comfortably below at about 18 percent. Some 125 Barbara Smith, Florida Has Much at Stake as Supreme Court Reviews Health Care Mandate ," Herald Tribune March 25, 2012.
98 of these individuals possess incomes that are well below what they need to purchase adequate health care coverage o r gather access to coverage. These are the same individuals that as they grow older and reach the age of Medicare eligibility, find themselves in need of the most expensive services as their health problems have worsened over time. 126 As most of Florida's leaders are adamantly against the Affordable Care Act for political reasons, this seems to have affected their willingness to pursue the implementation of provisions. Just by looking through the different bills that have either passed or failed to pass, it is clear that the Republican leaning Florida legislature is not doing much to further implementation. If anything the Florida legislature seems to be passing some symbolic legislation. For instance, in May of 2011 a bill passed both the House and Senate, that displays the Legislatures hostility towards implementation. The bill proposes a "State Constitutional amendment to prohibit laws or rules from compelling any person, employer, or health care provider to participate in any health care system, permit an y person or employer to purchase lawful health care services directly from health care provider, or permit health care provider to accept direct payment from person or employer for lawful health care services." Furthermore, the Florida Legislature failed t o pass a pending intent bill, which would display the state's intent to construct a state based health insurance exchange. The bill would have created a Legislative Study Committee to conduct further studies concerning state implementation and establishmen t, however, the bill is dead. Another bill that would require Florida's Agency for Health 126 Ibid..
99 Care Administration to implement the Medical Loss Ratio thresholds failed in the Florida Legislature as well. 127 These examples bring to light exactly how Florida's Rep ublican leaning Legislature has failed to really begin implementation, as is displayed in Graph 1, they have not taken any action t oward the implementation of an e xchange. Also, as displayed in Graph 1, the state of Florida has gone as far as refusing fede ra l planning grant money for the e xchange. It is clear that Florida, even with a large portion of uninsured residents and a state health care system in need of reform, possesses Republican leaders that are committed to not implementing reform. Unlike Flo rida, California has been eagerly implementing the provisions of the Affordable Care Act. California possesses both a Democratic leaning Legislature as well as a Democratic Governor that have been working toward implementing all the provisions in a timely manner. In comparison to Florida, California passed an establishment bill for the e xchange in 2010, while Florida has failed to do so even now. California was the first state to establish a state based exchange under the Affordable Care Act. The exchange i n the state of California will be housed under an independent state agency, which will be governed by a 5 member board, which have already been appointed. California, unlike Florida, has taken federal dollars to implement the exchange. California took the $1 million planning grant, $39,421,383 for the Level One 127 Natio nal Conference of State Legislatures, Federal Health Reform in the National Conference of State Legislatures State Legislative Tracking Database http://www.ncsl.org/issues research/health/health reform database 2011 2012 state legislation.aspx (accessed April 11, 2012).
100 Establishment Grant, and is taking a $5 million loan to establish the exchange. 128 Also, California has established priorities for the implementation of health care reform in California. They are looki ng to improve access to private health insurance, improve the quality and security of private health insurance, develop an exchange, and finally, focus on prevention and wellness. 129 Also, California is working towards the expansion of its Medicaid public he alth insurance program Medi Cal. Medi Cal, which was created in 1966, will be expanded to include the enrollment of the newly eligible adults produced under the Affordable Care Act. Unlike Florida, California is looking towards the implementation of even M edicaid expansion. They recognize that California's Medi Cal program will increase costs about $2 to $3 billion dollars. 130 However, California's leaders seem to hold the belief that the benefits of the Affordable Care Act are worth the costs. When analyzin g both Florida and California, they are about equal in terms of what problems their health care systems possess. They both possess a high percentage of uninsured individuals. Thus, a major section of their state population is in need of coverage and access to needed health care coverage. Also, in terms of health care infrastructure the states are comparable by looking at Table 3. When looking at the 128 National Conference of State Legislatures, "State Actions to Implement Health Insurance Exchanges." 129 California Health Care Reform, California Priorities for Implementing the New Federal Health Care Law ," CA.gov, http://healthcare.ca.g ov/Priorities.aspx (accessed April 7, 2012). 130 California Health Care Reform, Expanding Existing Public Insurance Programs Like Medi Cal to Cover More Lower Income Californians ," CA.gov, http://healthcare.ca.gov/Priorities/Expandingexistingpublicprograms.aspx (accessed March 31, 2012).
101 number of primary care physicians California possesses 119 primary care physicians per 100,000. While Florida possesses about 109.7 primary care physicians per 100,000 population. Additionally, when looking at the number of insurance companies already present in the states the numbers are again comparable. Florida possesses 16 major insurance companies in the sta te, while California has 13. Furthermore, California actually seems to possess better health outcomes in the state than Florida on a number of factors. For instance, California only possessed about 54 preventable hospitalizations in 2011, while Florida pos sessed 64 131 132 Thus, it would seem that Florida is in need of more access and a higher level of care than California. However, California is clearly the one implementing the Affordable Care Act and attempting to expand coverage and deliver more benefits, wi th a focus on prevention. However, it is important to note that much more research is needed in this area, as one cannot clearly determine what is occurring in these states and why they are acting in conflicting manners. However, the political leaning of t he state seems to at least be a factor that is influencing implementation. Even though further research is needed, it seems that politics are playing a role in these states, especially in Florida. The fact that Florida has a heavily Republican legislature and a Republican Governor seems to be playing some role in their reluctance to implement the Act. Furthermore, more research should be conducted on whether federal level politics is playing a role in how some states are choosing to deal with reform. State politics could be affected from above, as some 131 America's Health R ankings, "The Rankings: Florida. 132 America's Health Rankings, "The Rankings: California."
102 Governors as well as Legislatures may be dealing with party leaders that are highly involved at the federal level. After all, Republicans did win big in the 2010 elections, gaining a number of seats in the Se nate and a majority control of the House. Speaker John Boehner has called the health care reform law a "monstrosity" and has led an attack on the bill. 133 Additionally, Boehner has proclaimed that the money provided by the government to fund the health care bill are "slush funds". However, a "slush fund," defined as an unregulated fund often used for illicit purposes, is not properly used here as the funds are designated for programs set by the law, and Congress will see oversee the implementation of the bil l's implementation provision s 134 After statements, such as these, it should not be surprising that some states are refusing to take federal grants. Since any repeal of the Affordable Care Act cannot pass the Senate or be signed into law by President Obama, the House passed a repeal of the bill in 2011, largely as a symbolic gesture. In the 2010 elections, Republican candidates won 29 of 37 Governors' races, for a gain of ten. Republicans also gained control and influence in more state legislatures, 26 state legislatures to be exact. Democrats are only in control of 17 state le gislatures, with a loss of ten 135 In turn, many Republicans may be refusing to implement exchanges and other provisions as a sym bolic move. 133 Jonathan Oberlander, Beyond Repeal The Future of Health Care Reform ," New England Journal of Medicine 363 no. 24, (2010): 2277 79 134 Sabrina Eaton, House Speaker John Boehner labels money in health care bill "slush funds Politifact Ohio March 31, 2011, http://www.politifact.com/ohio/stateme nts/2011/mar/31/john boehner/house speaker john boehner labels money health car/ (accessed April 11, 2012). 135 John K. Iglehard, After Midterm Elections, Changes Are In Store ," Health Affairs 30, no. 10 (2011): 8 10.
103 Furthermore, party leaders at the federal level may be influencing the manner in which states implement the Affordable Care Act. For instance, Florida is known as a swing state, that is an important win in a Presidential Election. Thus, state leaders may be acting on the request of party leaders at the federal level that are looking to please the "conservative" base in Florida Florida's stand against the Affordable Care Act has gained national coverage and may be collecting Republican votes fo r the upcoming Presidential Election. After all it is important for Republicans to satisfy their base, especially in swing states that possess a large number of electoral votes. Florida has 29 electoral votes, and has largely been known as a "must win" sta te in Presidential Elections. 136 California is also a must win state for Democrats, and it is a big win. California possesses a whopping 55 electoral v otes, the most out of any state 137 California has been a Democratic voting state since the 1992 elections, w ith President Obama most likely winning the state again in 2012. 138 California has largely been leading the reform process in terms of progress, and seems to be enjoying some benefits as well. It is important to note that having a very Democratic Legislature and Democratic Governor seems to have influenced the level of progress that has been achieved. Party leaders are also most likely exerting some pressure on state leaders in states that have been known to be especially important and to be at the forefront of their policies. While 136 Tom Murse, Electoral Votes by State in 2012 ," About.com U.S. Government Info September 28, 2011, http://usgovinfo.about.com/od/thepoliticalsystem/a/2012 Electoral Votes By State.htm (accessed March 11, 2012). 137 Ibid.. 138 270 to Win, California Presidential Election Voting History ," http://w ww.270towin.com/states/California (accessed March 11, 2012).
