Exchanges could survive even if health reform dies

Even if the Supreme Court strikes down the health care law, industry experts expect some states will still proceed with establishing health insurance exchanges.

NEW YORK (CNNMoney) -- The Supreme Court's review of health reform means any or all of the law's mandates, such as coverage of adult dependents up to age 26 and protections for people with pre-existing conditions, could be in jeopardy.

But health insurance exchanges -- which also must be set up as part of the law -- may survive and flourish even if the entire Affordable Care Act is struck down, industry experts said. Exchanges are meant to offer cheaper health plans, so more of the nation's 32 million uninsured can afford coverage.

Regardless of what happens to the health reform law, "there is bipartisan support for states having some kind of health insurance exchanges," said Christopher Condeluci, a tax attorney with law firm Venable LLP and former tax counsel to the Senate Finance Committee.

Among other things, health reform mandates that by 2014 all states set up a health insurance "exchange," an online marketplace where consumers who are underinsured or uninsured will be able to shop for subsidized coverage, and small businesses can buy more affordable plans for their workers.

The law also gives states federal grants to help build their exchanges.

The Court, which is expected to announce its ruling on the constitutionality of the Act later this month, could uphold the law, overturn it partially, or completely strike it down.

If the law is struck down completely, the loss of federal grants will make it harder for states to start exchanges, said Brett Graham, head of the Insurance Exchange Practice at law firm Leavitt Partners in Salt Lake City, Utah.

But the "train has already left the station" and some states will establish exchanges anyway, Graham said.

Indeed, even before health reform passed in 2010, Massachusetts and Utah already operated insurance exchanges. And a handful of states were exploring setting them up as a way to cut their health care spending by getting more residents insured, said Dan Schuyler, former director of technology who helped launch Utah's exchange in 2009.

With fewer uninsured people, there's less financial burden on states' public health-care programs such as Medicaid.

Soon after health reform became law, two dozen states reached out to learn more about Utah's program, said Schuyler, now a director with Leavitt Partners.

Two years later, many of those same states remain committed to establishing exchanges. California, Oregon, Maryland, Colorado and New York have already passed legislation to establish state-based exchanges by 2014, said Brett Graham, head of Leavitt Partners' Insurance Exchange Practice.

That's in contrast to some other states that have asked for waivers on meeting the deadline for setting up exchanges, are taking a wait-and-see approach, or are actively fighting health reform.

In any case, consumer demand for the exchanges is already there, said Condeluci. "Whether it's individuals buying their own coverage or employers buying it for them, people want a consumer-friendly place to buy health insurance," he said.

Still, if the law is struck down, creating exchanges will get trickier, said Jeff Munn, vice president of benefit policy development with Fidelity Investments.

"Without the mandate of a uniform structure, states themselves have to figure out what the exchanges look like," said Munn. "It will be a little bit of a Wild Wild West."

Another big question is how the exchanges will be financed if the federal government doesn't pony up money for them, said Munn.

Also unclear is whether states that already got federal grants to set up exchanges would have to give it back, said Munn.

But despite these questions, Munn believes more exchanges will begin to roll out.

"In many states the scaffolding is already there for health exchanges," he said. "The hope is that if they build it, people will come." 

View the original article here

Exchanges could survive even if health reform law dies

Even if the Supreme Court strikes down the health care law, industry experts expect some states will still proceed with establishing health insurance exchanges.

NEW YORK (CNNMoney) -- The Supreme Court's review of health reform means any or all of the law's mandates, such as coverage of adult dependents up to age 26 and protections for people with pre-existing conditions, could be in jeopardy.

But health insurance exchanges -- which also must be set up as part of the law -- may survive and flourish even if the entire Affordable Care Act is struck down, industry experts said. Exchanges are meant to offer cheaper health plans, so more of the nation's 32 million uninsured can afford coverage.

Regardless of what happens to the health reform law, "there is bipartisan support for states having some kind of health insurance exchanges," said Christopher Condeluci, a tax attorney with law firm Venable LLP and former tax counsel to the Senate Finance Committee.

Among other things, health reform mandates that by 2014 all states set up a health insurance "exchange," an online marketplace where consumers who are underinsured or uninsured will be able to shop for subsidized coverage, and small businesses can buy more affordable plans for their workers.

The law also gives states federal grants to help build their exchanges.

The Court, which is expected to announce its ruling on the constitutionality of the Act later this month, could uphold the law, overturn it partially, or completely strike it down.

If the law is struck down completely, the loss of federal grants will make it harder for states to start exchanges, said Brett Graham, head of the Insurance Exchange Practice at law firm Leavitt Partners in Salt Lake City, Utah.

But the "train has already left the station" and some states will establish exchanges anyway, Graham said.

Indeed, even before health reform passed in 2010, Massachusetts and Utah already operated insurance exchanges. And a handful of states were exploring setting them up as a way to cut their health care spending by getting more residents insured, said Dan Schuyler, former director of technology who helped launch Utah's exchange in 2009.

With fewer uninsured people, there's less financial burden on states' public health-care programs such as Medicaid.

Soon after health reform became law, two dozen states reached out to learn more about Utah's program, said Schuyler, now a director with Leavitt Partners.

Two years later, many of those same states remain committed to establishing exchanges. California, Oregon, Maryland, Colorado and New York have already passed legislation to establish state-based exchanges by 2014, said Brett Graham, head of Leavitt Partners' Insurance Exchange Practice.

That's in contrast to some other states that have asked for waivers on meeting the deadline for setting up exchanges, are taking a wait-and-see approach, or are actively fighting health reform.

In any case, consumer demand for the exchanges is already there, said Condeluci. "Whether it's individuals buying their own coverage or employers buying it for them, people want a consumer-friendly place to buy health insurance," he said.

