Tribpedia: Federal Health Reform And Texas

When the U.S. House of Representatives passed the Senate version of the Patient Protection and Affordable Care Act (ACA) into law on March 21, 2010, the reaction from Texas leaders of all political persuasions was swift, varied and impassioned — no surprise, given the sweeping scope of the new law.

One thing all sides could agree on: The implications of the law for Texas, with the nation’s highest percentage of uninsured residents, are enormous. For supporters, the promise of getting 1.2 million or more people on the insurance rolls in 2014 was cause for celebration, but for its many detractors — among them, politicians, business owners and conservative leaders — the Affordable Care Act (or Obamacare, as it is almost universally known) represents both a potentially bankrupting budgetary disaster and an unprecedented incursion into the lives of ordinary Americans.

A key part of the ACA — and a major reason for opposition to it in Texas and many other states — is a massive expansion of Medicaid. Opponents already consider the program outdated, inefficient and in dire need of reform. As it stands, Texas is billions short in current Medicaid funding; the 2011 Legislature reduced their estimates of Medicaid costs to pass a balanced budget, as required by the state Constitution, intending to shore up any shortfall from “unexpected revenue” or the state’s rainy day fund.

With an expansion in Medicaid eligibility, hundreds of thousands of Texans — estimates range from 600,000 to 1 million, although there is considerable uncertainty there — who are currently eligible but not enrolled might swell the overburdened program even further.

When President Obama signed the act on March 23, 2102, opponents in Texas immediately set out to undo the reform, using both legal and political means. Florida filed suit the day it was signed into law, and Texas immediately joined it — a total of 26 states would eventually be co-plaintiffs as the law inevitably moved towards a constitutional test. Across the nation, conservatives ran on the promise of repealing the law; the legislation helped define and energize the newly-emerging Tea Party. In Texas, the 2010 elections saw the Republicans gain a historic supermajority in the state House of Representatives, along with overwhelming dominance in the Senate, a sweep few predicted. Other factors came into play in a state with no Democrat holding statewide office, but resistance to health care reform was a powerful and unifying issue.

What it does
ACA is designed to unfold over several years, with the last provision scheduled to take effect in 2015. Key elements include:

  • A dramatic expansion of who will be eligible for Medicaid;
  • Ending denial, or loss of coverage, due to pre-existing conditions;
  • Extending young adults’ coverage under their parent’s insurance plans to age 26;
  • Creation of health exchanges to offer a variety of health insurance choices at varying levels of cost and coverage (The states have the option to create these exchanges. If they don’t, the Federal government will);
  • Establishing an individual mandate; that is, most Americans will be required to have some kind of insurance, or pay a penalty, or tax, if they choose to remain uninsurThere are many, many more changes to the system, affecting insurance companies, small and large businesses, large urban hospitals and remote rural care, doctors, caregivers and patients — it is a massive reform of health care in America that effectively if not completely ends the U.S. distinction of being the only industrialized country in the world without universal healthcare.

How it Works
The ACA is designed to expand health coverage in two broad ways: offering more choices to Americans via state or federal-run health care exchanges, and by expanding Medicaid for the poor and other low-income Americans.

The exchanges are meant to provide a clearinghouse of choices and information, helping individuals and small businesses alike get information, determine eligibility, compare providers and shop for the right deals, at least theoretically creating possibilities for savings enjoyed by large organizations.

Texas leaders have so far shown no sign of setting up a state-run health insurance exchange, which means the federal government will by law have to step in and do it for them.

The second aspect — expanding Medicaid coverage to anybody younger than 65 making less than 133 percent of the Federal Poverty Level (FPL) — begins in January 2014 and would cover millions of previously uninsured low-income Americans. Cost-sharing subsidies to families making 100 percent to 400 percent of the FPL are also offered under the law.

Extending Medicaid beyond its traditional scope of health care — for the disabled and children and their mothers — to anyone within the guidelines means everything will get bigger: the insured population, the bureaucracy, the responsibilities of the federal and state governments — and, of course, the bills. To soften the financial blow to the states, the ACA’s Medicaidprovisions are structured so that the federal government would pay 100 percent of the new costs for the first 3 years, then gradually cede some of the costs to the states, ultimately capping at 10 percent.

Central to “affordable” in the Affordable Care Act is the idea of the individual mandate — that is, requiring nearly every citizen to participate, a large healthy population mitigating the cost of treating those needing care. Fundamental to the idea: sooner or later, nearly everyone, no matter how healthy, will eventually need healthcare, making the mandate ultimately equitable. Under the law, individuals — and businesses — may decide not to participate in ACA, but if they do so, they must pay a penalty, for individuals capping in 2016 at $695 per adult and $347.50 per child, up to a family maximum of $2,085 or 2.5 percent of family income, whichever is greater.

Against that tax, the ACA offers a wide range of incentives, from tax breaks to financial assistance, to participate in the system and broaden the insured base.

The Supreme Court Decision
Florida filed a lawsuit (Florida v. Department of Health and Human Services) immediately after the president signed the bill, seeking to strike down the law under the twin principles of the individual mandate and the expansion of Medicaid. Texas joined that suit the same day, eventually followed by 24 more states. As the case progressed through the federal appeals courts, it was merged with another lawsuit — National Federation of Independent Business v. Sebelius — and that was the case that was finally heard by the U.S. Supreme Court. Oral arguments were presented to the justices over three days in March, 2012. The rhetoric around the ACA was further charged by heated presidential-year primaries. During arguments, both sides’ arguments — and especially the judges’ questions — received intense scrutiny for some clue to the court’s ultimate decision.

The interest hardly abated until June 28, when the Supreme Court upheld the law’s constitutionality by a 5-4 margin. Chief Justice John Roberts, appointed by George W. Bush in 2005, was the unexpected swing vote.