104 much more research must be conducted in this area, it seems that this is a possibility that should be further considered. NORTH DAKOTA AND WEST VIRGINIA: United Small States While larger states seem to be influenced by political factors, smaller states, both Republican and Democratic, seem to be moving toward the implementation of the Affordable Care Act. Regardless of what party is running the state Legislature or Governorship, smaller state leaders seem to be willing t o move forward with health care reform. Political leaning of the state does matter but other factors seem to be playing a role as well in these states and in some instances, may be leveraging more pressure than politics. North Dakota, while a Republican le aning state, seems to be moving toward health care reform. In 2011, the legislature passed a law that requires the exchange to be further researched in order to determine that it is created no later than January 1, 2013 and that it is operational by Januar y 1, 2014. The bill states North Dakota's intent to construct a health insurance exchange. North Dakota's Insurance Commissioner and the Department of Human Services can adopt rules that are necessary or desirable to carry out the provisions that are neede d to construct the exchange. The commissioner along with the Department of Human Services is charged with providing the legislature with a progress report before October 15, 2012. A special legislative session will be called in
105 order to analyze their recom mendations and move toward a running exchange. 139 North Dakota also took the $1 million Planning Grant from the federal government. 140 Additionally, the legislature passed legislation that provides an information technology update of the Medicaid eligibility system in the Department of Human Services. This aspect is needed for a state run exchange in North Dakota. 141 Even as North Dakota is a Republican state, it only seems to be influenced by party politics to a certain extent. North Dakota did enact a law de claring that the new national health care law may be unconstitutional and that any provision forcing individuals to purchase health insurance would not be enforced. 142 However, this seems to have been just a largely a symbolic move by the state leaders, as t hey are still moving toward implementation in the state and they have taken federal dollars. They are not just refusing to take any money or even really acknowledge that the Act is going into affect. Unlike Florida, North Dakota seems to be at least realis tic about the implementation process and what needs to occur. Thus, the question becomes why is North Dakota cooperating to some extent and working towards implementation even though it is a Republican state. By analyzing other health care factors, it is s till unclear as to why exactly North Dakota is moving toward implementation, but there are a number of 139 Health Reform Source, "State Exchange Profiles: North Dakota," The Henry J. Kaiser Family Foundation, April 1, 2012, http://healthreform.kff.org/State Exchange Profiles/north dakota (accessed A pril 11, 2012). 140 National C onference of State Legislatures, State Actions to Implement Health Insurance Exchanges ." 141 Health Reform Source, "State Exchange Profiles: North Dakota." 142 Peter J. Smith, North Dakota Enacts Measure Nullifying ObamaCare ," Life Site News May 3, 2011.
106 possible factors that are influencing state policies. North Dakota may be in need of building a larger health care infrastructure but this is still debat able. It seems that North Dakota could benefit from bringing more major health insurance companies into the state. North Dakota only possesses 7 major insurance companies. However, when analyzing the number of primary care physicians in the state, North Da kota has a relatively high number of 126.9 per 100,000 population. This is actually higher than both Florida and California. Thus, North Dakota will most likely possess physician capacity to expand Medicaid. However, it may be that North Dakota recognizes the need for federal dollars at the state level. The gross state product for North Dakota currently stands at only about $39.9 billion, with only about .9 billion in the health care sector. 143 It is possible that North Dakota recognizes that they should tak e federal funds and begin implementation, that even if a portion of the Act is found unconstitutional a large portion of it will stand. President Obama will most likely formulate some sort of plan so that the Act can go on even without the individual manda te. North Dakota is a state that really would need grants and help from the federal government in order to expand access further. Furthermore, North Dakota is most likely not influenced or pressured by federal level politicians. It is not a swing state and it does not possess that many delegates. It is not a must win state, even though it is a Republican state. Also, it is important to note that North Dakota's actions are not widely in the media, except maybe in the state. Thus, North Dakota seems to be inf luenced by other factors that seem to hold a larger sway, 143 Christopher Chantrill, North Dakota State And Local Spending ," U.S. Government Spending, April 11, 2012, http://www.usgovernmentspending.com/North_Dakota_state_spending_2012 (accessed April 15, 2012).
107 than just political leaning. It is important to note again that further research is needed before this can be decisively determined. West Virginia is the other small state which will be included in the analysis, as it is a Democratic leaning state that is implementing the Affordable Care Act, but at the same time staying out of the political arguments. West Virginia only further displays that smaller states are seemingly moving toward implementati on for other reasons that are not political. Even though West Virginia is a Democratic state, it seems that other reasons are causing its movement toward implementation. First off, West Virginia has structured the exchange as a new entity that will stand w ithin the Office of Insurance Commissioner and it will be governed by a 10 member board. Furthermore, federal grants have been taken for the construction of the exchange. West Virginia has taken out a $1 million Planning Grant as well as a $9,667,694 Level One Establishment Grant. 144 First off, West Virginia in terms of the healthiest states in the United States is among the lowest, with a current ranking of 41 in the 2011 rankings. 145 Some of the most prevalent challenges facing West Virginia, in terms of health care, are dealt with to some degree in the Affordable Care Act. West Virginia has a high prevalence of obesity and diabetes as well as a high rate of preventable hospitalizations. 146 The Affordable Care Ac t does try to tackle preventable hospitalization through prevention and wellness provisions. As discussed earlier, the act creates a 144 National Conference o f State Legislatures "2 011 State and Legislative Partisan Composition ," September 8, 2011, http://www.ncsl.org/documents/statevote/2011_Legis_and_State.pdf (accessed October 20, 2011). 145 America's Health Rankings "The Rankings: West Virginia." 146 Ibid..
108 number of new programs and benefits connected to preventive care and services. There are a number of wellness programs and nutritional information requirements that can help with the obesity and diabetes numbers in the state. For instance, chain restaurants will now be required to disclose calories on menu boards. 147 Furthermore, individuals with diabetes under reform will be a ble to find affordable health care coverage, as they were often unable to gather insurance because of diabetes as a pre existing condition. Preventable hospitalizations will likely decrease under reform, as individuals are able to get needed access and car e before they become extremely ill. By decreasing preventable hospitalizations West Virginia will witness savings, as hospitalization is very expensive and these individuals usually do not possess health care insurance. Thus, it seems that West Virginia ma y have been influenced by other factors when looking at the implementation process. Regardless of being a Democratic state, West Virginia will benefit from the provisions included in the Act. Overview While it seems that state policies are influenced by the political leaning of state leaders, especially if the state Legislature is run by either Republicans or Democrats and what party their Governor belongs to, this might not always be the case. However, its important to note that much more research is ne eded before it clearly be determined what is causing states to act in a certain manner. Also, it is not as clear cut as being a large 147 The Henry J. Kaiser Family Foundation, Summary of New Health Reform Law ," April 15, 2011, http://www.kff.org/healthreform/upload/8061.pdf (accessed October 20, 2011), 11.
109 state and a smaller state. Some smaller states may be clearly against the Affordable Care Act, even though they would bene fit from its implementation. The political leaning of a state is always going to influence the actions of its leaders in some manner; it is just that some factors may outweigh politics. It seems that larger states are influenced to a greater extent by poli tics and possibly even federal level politics. For instance, Florida's leaders are at the forefront of arguments against the Affordable Care Act. Florida's Legislature and Governor are working to put an end to the Act and are questioning a number of provis ions. Furthermore, they have largely refused to implement any reforms, and this seems to be largely due to the political leaning of the leaders. Since Florida is a large state and a swing state Republicans may be using the Affordable Care Act and argument s against it as a way to reach their "conservative" base. Politicians and political party leaders at the federal level may be influencing the actions of the state. While on the other hand, California, as a Democratic state has become a leader in the implem entation process. California is a strongly Democratic state and has vote d Democratic since the 1992 in presidential e lections. If California succeeds in the implementation process and begins witnessing benefits, it may bring support to the Democratic Party as well as the Affordable Care Act. It is likely that federal level political leaders are working with California's leaders in order to increase support for the bill. California stands as the embodiment of the Democratic stance on the Affordable Care Act, while Florida's stance on the Act represents directly the wishes of the Republican Party as a whole. In analyzing the smaller states it seems that while politics may be influencing them, other factors may be more important. North Dakota enacted a law t hat stated a part of the bill might be unconstitutional and that the individual mandate would not be
110 enforced in their state. However, North Dakota has continued on the path of implementation concerning the exchange as well as other reforms. It seems that other factors are at play in North Dakota as it is a Republican state. However, it is unclear as to what exactly is the factor or if it is a combination of factors leading to the implementation of reform. North Dakota is after all a small state with not a lot of money, and the federal government is offering to pay for a major amount of the reform. West Virginia is another small state that has been moving forward in the process but is Democratic. Obviously, all Democratic states are moving forward in the pro cess, but it seems that even in these states politics only play a minor role. West Virginia is not a very healthy state, and it has a lot to gain from the implementation of the Act in the state. Even if West Virginia were Republican, it would be surprising if it did not move on with implementation, as it is a small state that does not receive a lot of countrywide media exposure. However, in all these cases, a lot more research is needed in order to determine why states are acting either against or for imple mentation. While politics seem to play a role, the role seems to be larger in larger states than smaller states. CHAPTER CONCLUSION While the statistical analysis performed in this chapter did not fully determine much, it is important to reco gnize that more advanced forms of tests must be performed. It is not as simple as it may be perceived to determine whether politics are playing a role at the state level. Policymakers could benefit from recognizing why states are acting in certain conflict ing manners, but more research must be conducted. Even with the case
111 studies, it seems that politics are playing some role in the implementation process, but the political leaning of a state seems to influence larger states more than smaller o nes. In larg er states, federal level political leaders may be influencing the state leaders, as their actions influence other elections. Furthermore, larger states can gain countrywide media exposure by being at the forefront of the arguments against reform. For insta nce, Florida may have riled up conservative voters in the state as well as other states. Smaller states are not as important to the political parties and even if they implement some type of law against the Affordable Care Act, it remains just as a symbolic bill. North Dakota continued its implementation process even after calling a part of the Act unconstitutional. Also, North Dakota seems to not have received nearly as much media coverage as Florida. Smaller states are able to remain in the background. Eve n Democratic states such as West Virginia seem to have other factors influencing their implementation. West Virginia is possess es major challenges that may be resolved through the implementation of reform. The Affordable Care Act seems to solve many of the problems facing the state. While this may be the case, much more research is needed even with using case studies. Researchers may need to look at more states in order to come to an unwavering conclusion. However, it is important to determine why states ar e acting in conflicting manners, especially as they play a significant role in the reform process and will determine whet her or not reform is successful.
112 CHAPTER 4 HOW STATES CAN IMPLEMENT THE AFFORDABLE CARE ACT INTRODUCTION While many believe that the Affordable Care Act creates a federal government takeover of the health care system, this is simply not the case. State policies as well as implementation practices will be of great importance to health care reform. Ultimately, state actions will determine whether the federal health reform law translates into actual savings more affordable coverage and greater access. State action will determine whether or not health care reform is successful in the United States. States are to play an especially crucial role in the creation of insurance exchanges, Medicaid expansion, and the new market rules concerning insurance. However, states have other responsibilities and options beyond these important requirements that will determine the extent of reform in the state. Thus, the question of how states can implement the law is of great importance. States will have to look at a number of factors when considering how they should go about bringing reform to life. What issues might they run into during the process of implementation? What are the options available to states? How can states be successful in implementation? Ultimately, who will lead the implementation process and will added revenue be needed? Will administrative capacity need to be strengthened? Even after implementation, what are some issues that might become prevalent? These are
113 all fundamentally important questions that states must be asking themselves in the early years of the implementation process. However, first states must re cognize what requirements the Affordable Care Act places on the states as well as what options and federal funding are available. While Chapter 1 discussed some of the details of the Affordable Care Act and the provisions that would be carried out by the s tates. The details of these provisions will be discussed below. States will often find that meeting the requirements put forth by the reform will be challenging. However, many states have been working towards improving the health care system in their sta te long before the federal government began reform. States have extended coverage to specific populations, such as low income children and working adults. Also, states have constructed systems to help bring services to vulnerable populations, such as child ren with special health care needs and people with disabilities. Additionally, many states have already started the process of streamlining enrollment systems, this helps states decrease their administrative costs and it makes it easier for individuals to receive the assistance that they are eligible to receive. States are implementing the provisions of the American Recovery and Reinvestment Act of 2009, which relate to health information technology. Thus, through the years, states have a lready taken on the prospect of reforming health care, just not to the extent that the Act requires. 148 148 Raymond Scheppach and Alan Weil, "New Roles for States in Health Reform," Health Affairs 29, no. 6 (2010): 1179.
11 4 THE STATE TO DO LIST Health Insurance Exchanges One of the most important components of the health care reform law is the construction and management of a state health be nefit exchange. The exchanges will be a place where consumers gather information about health care plans available to them and determine whether they are eligible for assistance in purchasing insurance. The law states that "each State shall establish an Am erican Health Benefit Exchange for the state by January 1, 2014 or the federal government will provide an exchange for states that choose not to establish their own exchange." The law established two different exchanges. The American Health Benefit Exchang e, which is for individuals and self employed individuals, and the Small Business Health O ptions Program E xchange, which is for small groups. 149 However, states have the option of connecting the individual and small group exchanges and markets. Exchanges are meant to not only provide information, but to screen applicants who many qualify for Medicaid benefits and enroll them into the program. 150 The Affordable Care Act outlines major elements of the implementation for health insurance exchanges, but it also off ers states flexibility in how they implement 149 Michael Bare, An Exploration of State Options Related to Health Insurance Exchanges ," Community Advocates Public Policy Institute, http://ca ppi.org/resources/documents/Exchange_Options_for_States_CAPPI.pdf (accessed Ma rch 23, 2012), 1. 150 Ibid., 2.
115 many key areas. In many instances, if states fail to implement vital provisions implementation decisions will take place at the federal level rather than the state level. 151 There are a number of requirements that states must recognize when looking to establish a state exchange and manage it once it is constructed. First, states must establish a health insurance exchange that provides specific health benefit coverage to individuals as well as small businesses. For this requirement, states have $49 million in planning and implementation grants that are available. States may choose to construct a single exchange, a regional exchange, or a type of multiple subsidiary exchange if each one serves a distinct geographic area. Exchanges can contract out to entities with experience and these entities do not have to affiliate with insurers or the state Medicaid Agency. Also, states can require that there are additional benefits for t he essential benefits package, which these benefits would be known as "state mandated benefits." Next, states must develop a process for the annual review of premium increases to determine whether the increases are reasonable or not. For this purpose, stat es have $250 million appropriated over a five year period. In 2011, insurers requesting a 10% or higher increase will be subject to this review. Starting in 2012, there will be state specific thresholds that will be determined. States must be able to make recommendations as to whether or not an insurer should be left out of the exchange due to unreasonable premium increases. However, if the state is unable to do this, the United States Department of Health and Human Services will do it for them. Next, the s tates will have to apply 151 Center for Health Care Research & Transformation, Guide to State Requirements and Policy Choices in the Affordable Care Act ," April 2011, http://www.chrt.org/assets/policy briefs/CHRT Policy Brief April 2011.pdf (accessed M arch 21, 2012), 1.
116 charges on health plans in the market with enrollees that have lower than average actuarial risks, while making payments to those plans with higher than average risks. Also, another important requirement is that states streamline e nrollment procedures and institute a secure, electronic transfer of information between Medicaid, CHIP, and the exchanges. Finally, states will have to contract with one or more reinsurance entities, which will replace the temporary high risk pool. The rei nsurance entity must be a non profit and states may have more than one of these entities. Additionally, two or more states may enter into agreements to create entities to administer reinsurance in those states. 152 While there are requirements concerning th e creation of a state exchange, states also have policy choices available to them concerning the exchange. States can institute, expand or support offices of health insurance consumer assistance or ombudsman programs that further educate consumers and coll ect consumer data. There are $30 million appropriated for this purpose as 2010 and there is more to be authorized, as it needed in the years to come. Additionally, states have the option to opt out of abortion coverage in qualified health plans offered thr ough exchanges. If a plan does cover abortion services, funds from subsidies cannot be used for this purpose. Funds must be collected by a payment from enrollees for the actu al value of the service. Also, until January 1 st 2016, states can choose to define the small group market as 1 50 employees, rather than as the Act defines it as 1 100 employees. Finally, two or more states have the option of constructing interstate compacts, where one or more qualified health plans for 152 Ibid., 2.
117 individuals can be provided in ea ch "compacting" state. However, issuers are to be subject to laws in the purchaser's home state and plans must be licensed in each state where they offer coverage. Also, states have the option of requiring multi state plans to offer more benefits but they must pay for the costs associated with the added benefits. 153 Interestingly, states also have the option to apply for five year waivers to the exchange requirements. However, the Secretary of HHS may grant waivers only if the state's alternative plan: 1) pro vides coverage as comprehensive as the essential health benefits requirements; 2) provides coverage and cost sharing protections against out of pocket expenditures that are as cost saving as those under the Act; 3) provides coverage to at least the same nu mber of state residents; 3) will not increase the federal deficit by any amount. 154 Finally, while states have requirements and options available to them when implementing the exchange, there is a strict timeline for implementation presented in the Act. E ffective as of June 21, 2010, adults with pre existing conditions became eligible to join a temporary high risk pool, which will than be replaced by the health care exchange in 2014. Furthermore, on January 1, 2013, the Secretary of Health and Human Servic es will determine whether a state is ready to implement a state health insurance e xchange. The Secretary will ultimately determine whe ther the e xchange will be implemented by 2014. Is the state on the right path? As of January 1, 2014, the establishment of health insurance exchanges and subsidization of insurance premiums for individuals with 153 Ibid., 3. 154 Michael Bare, An Exploration of State Options Related to Health Insurance Exchanges ," 3.
118 incomes up to the 400% of the poverty line must take place. Lastly, as of January 1, 2015, the state exchange must be financially self sufficient. 155 In order to reach s elf sufficiency, exchanges can charge assessment or user fees to health insurance issuers, or by other means of generating funding. 156 Medicaid Expansion Medicaid expansion under the Affordable Care Act is one of the most important requirements, as covera ge will go up to 133% of the federal poverty level. As with the creation and management of the exchanges, there are requirements for the expansion of Medicaid coverage. As stated above, coverage will need to be expanded up to 133% of the federal poverty le vel. However, between 2014 and 2016, federal funding will cover 100% of the expanded population. This number will go down to 90% between 2017 and 2020. Also, states have the option to expand Medicaid coverage before 2014 and the option to expand coverage b eyond the 133% threshold. Medicaid eligibility is to be determined using modified adjusted gross income, coupled with a 5% income disregard. This means that income eligibility is 138% of the federal poverty level (instead of 133%) with the application of t he 5% income disregard. Also, now under Medicaid it requires that some specific drugs are covered, as coverage can not exclude smoking cessation and 155 Matt Grayson and Richard Pennington, The Patient Protection and Affordable Care Act Implications for State Procurement Officials ," National Association of State Procurement Officials July 2011, http://www.naspo.org/whitepapers/documents/NASPO_HealthcareWhitepaper_July2011.pdf (accessed March 22, 2012), 3. 156 Michael Bare, An Exploration of State Options Relate d to Health Insurance Exchanges ," 2.
119 specific anti anxiety drugs. Additionally, it expands Aging and Disability Resource Centers' initiatives to streamline access to long term care services. It aims to remove barriers to providing home and community based services. It provides the option of home services through a state plan amendment rather than a waiver. The states can extend full Medicaid benef its to individuals receiving home and community based services whose income does not exceed 300% of the supplemental security benefit. Also, states have the option of establishing basic health programs that provide essential benefits that fall between the 134 200% level of the federal poverty line and legal immigrants above 133% who are not eligible for Medicaid. This can serve as a non exchange option. If states choose to institute such optional heath programs, the state will receive 95% of the tax credits and cost sharing reductions that would have been provided to the individual in a health plan. However, this cost charging cannot exceed the platinum plan that is available in an exchange for individuals. 157 Thus, states have many decisions to make when it comes to implementing the Medicaid expansion that is required under the Affordable Care Act. Insurance Reforms The Affordable Care Act, along with expanding coverage, has taken on reforming the private i nsurance system. Historically, states have been the key regulators of private health insurance. States will continue to play this role under the Affordable Care Act, 157 Center for Health Care Research & Transformation, Guide to State Requirements and Policy Choices in the Affordable Care Act ," 4 5.