The consensus of legal experts and pundits alike was that the Affordable Care Act would stand or fall on the Individual Mandate provision; if it was deemed unconstitutional, the fate of rest of the federal health reform was at best uncertain. In upholding that central tenet, Roberts outraged conservatives, but the way he upheld it — by labeling it a tax instead of a penalty, a well-established right of Congress — and giving states an out, saying they could decline to participate in ACA without losing current funding — gave a boost to opponents and a potentially wide-reaching poison pill to supporters of the broader principle of federal versus states’ rights.

The Reaction in Texas
Reaction was swift. Gov. Rick Perry condemned the decision as a “stomach punch to the American economy,” but Texas Attorney General Greg Abbott saw deeper implications in Roberts’ decision, going so far as to declare victory even as most conservatives remained stunned at the outcome.

On July 9, Perry went on Fox News, declaring Texas would exercise the option outlined in Roberts’ decision and not participate in the expansion of Medicaid. Texas House Speaker Joe Straus, R-San Antonio, who joined the general conservative outcry, nonetheless noted that the state legislature would “be much more involved in the decision-making on this.”

What’s Next
The Supreme Court’s decision to uphold the law marked the beginning of fresh uncertainty, with virtually every Republican from presidential nominee Mitt Romney on down vowing to repeal the law if the GOP gained a significant majority. But the 2012 General Election re-elected Obama and dealt losses in both the House and Senate to the GOP. Ted Cruz, who replaced outgoing Kay Bailey Hutchison in the U.S. Senate, followed through on his campaign promise to file a bill to repeal Obamacare, but acknowledged it stood virtually no chance, saying in a statement, “Unfortunately, this bill will not pass in the current Congress, but I will continue working hard until we have the votes to repeal Obamacare in its entirety.”

Initially, many Republican governors, following almost immediate pronouncements from Florida and Texas, said they wouldn’t participate in the expansion to Medicaid. In practice, that hard line has proven problematic. While opposing expansion might play well to the conservative base, leaving a significant portion of the population uninsured could come at a political cost –– if Texas participated, it’s estimated that as many as 4.4 million of the state’s six million uninsured will be covered by 2014. Economically, the effect of opting out is similarly stark, with billions of Federal dollars left on the table: in trying to avoid spending $9.6 billion over 10 years (according to a state Health and Human Services Commission estimate), Texas will turn away $112 billion.

No matter how you look at it, the numbers are staggering: implemented, between 2013 and 2017, Texas will spend $68 billion on healthcare, the Federal government $1.2 trillion.

The arguments against expanding coverage are rooted in tough math: Opponents point out that even if all those additional Texans get a new card with Medicaid expansion, there aren’t enough doctors accepting Medicaid patients to cover those 4 ½ million people –– and the number of doctors, currently about 30 percent, has been steadily declining, dissatisfied with, among other things, the state’s reimbursement rate. Beyond that, detractors say, even the relatively modest outlay required of the state –– theoretically nothing at first, with the state’s share of the burden gradually increasing, although there would certainly be considerable administrative costs in setting the whole thing up –– is enough to bankrupt the state, already strained to bursting by the system as it currently stands –– as system, many maintain, is already broken. Gov. Perry likened the situation to getting on board a sinking ship. ““To expand this program is not unlike adding a thousand people to the Titanic,” he said.

Americans remain deeply divided on the law. Many provisions of the law have already been enacted and would be tough to walk back, even if the numbers and political will existed in Congress to repeal the law: extending parents’ health insurance to adult children, making it illegal to deny coverage to children based on pre-existing conditions, lowering prescription drug costs for seniors, etc. — many opposed to the law in general may still find much to like in the law’s particulars.

Leaving that much money on the table has implications for a range of businesses, from clinics and hospitals to doctors to insurers. Small businesses are certainly interested in controlling insurance costs, and the health care exchanges, another aspect of Obamacare adamantly opposed by Perry, has, along with incentivising tax credits, at least the potential to do just that. In February 2013, after long internal debate, the state’s largest group of doctors, the Texas Medical Association, came out in support of expanded Medicaid coverage –– with conditions: that reimbursement rates improve, and that the system be improved to minimize excessive paperwork and overzealous enforcement. This came months after the Texas Hospital Association, also with plenty of skin in the game, endorsed expansion –– without conditions. Hospitals would stand to gain, even if doctors don’t take on more eligible patients,  because money could flow to relieving the costs of indigent care –– which could ultimately bring relief to local taxpayers. And some economists have cited a stimulus effect from all those health care dollars flowing into the state: a $1.29 return for every dollar spent, according to one study.

Perry and new HHSC chief Kyle Janek, among others, favor a system of block grants — allowing the states to take federal money and design their own health care systems — as an alternative to the ACA, or, less ambitiously, to Medicaid expansion. There is some evidence that more local control can offer better outcomes, but skeptics point to Texas’ last-place standing in per-capita spending on its citizens and wonder if the state has any real impulse to improve health care.

Other states that originally took a similar hard line against the expansion of Medicaid have since agreed to participate, among them Arizona, where staunchly conservative Governor Jan Brewer conceded that "The Affordable Care Act is not going anywhere, at least not for the time being," and Ohio, whose Republican Governor Kasich said expanding Medicaid "makes sense for the state of Ohio."

Everything about the ACA is big. The law itself runs 2,407 pages. The problems it attempts to address are tremendous. It figures large in Obama’s political legacy and will probably be the signature legislation of his administration. The resistance to it in Texas and across the nation has been massive. And regardless of whether it survives in full or in part or is repealed altogether, its effect on Texans will be huge.


Obamacare in the Valley

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