120 however, there will be a federal floor for consumer protections. States can choose to not adopt and enforce these protections, but if they fail to do so, federal officials will step in and enforce it for the state. For instance, the federal floor established by the health reform law includes a number of early market reforms that apply to privat e health insurers in the individual, small group, and large group markets. Insurance reforms include a number of provisions. The new law prohibits lifetime limits and annual limits on the dollar value of essential health benefits. It requires that plans pr ovide dependent coverage for children up to the age of 26. Also, it prohibits plans from retroactively cancelling coverage, except in cases of fraud or intentional misrepresentation of facts. It prohibits plans from imposing pre existing condition exclusio ns and requires that coverage cover preventive health services without copayments, coinsurance, or deductibles. 158 While there are many other provisions concerning insurance reform, these are some of the main ones that states will have enforce. States have a number of legislative options when dealing with the enactment and enforcement of insurance reform. Legislation can take on a number of forms such as, conforming legislation, enforcement legislation, and enabling legislation. State that want to write int o state law the federal law passed conforming legislation. This legislation amends existing state law or adopts a new state law that abides by federal law. States can also pass enforcement legislation, which provides the state with directions on how to 158 Sabrina Corlette, Katie Keither, and Kevin W. Lucia, Implementing the Affordable C are Act: State Action on Early Market Reforms ," The Commonwealth Fund March 2012, http://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2012/Mar/1586_ Keith_state_action_early_market_reforms_v2.pdf (accessed March 23, 2012).
121 enf orce federal law, or demands that insurers comply with the federal law in place. Lastly, a state can pass legislation that provides the department of insurance (DOI) with the authority to implement federal law. The enabling legislation signifies that the D OI can issue regulations that implement provisions of the Affordable Care Act, but they may also not issue regulations. 159 Another method of implementation is sub regulatory guidance on insurance reforms. Subregulatory guidance normally reveals the state's in terpretation of existing law. It can include such things as bulletins, memoranda, and notices from the state division of insurance to insurers. While subregulatory guidance is generally not legally binding, insurers usually do comply with the guidance prov ided. However, subregulatory guidance can just notify insurers of the provisions, but they may not require compliance with the law. While subregulatory guidance, which requires insurers to alter their policy forms to reflect reforms, can be reviewed and ap proved or disapproved by the state. The state can use this type of subregulatory guidance to guarantee that insurers are complying with reforms. However, there are some states that do not have the authority to approve or disapprove policy forms, in which c ase they might have to wait for complaints before determining compliance. Thus, states have options on how to implement in surance reforms in their state 160 Additionally, they have the option of not enforcing the law, in which case the federal government wil l step in. 159 Ibid., 4 7 160 Ibid., 8.
122 Overview The states are the most important actors when it comes to implementing the Affordable Care Act. The states will be the ones constructing exchanges, expanding Medicaid, and implementing most of the insurance reforms. While states hav e many options on how to implement different provisions, if they choose to not implement one the federal government will step in and implement it for them. However, most states would prefer to implement health care reform on their own, without the federal government stepping over them. States have numerous options when implementing provisions and they are often able to get waivers for various provisions. However, if waivers are chosen, states must provide the same services and quality of services as would b e provided under normal implementation. While many believe that the Affordable Care Act is a federal take over of health care, the states have a lot of discretion on how to implement provisions. Ultimately, the states will determine how reform takes place in the United States and thus, will determine the level of success. As states begin implementation, if they are successful, health care reform will become embedded KEY ISSUES WHILE FACING IMPLEMENTATION As states are looking to implement the Affordable Care Act, they are faced with a number of broad issues. State budgets have been largely shrinking as a result of the economic downturn, while there is high demand for services such as Medicaid. States do not anticipate that state revenues will r eturn to pre recession levels for a couple more
123 years. Even as grueling as state budgets are currently, they would be much worse without federal relief through the American Recovery and Reinvestment Act of 2009 (ARRA). The ARRA supplied states with funding that in turn allowed states to provide services and avoid some very destructive cuts. A large portion of the relief to states was $87 billion, which came in the form on enlarged federal Medicaid matching funds (FMAP). Medicaid directors in states viewed t he added funds as necessary to ensure that state Medicaid programs would be able to preserve eligibi lity levels and refrain from cutt ing services or reimbursement practices. As states continue to face financial hardships, they also must begin implementing the Affordable Care Act. States are supposed to play a crucial role in implementing Medicaid expansion and private insurance alterations. In order to implement these key provisions, states will face a number of challenges concerning administration and the budget. States have the crucial task of re designing the Medicaid eligibility systems in order to include the new income eligibility determination methodology and to do this in a way that coordinates with the state health care exchanges 161 Thus, it is not s urprising that the states may be facing some challenging reform process issues. 161 The Kaiser Commission on Medicaid and the Uninsured State Medicaid Agencies Prepare for Health Care Reform While Continuing to Face Challenges from the Recession ," Henry J. Kaiser Family Foundation August 2010, http://www.kff.org/medicai d/upload/8091.pdf (accessed March 23, 2012), 2.
124 Fiscal and Administrative Capacity Across the states, there is concern that state funding and administrative capacity are insufficient. As states will likely determine whether or not the Affordable Care Act is successful, it is important that states look into raising fiscal and administrati ve capacity. States are looking to meet new Medicaid budget reduction targets, but at the same time are hiring new staff and funding to get implementation of the reform completed. The staff that is working to get implementation completed is often consumed with administrative changes that are required to control program spending. In many instances, state officials are worried that there are not enough staff members with the needed expertise to manage implementation. Additionally, states have encountered larg e layoffs and hiring freezes couples with incentives for early retirement. All of these factors may mean that it might be difficult to gather high level staff with institutional knowledge and expertise. Even if states begin looking for additional staff, fi nding staff with the needed proficiency and experience will be extremely difficult. Health reform implementation requires that individuals are knowledgeable in Medicaid, systems development, as well as insurance market issues. This distinct mixture of need ed expertise and experiences is difficult to encounter. Developing systems not only means writing new software code, but requires the construction of blueprints that map out policy changes, which entails some level of Medicaid policy knowledge as well. The re are some ways in which to maximize administrative resources at the state levels such as, drawing information from the National Governors Association Consortium on Health Reform and constructing webinar style or other training occasions that would not ne cessitate out of state travel. Additionally, foundations with are heavily interested in health reform implementation
125 could be approached about possible funding for technical assistance support to states. This would be done without the requirement for grant writing and reporting, which can often be resource and time consuming. 162 However, it is important to look into funding expansion at the same level because states will need to come up with at least some added funding. While many state leaders proclaim th at the federal government is adding a great financial burden on the states, the federal government will cover most of the cost According to the Congressional Budget Office the federal government will take on about 93 percent of the costs of the Medicaid e xpansion over its first nine years. The added cost to the states will be about a 2.8 percent increase from what states would have spent without expansion of Medicaid from 2014 to 2022. However, it is important to note that the impact on state budgets is o verstated since it does not take into account the savings brought about by the expansion of coverage. 163 States have a number of options that they may look into when analyzing the increased costs of health care at the state level. States should work to make the state's health programs as efficient as possible. States should use federal funds whenever they are available, while using state funds last. States should also attempt to leverage their purchasing power whenever possible. For instance, in California th e state covers 9.5 million people through their Medicaid program Medi Cal, the HFP, and California Public Employees' Retirement System. However, it negotiates 162 Ibid., 5 6. 163 January Angeles and Matt Broaddus Federal Government Will Pick Up Nearly All Costs of Health Reform's Medicaid Expansion ," Center on Budget and Policy Priorities, March 28, 2012, http://www.cbpp.org/cms/index.cfm?fa=view&id=3161 (accessed April 2, 2012).
126 rates with health care plans for each these programs, and it may benefit from connecting its purc hases of health care for these state programs. By consolidating its purchases, it can leverage state purchasing power. 164 Although states will incur savings, they should look into raising more revenue in order to pay for the expansion of Medicaid and other provisions. As states begin to see widening budget gaps, they may turn to broad based tax increases. 165 States rely on different tax revenue sources, depending on what their endowed resources and policy priorities are in the state. The four major categories of taxes which states rely on includes, property taxes, individual income taxes, general and selective sales taxes, and licenses and other taxes. All states rely to a different degree on these tax sources. For instance, Florida's tax revenue comes 49% fro m the sales tax. 166 Thus, states looking to increase their revenue should look into increase in sales or income taxes. Even a slight increase in the sales tax or income tax could bring in large amounts of money for the states. Especially states that rely on income tax filings, will find that their largest source of revenue is falling. States that have been hit by the recession or are facing budget cuts as it is will have to look into increasing taxes even further. As states look to raise revenue for the Affor dable Care Act, they will most likely have to turn their attention to increasing 164 Mac Taylor, "T he Patient Protection and Affordable Care Act: An Overview of Its Potential Impact on State Health Programs ," Legislative Analyst's Office, May 13, 2010, http://www .lao.ca.gov/reports/2010/hlth/fed_healthcare/fed_healthcare_051310.pdf (accessed February 7, 2012), 25. 165 Leslie Eaton More States Look to Raise Taxes ," The Wall Street Journal April 9, 2009. 166 Gerald Prante, Where Do State and Local Go vernments Get Their Tax Revenue," Tax Foundation, October 9, 2009, http://www.taxfoundation.org/research/show/25301.html (accessed March 20, 2012).
127 income and sales taxes. Donald J. Boyd, of the Rockefeller Institute of Government, explains that, "income taxes and sales taxes are the go to taxes when you really need to ra ise a lot of money." Along with some budget cuts, states will have to look into raising their tax revenues. Furthermore, income tax increases could occur in a state on only the state's high earners. This could help in not crippling the middle or lower clas s populations of the state. While states could use cuts in other state spending areas, this is most likely not the best proposal. States have been cutting their spending for years now, as the country has been moving out of a recession. States should be loo king to raise revenue and not further decrease government spending in education and other areas that are important to the residents of a state. 167 Unfortunately, state leaders will often run into obstacles when attempting to raise taxes. Americans do not wan t to see their taxes rise especially when a large portion are struggling with their own finances. States may look to raise revenue by raising taxes that at the same time have the potential to decrease health care costs, such as an increased tax on alcohol. The state can add revenue while at the same decreasing alcohol usage that is contributing to medical problems. Alcohol usage is tied to a number of medical problems, such as liver cirrhosis. 168 While this increase cannot be substantial, it can help raise fu nds and may lead to lower costs in health care. Alcohol tax revenues and other potential taxes should be adjusted for inflation, which 167 Leslie Eaton More States Look to Raise Taxes ." 168 Melissa Bianchi, "State Alcohol Taxes and Health: A Cit izen's Action Guide," Center for Science in the Public Interest, 1996, http://www.cspinet.org/booze/tax.pdf (accessed February 3, 2012).
128 will help keep revenue constant for the state. Nonetheless, raising taxes is never an easy political move, and especially in a recession. However, states may also look into other options for raising revenue over time, especially consistent sources of revenue. For instance, California can extend the current fee on hospitals that expires, and utilize these funds to implement and manage health care reform. 169 States can look into the sale or lease of state owned properties, which can bring in millions in most cases. Licensing fees for regulated occupations could be adjusted and regulated industries could be assessed frees. For i nstance, in Connecticut through the adjustments of the fee structures the state revenue could be increased by $110 million. 170 Also, while not very publicly supported, speed enforcement cameras may be placed in the states to increase revenue. Cameras could take pictures of license plates that exceed speed limits by a certain specified amount. 171 This proposal could lead to a huge increase in revenue, but it will most likely anger the residents of the state. The states face many difficult questions when attemp ting to increase revenue. States may also look into spending reductions in areas that savings may be incurred. Spending reductions do not have to take place in education spending or spending that is of importance to the community. For instance, in Connec ticut the budget proposal included the consolidation of 10 units into other state departments such as, the Department of Higher Education into the Department of Education or merging three 169 Mac Taylor, "T he Patient Protection and Affordable Care Act: An Overview of Its Potential Impact on State Health Prog rams ." 170 Ken Dautrich, Mark D. Robbins, and Bill Simonsen, Budget Deficits in the States: Connecticut ," Public Budgeting & Finance 30, no. 1 (2010): 146. 171 Ibid., 147.
129 quasi public economic development agencies into one. The state of Co nnecticut would save over $10 million just by consolidating its' agencies. Also, states could look into reducing state vehicles and state cell phone usage. Last, the states could look into an early retirement incentive plan. State employees, over the age o f 54 who have at least 20 years of state services, could be provided a 5 percent increase in their pension compensation. In Connecticut this plan would incur savings of about $250 million annually. 172 However, it is important that the state consider plans su ch as this because it could decrease its administrative capacity, as state employees that have the most knowledge are usually the ones that have been there many years. States will have to weigh all their options before determining how to raise their revenu e sources. Provider Capacity Additionally, at the state level there are concerns about the availability of providers to manage increases in Medicaid as well as health care coverage. If there are workforce shortages, it may necessitate further investments in nurse practitioners and physician assistants and it may call for the expansion and examination of the scope of practice for certain caregivers. As there is a call to unite programs with providers, this may have added more administrative burd ens on physicians. If providers feel that their administrative duties are overburdening their practice, they might not be willing to stay in 172 Ibid., 145 46.
130 the Medicaid system. 173 Many are worried that with the increased demand in health care services will exceed the capac ity level of local health care delivery systems. Specifically, individuals are worried about physician capacity, as fewer physicians accept Medicaid patients compared to Medicare and privately insured patients. Low reimbursement rates for Medicaid patients are one of the reasons why physicians will not accept these patients. 174 The Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, increases Medicaid reimbursement rates for specific services that are provided by prim ary care physicians to 100 percent of Medicare rates in 2013 and 2014. However, reimbursement increases will probably have a small impact as it is temporary and it excludes other services by primary care physicians and any services by medical and surgical specialists. Also, a low reimbursement rate is not the only factor, which affects physicians' willingness to treat Medicaid patients. The other factors, which affect physicians' willingness to treat Medicaid patients, includes delayed reimbursement, paper work and the high administrative burden as well as the low compliance among patients. However, problems with physician capacity will vary across states, as a result of differences in states' physician supply and Medicaid reimbursement 173 The Kaiser Commission on Medicaid and the Uninsured State Medicaid Agencies Prepare for Health Care Reform While Continuing to Face Challenges from the Recession ," 6. 174 Peter J. Cunningham, State Variation in Primary Care Physician Supply: Implications for Health Reform Medicaid Expansions ," Center for Studying Health S ystem Change, March 2011, http://www.rwjf.org/files/research/72046.pdf (accessed March 27, 2012), 1.
131 rates. Primary care physician shortages will continue to worsen if Medicaid enrollment outpaces Medicaid primary care physician capacity. 175 Primary care physician supply varies extensively by region of the country, with the highest levels being in the Mid Atlantic and Northea st and the lowest supply in the South and Mountain West. To a certain extent, this reveals the higher levels of primary care physician supply in urban areas, which are widespread in the Northeast and the small towns and rural areas, which are in the south ern and western states. Additionally, low and high primary care physician states differ by state Medicaid program characteristics. For instance, Medicaid reimbursement rates for primary care are much higher on average in low primary care physician states c ompared to high primary care physician states. Additionally, low primary care states are disposed to more uninsured residents and a lower percentage of privately insured persons. 176 Thus, it becomes important to consider potential effects of health reform i n states with varying primary care physician supply. States with restrictive Medicaid eligibility guidelines in low primary care physician states will most likely experience a much more extensive increase in Medicaid enrollment when eligibility increases. According to projections by the Urban Institute, Medicaid enrollment under the reform law's eligibility expansion has the possibility of increasing as much as 38 percent in low primary care physician states on average, while only 15 percent in high primary care physician states. Additionally, it seems that since Medicaid reimbursement rates for primary care are 175 Ibid., 1 2. 176 Ibid., 4.
132 already high in low supply states, the brief increase in reimbursement rates will not have as large of an affect in low supply states as high primar y care physician states. Interestingly, in already high primary care physician states, an increase to 100% of Medicare rates for Medicaid reimbursement will on average bring about a 23.5 percent increase in Medicaid primary care physician supply. Supplies of primary care physicians in these already high supply states will most likely exceed the increase in Medicaid enrollment. Thus, supply of primary care physicians will increase in the states that already have the highest level of supply, while most shortf alls of supply will be experienced in states that already have low supply, only adding to troubles. 177 While other Affordable Care Act provisions attempt to increase the supply of primary care, the states must take into consideration supply of physicians wh en beginning to implement the Act. The law includes a 10 percent bonus in Medicare payments from 2011 to 2016 for certain primary care services. Additionally, the law provides incentives to medical students, in order for them to choose primary care special ties Efforts at expanding the supply of nurse practitioners and other mid level practitioners are almost meant to curtail shortages in primary care. 178 However, even with these efforts, states must take into account their own primary care physician supply a nd what that could potentially mean for implementation and health care access. 177 Ibid., 6 7. 178 Ibid., 7 8.
133 Specialists Capacity As access to care expands, the supply of specialists also becomes a concern that states must analyze. State variation in the supply of specialists for Medicaid is almost identical to primary care physician supply. States with high overall supply of primary care physicians also have a high supply of specialists. However, unlike for primary care physicians, a higher percentage of specialists in low primary care physician states accept most or all new Medicaid patients, this stands at 58.4%. In medium and high primary care physician states, fewer specialists accept Medicaid with 48.5% and 50.6% of specialists accepting Medicaid, respectively. Medicaid reimbursement levels for specialists will not be altered under reform, and therefore, will have little affect o n state supply. While analyzing supply the number of specialists per the number of Medicaid enrollees will decrease in all states but will probably decrease most in low primary care physician states as they look to increase their Medicaid population the mo st. Thus, specialist supply will need to be examined, monitored, and increased in most states as they look to add to the Medicaid population. 179 Transformative Medicaid Program Medicaid leaders also feel that the reform process will be transformative for the Medicaid program. Medicaid has been known more as a health care coverage program, and health reform further strengthens in this claim. Through the enrollment of more and high er income individuals and through the integration with the commercial market, 179 Ibid., 7.
134 Medicaid may move farther away from a welfare style or social program. This could lead to changes within the organization of Medicaid agencies and sister agencies as well as the public's notion of Medicaid. This could have a number of implications, as states could begin looking at different options. For instance, Medicaid could be integrated with health coverage for state employees in order to leverage more purchasing power in the market. Furthermore, Medicaid programs will need to become more integrated and coordinated with commercial health care plans. There is the possibility that there will be an integrated health plan system, in which individuals and employers access one entra nce for Medicaid, CHIP, and exchange coverage, and these individuals might not even have to be aware of their eligibility. Even if transformation does not occur to this extent, health reform opens a number of doors for Medicaid to take part in the broader health care market, to work together with commercial payers, and to pursue improvement efforts across the health care system As health care reform becomes embedded in the health care system, there could a number of changes that present themselves in the f ollowing years. 180 Interest in Policy Innovation, Demonstrations, and Pilots Furthermore, as the Act provides states with a variety of options and pilot programs for states, states will have to begin figuring out what options best serve their interests. T here seems to be interest in policy innovation at the state level, especially 180 The Kaiser Commission on Medicaid and the Uninsured State Medicaid Agencies Prepare f or Health Care Reform While Continuing to Face Challenges from the Recession ," 7.
135 when it comes to restructuring payment incentives and long term care system reforms. However, even if officials are intrigued by the demonstrations, such as the bundled payment d emonstration, which can improve quality of service and produce savings, the state might not have enough resources or expertise to produce a successful demonstration. This once again brings out administrative capacity, which will be key for success with dem onstrations as well. Also, it seems that directors of Medicaid in states believe that health reform law did not address serious concerns about "dual eligible ," which are individuals who qualify for both Medicare and Medicaid. However, it seems that there i s enthusiasm to participate in these, but most states are need of additional funds and guidance from the federal government, before they move towards further innovation. 181 Overview States will face a number of issues while attempting to implement the Af fordable Care Act. However, some issues have become increasing ly prevalent States will face budget shortages as a result of the recession and during the recovery process. Of course, as the economy picks up states will be better able to implement the parts of reform that the federal government doesn't provide necessary funds. Health reform expands the role for states and for Medicaid, including many roles that are new for administrators of the program. As budget shortfalls are widespread, administrative cap acity will be hurt from layoffs, hiring freezes, and program cutbacks. There are a lot of complexities that the 181 Ibid., 8.
136 states will face in the coming years concerning implementation and reform. They need to possess the necessary resources, both fiscal and adminis trative, to carry out implementation in an expert manner. They must also analyze their physician and specialist capacity levels, as all individuals will now have access to health care. While only physician and specialist capacity growth was discussed here, states must look into their hospital capacity levels as well as other health care facility levels. The states will likely determine whether or not the Affordable Care Act is successful, depending on how they implement the reform. APPROACHING IMPLEMENTAT ION In order to implement the Affordable Care Act successfully, states must develop a clear vision to lead their work. Also, states must collaborate their tasks so that everyone involved in the process is working together effectively, towards identical g oals. They must coordinate their actions with an extensive range of stakeholders, including their own citizens. 182 Knowledge State officials must have a comprehensive understanding of the law, including what are state requirements, options, and grant prog rams. They must know the timeline to implement provisions and when various ones go into effect. They need to closely monitor 182 Raymond Scheppach and Alan Weil, "New Roles for States in Health Reform," 1179.
137 federal guidance and regulations in the areas that state action is required such as, with exchanges, Medicaid expansion, and insura nce regulation. The experts, which are implementing the law, must be well versed in the structure of state health care and must clearly understand what needs to be accomplished. 183 Executive Branch Leadership Governors should take a leadership position whe n it comes to implementation of the Act. They should appoint a coordinator to oversee state implementation and determine the staff that will be responsible for the key tasks pertaining to Medicaid, insurance regulation, as well as the exchanges. The implem enting team should initiate a working relationship with legislative leaders, main interests in the state's health care sector, and representatives of businesses and consumers, which will all be involved in the process. Additionally, the implementation enti ty must establish the means by which to communicate decisions and progress to the public. 184 The public must be informed as to what is going on in the health care arena. Strategic and Operational Plan Furthermore, every state should posses a strategic pl an that displays the priorities of the governor and the state legislature. A strategic plan would be a guiding documenting that reflects the goals of the state. Efforts to bring about to life a specific 183 Ibid., 1179 80. 184 Ibid..
138 state goal should be coordinated throughout the diffe rent levels of reform. For instance, if a state is looking to decrease obesity, it will want to make sure that health plans in the exchange are accountable for measuring and improving obesity in state, that there is coverage of services such as dietary cou nseling, and that the state is able to receive federal grant funds in this area. Furthermore, every state must create an operational plan that to implement the law's provisions. This plan must cover such things as statutory and regulatory changes, applicat ions for federal government grants, administrative reorganization, or administrative capacity building. The plan should continue to at least 2014, when various provisions of the law go into effect, but it may need to be lengthened even beyond that date. Al so, the plan should specify methods of engaging different stakeholders, including the public. 185 The public needs to be well versed as different provisions are implemented, in order for them to reap the benefits of the reform. Needs Assessment As the operational plan is constructed, the state should be able to establish what resources the state will need to accomplish tasks and bring about implementation of the different provisions. The state may need to increase staff and expertise levels conce rning budgets taxation, the insurance market, computer systems, and other specialized areas that are related to the reform process. The state's capacity level must correspond with the goals and tasks that it must accomplish. 186 185 Ibid.. 186 Ibid..
139 THE CASE OF FLORIDA AND IMPLEMENTATION In order to further discuss how states can implement reforms and what considerations they need to take into account, it is important to look at one state's actions and issues. While Florida may not be representative of other states, it is one with a large population of uninsured individuals and a growing Medicaid population. Furthermore, Florida is one of the most outspoken states against reform, but even it has begun thinking about implementation. Thus, this section will focus on the issue s Florida is facing as a state that is rather behind in the implementation process, but is slowly moving along. Some of the most important considerations that Florida will need to take into account is how much the implementation of reform will cost. Furthe rmore, even if reform will cost more, will the savings from reform offset any additional costs? This is a possibility that the state needs to further examine. Also, who will implement the Affordable Care Act in Florida? Will they have enough administrative capacity to successfully implement this or does Florida need to expand administrative capacity? These are all important questions that need to be analyzed in this state. Furthermore, it is important to examine what has been done and whether the state is b roadly moving in the right direction. However, first it is important to again gather a little more background information on Florida's stance concerning the Affordable Care Act and what progress Florida has made thus far in implementing the Affordable Care Act.
140 Medicaid in Florida As was acknowledged earlier, Florida has been attempting to reform its Medicaid program through a Medicaid reform program. However, the reform program has only gone into affect in five counties, and it has not produced any clear advantages. Thus, Florida must begin looking to reform the Medicaid program in the state of Florida, by implementing the Affordable Care Act. Unfortunately, Florida has made a clear effort to distance itself from the implementation of the Act, as its leaders believe that the constitutionality of the Act will bring the law down. Florida needs to begin preparing itself for changes to help improve the quality of services and reduce costs of health care. Currently, there are more than 4 million uninsured Floridians, which are only further draining the state's health care system. Medicaid is an extremely efficient program, costing much less on a per person basis than private insurance. 187 Can Florida Afford Reform? One of the main concerns about expanding Medicaid coverage and implementing the Affordable Care Act in Florida is cost. Discussions about Medicaid have often focused on the bu rden it places on state budgets. However, the federal government, through the system of matching funds, provides most of the funding to support Florida's Medicaid program Before the recession, the federal government's share of every dollar 187 Jack Meyer and Sharon Silow Carro ll, Making the Investments Work: Important Benefits and Key Challenges in Implementing Health Reform in Florida ," Collins Center for Public Policy February 2011, http://www.collinscenter.org/resource/resmgr/health_care_docs/health_reform_report_final_l.pdf (accessed March 20, 2012), 6.
141 spent on Medicaid stood at nearly 57 percent. As the recession began to further constrain state budgets, the federal government raised t he matching rate for Florida in 2010 to more than 67 percent, but it brought it back down to 56 percent in 2011. Additionally, matching funds for Florida's CHIP program stand at about 69 percent as of 2009. As a result of the matching funds system, every d ollar Florida spends towards Medicaid in turn results in a greater value in benefits to those enrolled and the providers of health care. While utilizing the normal rate, every $1.00 in state funds will amount to $2.30 in benefits, and $1.00 in CHIP state f unds will in return yield over $3.20 in benefits. 188 While analyzing the reform costs in Florida, it is important to look at new costs as well as potential savings that the state and local governments will experience from reform. Through the Affordable Care Act, the federal government, with a small portion to be paid by the states, will finance Medicaid expansion Without health reform, Florida would spend about $66.3 billion on Medicaid over the 2014 2019 period, and the federal government would in return pa y about $82.6 billion to Florida Medicaid. According to the Urban Institute, under the Affordable Care Act, Florida will be paying $1.2 billion more over six years based on lower participation assumptions for Medicaid expansion, with the federal government spending $20.1 billion more under the Affordable Care Act for Florida Medicaid over 2014 2019. Furthermore, under a high participation rate for expansion of Medicaid, Florida would spend an added $2.5 billion during 2014 2019, 188 Jack Hoadley and Joan Alker, Understanding Florida Medicaid Today And the Impact of Federal Health Care Reform ," Georgetown Univ ersity April 2011, http://ihcrp.georgetown.edu/floridamedicaid/pdfs/Health_Reform_FL_2011.pdf (accessed March 28, 2012), 6.
142 with the federal government spending $24.3 more. Under each of the participation assumptions, the federal government will be providing most of the funding for the expansion of the Medicaid population. 189 However, the cost estimates presented by the Urban Institute are remarkably lower than those offered by Florida's Agency for Health Care Administration (AHCA), which estimates that the state would spend $4.1 billion more in Medicaid expenses because of the expansion. 190 Thus, the question becomes why are cost estimates so different for the state of Florida. First, AHCA's estimate assumes the highest possible costs and minimal savings, which may be sensible in some instances, but illogical in other cases. AHCA assumes that 100% of those newly eligible will enroll over a two year transitio n period. However, no state has ever reached this participation level ever before in Medicaid. AHCA uses the 100% participation assumption with people who are newly eligible for Medicaid as well as for those who are currently eligible but not enrolled. How ever, the Urban Institute's examination assumes that participation levels will be about the same as with past program experience, which claims that between 57 percent and 75 percent of uninsured newly eligibles would enroll. Lower enrollment rates will cor relate with lower costs for the state but also fewer people receiving health care services. Currently, Florida's participation rate is low by national standards, with only 70 percent of eligible children enrolled, compared to a national average of 82 perce nt for eligible children. Florida in this category stands as the fifth lowest of all states. Thus, even if Florida improves their 189 Jack Meyer and Sharon Silow Carroll, Making the Investments Work ," 12. 190 Jack Hoadley and Joan Alker, Understanding Florida Med icaid Today And the Impact of Federal Health Care Reform ," 7 8.
143 participation rate, it will most likely fall below 100% enrollment Additionally, AHCA's cost estimates assume that the curren t average per person rate of spending will be the same for new enrollees. However, new enrollees will most likely be less expensive than those already enrolled, as the sickest and most disabled are already part of the system of Medicaid. Newly enrolled adu lts should cost less than adults already in Medicaid. While both of these factors may hick up estimated costs, there are some potential sources for an increase in costs. For instance, state administrative expenses may increase as a result of having more pe ople in the program. However, this should add only modest cost increases. 191 Potential Savings and Economic Benefits In addition, it seems that by implementing the Affordable Care Act there will be a number of savings that occur, both direct as well as indirect. First off, physicians and hospitals are going to benefit from the Affordable Care Act because they will no longer be overwhelmed by uncompensated care. Worrying, the cost of uncompensated care by Florida hospitals has skyrocketed, with increases of about 70% between 2003 and 2009. Uncompensated care accounts for about 9% of complete hospital costs in Florida, in comparison to less than 6% nationwide. Currently, hospitals are presented with Disproportionate Share Hospital (DSH) payments and funds f rom the Low Income Pool (LIP). This pool possesses a capped allotment of $1 billion per year funded through funds by the federal government, the state, and local funds from countries and hospital taxing 191 Ibid., 8.
144 districts. However, it seems that uncompensated care now amounts to over $3 billion a year in Florida, much more than the capped amount for payment. 192 As coverage of the uninsured expands, in return it will decrease the uncompensated care burden placed on hospitals and physicians. State and local governments could see savings if more insurance coverage comes to mean lower amounts of uncompensated care. Currently, 12 Florida counties operate 16 independent hospital taxing districts with the authority to levy taxes. These districts usually support local hospital s that are providing care to the poor and the uninsured in the county. In 2007, these districted collected about $600 million in taxes, showcasing an increase of about 75% in five years. Broward County alone raises nearly $205 million per year to help out its public hospitals with uncompensated care. As coverage expands though, there will be less need for support from public dollars, which in turn might lower taxes in these counties. 193 There are also indirect savings that could be reached by expanding the coverage of health care, through community wide benefits. The indirect costs of being uninsured come from experiencing health problems, as a result of not gaining access to needed care and often, preventive services. In turn, the low level of health affect s school attendance and educational achievement, productivity in the work place, and their morbidity. 194 There are numerous studies that support the conclusion that a healthier student will reach a higher level of education and better health as well as incom e as an adult. Additionally, 192 Jack Meyer and Sharon Silow Carroll, Making the Investments Work ," 10. 193 Jack Hoadley and Joan Alker, Understanding Florida Medicaid Today And the Impact of Federal Health Care Reform ," 8 9. 194 Jack Meyer and Sharon Silow Carroll, Making the Investments Work ," 10.
145 there are studies that show that poor health decreases annual earning from work, especially through less labor participation and work effort. 195 A report from the National Academy on an Aging Society in 2002 displayed data from n ational surveys conducted on early retires (51 59 years of age) and older (60 and older) concerning their health and income. Among the 51 59 age group, a higher proportion of early retirees reported that they were in fair or poor health when comparing to w orkers of the same age, 48% of early retirees to only 12% of workers. Among the older group, a higher proportion of workers reported that they were in excellent or very good health. Furthermore, young retirees in fair or poor health reported significantly lower median incomes and median wealth than young retirees in excellent or good health. Young retirees in fair or poor health reported their median incomes as $15,000, while young retirees in excellent health reported median incomes of $41,000. This displa ys a substantial difference in the level of median income by health status. Poor health in most instances can force people into early retirement. Overall, it has been found that poor health can reduce annual earnings by about 15 30 percent, which is very s ubstantial. 196 Additionally, the Institute of Medicine (IOM), estimates that 18,000 uninsured adults, between the ages of 25 and 64, die each year as a result of illnesses that they would have survived if they had been insured and received the services that they needed. Florida needs to take this into account as the latest 195 Jack Hadley, Sicker and Poorer: The Consequences of Being Uninsured ," The Henry J. Kaiser Family Foundation May 2002, http://www.kff.org/uninsured/upload/Full Repo rt.pdf (accessed March 28, 2012), 87 90. 196 Ibid., 82 83.
146 Census Bureau figure displayed that 4.1 million residents in Florida were uninsured in 2009. 197 Also, through the expansion of the Medicaid safety net, there might be a positive effect on t he state economy, through the generation of jobs and other activities. Matching federal dollars also enlarges the effect on the economy The economic benefit of the Medicaid program to Florida's economy is by far the greatest when looking at other categori es of state spending. Medicaid spending seems to have a compound effect that extends throughout the Florida economy. First off, Medicaid supports thousands of health care providers throughout the state, including, hospitals, nursing facilities, group homes community health centers, and pharmacies. There are also indirect benefits for businesses and industries, as health care providers have suppliers and vendors. For instance, Medicaid funds help directly support hospitals, which than spend some of the fund s on supplies, technology, and transportation. Lastly, both direct and indirect impacts lead to additionally spending, as a result of higher incomes for benefitting households and businesses. The positive economic impact of Medicaid includes job constructi on. The economic impact of Medicaid is generally much greater than the investment made by a state, which is often called the Medicaid multiplier effect. The multiplier effect may fluctuate by state and over time with federal matching funds as well as econo mic 197 Jack Meyer and Sharon Silow Carroll, Making the Investments Work ," 10.
147 conditions. 198 Thus, the expansion of Medicaid in Florida might bring about great benefits for Florida's economy. Physician/Provider Capacity and Expansion of Medicaid As Florida begins expansion of Medicaid, it will face the challenge of developing networks of physicians, nurses and medical professionals that will serve the expanded Medicaid population. However, this task becomes more difficult if health care providers are not paid enough for taking on Medicaid beneficiaries. Currently, Florida's Med icaid fees are lower than in the nation as a whole. Considering all health services, Medicaid reimbursement averages 63% of Medicare payments. Furthermore, for primary care services, Medicaid reimbursement averages only 55% of Medicare rates. The mixture o f a large proportion of senior citizens in Florida and an expansion in the number of people in Medicaid will lead to an increased demand for care, with only a limited supply of care providers available. Since state budgets are already in crisis mode, it ma y be very difficult to increase Medicaid payment rates, especially in Florida. Florida must identify ways to incur savings in other areas in order to provide higher payment rates for providers in the Medicaid system, especially physicians and nurses. 199 Curr ently, Florida is ranked 30 th nationwide in terms of the number of primary care physicians per 100,000 198 Florida Center for Fiscal and Economic Policy, Unhealthy Choices: Flawed Medicaid Proposals Would Kill Florida Jobs ," Janu ary 2011, http://www.fcfep.org/attachments/20110113 -Unhealthy%20Medicaid%20Choices(2).pdf (accessed March 28, 2012). 199 Jack Meyer and Sharon Silow Carroll, Making the Investments Work ," 14.
148 population, which stands at 109.7. 200 This number only decreases for Medicaid, as not all primary care physicians are in the Medicaid system. Furthermore, Florida must ensure that the number of dentists and dental hygienists pharmacists, social workers, nutritionists, public health workers, community health workers, and other providers meet the expanded needs of a growing and aging population that has incre ase access to insurance. 201 Administrative Capacity and Implementation The entity that will most likely be implementing the Affordable Care Act's provisions in Florida is AHCA. On November 17, 2010, when the Florida Senate held a hearing on Medicaid. Senator Negron, the chair of the Subcommittee on Health and Human Services A ppropriations, stated that one of the goals of health reform should be to transform AHCA, "into a monitoring agency, not just a "check writing" agency that "finds fraud after providers have left the program 202 First off, the legislature must move quickly t o provide AHCA with the authority to implement some of the key reform provisions. For instance, for insurance market reforms, the legislature must provide the Insurance Department as well as AHCA with the authority to implement the insurance market reforms 203 Also, AHCA must have the required expertise to implement and monitor the Affordable Care Act provisions. Florida might need to hire new staff, which 200 America's Health Rankings, "The Rankings: Florida." 201 Jack Mey er and Sharon Silow Carroll, Making the Investments Work ," 14. 202 Ibid., 8. 203 Ibid., 25.
149 possesses a high level of institutional knowledge and expertise. Florida will need to make sure that it has a capable staff that is able to successfully implement and monitor reform in the state of Florida. Finding staff with the needed expertise, if not already pre sent, might be difficult. As stated above, health care reform requires that individuals are knowledgeable in Medicaid, systems development, as well as insurance market reforms. Florida could also look into providing more training to the staff it already po ssesses. Finally, foundations in Florida, that are interested in health reform, might be interested in providing some technical assistance to the state 204 Florida must ensure that AHCA has the necessary administrative capacity to implement and monitor healt h reform in a state as large as Florida. While this is no small task, AHCA must be prepared for building a reformed health care system in the state of Florida. This is of course no small feat, as there is much to be done accomplished in this state. FLORI DA ACTIONS Finally, as reform as begun to take shape in many of the states in the United States, it becomes important to recognize what has already taken place in Florida. As stated earlier, Florida has largely refused to implement the Affordable Care Ac t, as it believes it is unconstitutional and will be brought down by the Supreme Court. Florida residents are already witnessing some of the benefits of the Affordable Care Act, but the 204 The Kaiser Commission on Medicaid and the Uninsured State Medicaid Agencies Prepare for Health Care Reform While Continuing to Face Challenges from the Recession ," 5 6.
150 state has yet to implement and construct much of the needed reform. Fo r instance, thanks to the law, 256,600 people with Medicare in Florida have received a $250 rebate to cover the cost of prescription drugs when they hit the doughnut hole in 2010, and received a 50% discount in 2011 when they hit the doughnut hole. By the year of 2020, the doughnut hole will be completely closed. 205 However, this part of the law is not something that Florida has put into place itself. Even in places where Florida has acted in some manner, it has relatively done this without any force. When i t comes to state action concerning early market reforms, Florida was one of the states that issued subregulatory guidance that only notified insurers of the Affordable Care Act related provisions. This subregulatory guidance did not explicitly require that insurers comply with the federal law. Florida issued a memorandum in which they choose to notify insurers of the federal legislative changes that become law after six months, and further, advised insurers to review the law. However, the memorandum did not state that the state would enforce any of the early market reforms or require the insurers to comply in any manner. 206 Additionally, Florida has not taken any legislative action towards the im plementation of the health insurance e xchange. This is one of th e first tasks that states must construct, as much of the rest of the bill relies on the e xchange being in place. Florida shou ld be looking to construct the e xchange as soon as possible. A plan is needed that produced a system that can screen people and dir ect them to the public program that they are eligible 205 U.S. Department of Health & Human Services, Two Years Later: The Benefits of the Affordable Care Act for Florida ," Healthcare.gov, March 15, 2012, http://www.healthcare.gov/law/resources/fl.html (accessed March 28, 2012). 206 Sabrina Corlette, Katie Keither, and Kevin W. Lucia, Implementing the Affordable Care Act ," 8.
151 to receive aid from or to guide them towards the e xchange. Initially, Florida should focus on web portals; in which consumers can shop around for a health plan and that will determine if they are eligi ble for any financial assistance 207 Florida Overview Florida is a state that will face some difficulties as it begins to implement the Affordable Care Act. Florida must analyze the fiscal impact of Medicaid expansion on the state, and whether they incur savings as a result of the Affordable Care Act. However, as Florida looks at the fiscal aspect of reform, Florida must be realistic in its' assumptions and on how it calculates the cost of reform. It seems that Florida will need to pay an added 1 billion t o about 2.5 billion as a result of expansion of Medicaid and health care reform. However, the state can begin to witness savings as a result of reform, especially from a lowering of uncompensated hospital care. Furthermore, Florida's economy may largely be nefit from the expansion of Medicaid, as it will translate into more jobs, more hiring, and a healthier workforce. Furthermore, Florida must build the administrative capacity of AHCA in order to insure the success of implementation and most importantly, th e monitoring of the health care system after implementation. Lastly, Florida must take into consideration the number of physicians as well as specialists in the state. As the number of enrollees in Medicaid expands, the supply of physicians and specialists in the state must expand as well in order to keep up with the high level of demand. Florida 207 Jack Meyer and Sharon Silow Carroll, Making the Investments Work ," 25.
152 clearly has a number of important issues that it will need to take into account as it implements and monitors implementation of reform. CHAPTER CONCLUSION State actions unquestionably play a vital role in the implementation and reform of the American health care system. Without the active role of states, health reform will be difficult to construct and ultimately, it would make health reform unsu ccessful. States are to play a key role in the construction of exchanges, Medicaid expansion, as well as in new market reforms concerning insurance. Beyond this, states have a variety of responsibilities and options that will determine the level of reform in a particular state. States must have a clear idea of what needs to be accomplished and what are their options in the implementation process. Also, states must acknowledge and be well aware of any deadlines that have been set by the new law. Furthermore, states must be mindful of any issues that will come about during the implementation process as well as after the implementation process. States will need to possess administrative capacity, fiscal capacity, as well as provider capacity in order to success fully implement health reform. While some states already possess many of these things, others will find it more difficult to obtain capacity in some or all of these areas. States must analyze their options and determine what is best for their respective st ate, as health care varies among the different states. Florida, while not representative of all states, still provides a good example of what issues a state will face when beginning to implement provisions of the law. Florida is a state that has distinctly faced economic problems in the past few years. Consequently,
153 fiscal considerations will be important for the state as it looks to bring administrative capacity to the AHCA and expand the physician and specialist supply in the state.
154 CHAPTER 5 CONCLUSION As state actions are greatly affecting the Affordable Care Act, one may begin to wonder what implications their actions have on national public opinion. Such an analysis is purely speculative, but it is still a rather interesting question to consider. Various state leaders are claiming the Affordable Care Act 's individual mandate is unconstitutional. While the Supreme Court will decide this question it may have already been decided in the minds of Americans. Even though Republicans came up with the ide a of the individual mandate, it seems to be used as a political maneuver in order to gather support against the Affordable Care Act. Looking at precedent, the constitutionality claim do es not seem to be true, but the debate it may be causing some rather in teresting results Public opinion concerning the Affordable Care Act has been rather low since the beginning; however, it seems that the corresponding low score may be influenced by state rhetoric toward the constitutionality of the Act After all, individ uals are influenced by negative claims aired on television, radio, and through conversations. While all the confusion regarding the Affordable Care Act at its inception most likely caused a rather negative opinion, the Affordable Care Act seemed to be gath ering supporters by the middle of 2010. However, that trend qu ickly turned negative once more as the law suits gained significance. The Kaiser Health Tracking Poll reveals some interesting facts that may be tied to how the states formed their arguments ag ainst the Affordable Care Act. After the passing
155 of the Affordable Care Act, the April 2010 Health Care Tracking Poll displayed that about 46 percent viewed it favorably, while 40 percent viewed it unfavorably, with 14 percent undecided. Furthermore, more than half of those poll ed said they did not have enough information to understand how the Act would impact them p ersonally, and more than half w ere just confused about the law in general. This proportion seems to have remained pretty constant, except for d uring the summer of 2010, in which the Act received more support. The July 2010 reported that half of the public expressed a favorable view of the law, while only 35 percent said they had an unfavorable opinion of the Act. However, even as of July 2010, ab out 43 percent of individuals still stated that they were confused about the law. The August 2010 Health Tracking Poll brought the support back down into the 40s, and further displayed the public's dismay with one issue, the individual mandate. 208 While the public viewed the individual mandate negatively, this may have largely already been a response to how the states viewed it as well. L awsuits against the Affordable Care Act began almost right after the signing of the Act, but they were just beginning to ga t her widespread attention by the end of 2010. In Commonwealth of Virginia v. Sebelius, Judge Hudson in August 2010 declined to dismiss the suit, and by December 2010 he declared the individual mandate unconstitutional. 209 In early October Judge Vinson allowe d the lawsuit filed against the Affordable Care Act to move forward, and rejected the government's request that case be 208 The Henry J. Kaiser Family Foundation, "Kaiser Health Tracking Poll," http://www.kff.org/kaiserpolls/trackingpoll.cfm (accessed April 5, 2012). 209 Mike Sacks, Lawsuits t o Undo Key Parts Of Health Care Law Move Forward, So Far ," The Christian Science Monitor September 29, 2010.
156 dismissed. He also declared that he would not accept the tax argument, noting that Congress did not call the mandate a tax. 210 In State of Florida v. U.S. Dept. of Health and Human Services, Judge Vinson went on to declare the federal health care overhaul unconstitutional. Federal judges having declared the Affordable Care Act unconstitutional may have influenced public opinion of the Act. A ccording to a Rasmussen poll, it seems that most Am ericans still believe the U.S. c onstitution has a positive impact on American life and that it should not be altered. Furthermo re, some even believe that the c onstitution does not put enough restrictions o n the government. 211 Americans seem to hold the constitution in very high regard and when something is challenged constitutionally they naturally will begin to formulate a negative attitude towards it. Even though this is purely speculative, it seems that R epublicans are using the constitutionality argument in order to alter public opinion towards the Act. For the most part, Americans are heavily against anything that could be considered unconstitutional. By challenging the Affordable Care Act in the courts, they have man aged to keep public support for the Affordable Care Act low. However, when asked, most individuals seem to support all provisions of the Act, other than the individual mandate. It can be argued that the individual mandate has become unpopular due to the constitutionality challenges. 210 Jonathan Cohn, Florida Repeal Lawsuit Moves Forward ," The New Republic October 15, 2010. 211 Rasmussen Reports, Most Americans Give Constitution High Marks, Say Don't Change It ," June 30, 2011, http://www.rasmussenreports.com/public_content/politics/general_politics/june_2011/most_amer icans_give_con stitution_high_marks_say_don_t_change_it (accessed April 5, 2012).
157 Polls have shown large majorities of voters think the provision is unconstitutional but have these individuals actually given it much thought or res ea rched Supreme Court precedent? How is it possible that many Republicans, such as those who came up with the individual mandate, now believe the individ ual mandate is unconstitutional? People are entitled to changing their minds, but it may just be that the y are using t his argument against Democrats. END REMARKS The states role in implementing and managing the Affordable Care Act is vital to the success of the Act. However, the states also have the power to undermine the Act. Republican and Democratic p residents have attempted to reform the health care system in the United States, but most have been unsuccessful in their efforts. President Obama was able to pass the Affordable Care Act, by allowing Congress to negotiate the terms of reform with stakehold ers. The individual mandate was one of the key provisions that allowed the Affordable Care Act to pass through Congress and become law. While Republicans actually came up with the individual mandate in the 1980s, they are now predominately against the indi vidual mandate. They are claiming that the government does not have the power to implement the individual mandate and that it is unconstitutional. However, by looking through the Supreme Court precedent in terms of Congress's powers, it seems that individu al mandate should be upheld. Furthermore, as discussed throughout the chapters many states are claiming the Affordable Care Act places a great financial burden on the states. While the Affordable Care Act does increase
158 the cost of health care in states, t he federal government is paying for most of the reform. The increase in costs mainly comes from the Medicaid expansion, but now many more individuals will have access to health care. Savings should be realized by the states over time and the cost to the st ates of reform should be lowered. States should still look into raising more revenue, eithe r through possible tax increase or fee increases, and they may look at decreasing costs in some areas. While it seems that most states should be able to i mplement the Affordable Care Act, many are not moving toward implementation. It seems that politics may have something to do with the refusal to implement the Act, but only in larger states. Smaller states, both Republican and Democratic states, are moving forward with implementation even if they have spoken out against the Act. Larger states seem to be influenced more by the politics surrounding the Affordable Care Act. Florida, which has become a must win state in most federal elections, seems to be influ enced by politics at the federal level. In this area more research is needed to see what is truly going on at the state level, and what influences state leaders' actions. Also, it is important to r ecognize that all states will face some challenges when mov ing forward with implementation. All states, Republican, Democratic, large or small, will be faced with many capacity problems when moving forward. Republican states are not the only ones that will be faced with challenges, as Democratic states face the s ame fiscal and administrative and infrastructure problems. State leaders must recognize these problems and analyze what solutions are available, and what is best for the citizens of the state. The Affordable Care Act, if implemented correctly has the pote ntial to decrease health care costs, while at the same time bring up the quality of care in the United States. Americans will have access to a better health care
159 system if the Act moves forward and if all states begin to cooperate. States, such as Florida, must move past political arguments, and see what benefits could come out of an expanded health care sys tem.
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