Still, if the law is struck down, creating exchanges will get trickier, said Jeff Munn, vice president of benefit policy development with Fidelity Investments.

"Without the mandate of a uniform structure, states themselves have to figure out what the exchanges look like," said Munn. "It will be a little bit of a Wild Wild West."

Another big question is how the exchanges will be financed if the federal government doesn't pony up money for them, said Munn.

Also unclear is whether states that already got federal grants to set up exchanges would have to give it back, said Munn.

But despite these questions, Munn believes more exchanges will begin to roll out.

"In many states the scaffolding is already there for health exchanges," he said. "The hope is that if they build it, people will come." 

View the original article here

Can the health care reform law survive without the individual mandate?

Two health care reform protesters on the first day of oral arguments. (Charles Dharapak/AP)

Could President Obama's sweeping health care reform law survive if the court strikes down the requirement that all Americans buy insurance?

The short answer is yes -- but insurance companies certainly won't be happy about it.

Both Justice Department lawyers and their challengers agree that the individual mandate is not "separable" from the rest of the law, which means the rest of the law can't survive if the individual mandate is surgically removed by the court.

[Complete coverage of the Supreme Court health care case]

The lower courts have been split on the question, but one of them, the 11th Circuit Court of Appeals, ruled in August that only the mandate should be struck down, leaving the rest of the law's provisions -- including an expansion of Medicaid to cover all low-income people and federal subsidies for lower-income and middle-class people to buy insurance -- in place.

That decision no doubt sent shivers down the spines of some insurance executives. Striking down the mandate could be a nightmare scenario for the health insurance industry, since the rest of the law compels them to accept sick customers and to not charge higher premiums based on a customer's health, age or gender. Sick customers would flood the insurance market and drive up costs, while young, healthy uninsured people would take their chances and not buy coverage, in what insurers worry would be a "death spiral" of rising costs.

[Related: Monday's audio of the Supreme Court health care law oral arguments]

The Congressional Budget Office estimated that premiums in the individual market would increase 15 to 20 percent if just the mandate is struck down, since millions of healthier Americans would could forgo buying insurance and thus not offset the costs of new sick customers. But a study by the Rand Corporation estimated a more modest premium increase of less than 3 percent. MIT Professor Jonathan Gruber wrote in an analysis for The Center for American Progress that 50 to 75 percent fewer uninsured people would be covered by 2019 under the law if there was no mandate, but that the government would only save 25 to 30 percent on the lower numbers.

Starting in 2014, the mandate will levy a penalty of 1 percent of a person's income on those who don't buy health insurance, with exceptions for religious objections and financial hardship. The fee would eventually increase to 2.5 percent of annual income or $695, whichever is higher.

Maura Carley, president of the patient advocacy firm Healthcare Navigation, tells Yahoo News that New York state provides a case study for what could happen if the mandate is struck down, but insurers are still required to take every patient and charge them equally.

"We go back to 1993," she said, referring to when the state passed a law requiring insurance companies to cover everyone. "Every New Yorker can get individual coverage, they just can't afford it." (Unlike in New York, the health care law will offer subsidies to people to purchase health insurance.)

To avoid this outcome, Justice Department attorneys are asking the court to strike down the regulation requiring insurers to take all customers if they decide to kill the individual mandate. In this, they partially agree with the 26 states that are suing the government over the law. The states' attorney, Paul Clement, will argue that the entire law needs to be struck down, echoing Florida-based Federal Judge Roger Vinson's ruling that Congress would not have passed the law without the individual mandate, and thus the entire thing should fall.

[Related: Santorum uses Supreme Court health care hearing to knock Romney]

If the Court does only strike down the mandate, the death spiral could be averted, argues Aaron E. Carroll, an associate professor at the Indiana University School of Medicine. He writes that the government could give big tax breaks to people who buy insurance as one way to prevent "adverse selection." Princeton sociologist Paul Starr writes that Congress could replace the mandate's monetary penalty with an opt-out system, where people who choose not to purchase insurance must sign a form saying they won't buy insurance for a period of five years. This would prevent some people from waiting until they get sick to buy insurance, which drives up costs.

But any of those changes would actually require Congress to pass new laws, which seems highly unlikely given that Republicans control the House and are pushing for a full repeal of the law. Individual states could take up the cause, by passing their own mandates or other measures to encourage people to buy insurance.

Other popular Yahoo News stories:

• The Supreme Court's health care reform case: What to expect

• Poll shows steep drop in support for war in Afghanistan

• New Orleans police officer suspended over Trayvon Martin comments

View the original article here

Health care arguments: Can any portion survive?

WASHINGTON (AP) — The Supreme Court signaled Wednesday that it could throw out other key parts of President Barack Obama's health care law if it first finds the individual insurance requirement unconstitutional.

On the third and last day of arguments, the justices appeared to accept the administration's argument that at least two important insurance changes are so closely tied to the insurance requirement that they could not survive without it.

Less clear was whether the court would conclude the entire law, with its hundreds of unrelated provisions, would have to be cast aside.

The justices also spent part of the day considering a challenge by 26 states to the expansion of the Medicaid program for low-income Americans, an important feature in the effort extending health insurance to an additional 30 million people.

The court's liberal justices made clear they will vote to uphold the Medicaid expansion, which would take in 15 million people with the federal government paying almost all the costs.

Justices Sonia Sotomayor, Elena Kagan, Ruth Bader Ginsburg and Stephen Breyer voiced strong disagreement with the states' contention that the expansion of the joint state-federal program is unconstitutionally coercive.

"Why is a big gift from the federal government a matter of coercion?" Kagan asked.

The day's earlier session was unusual in that it assumed an answer to the central question in the historic health care case: that the requirement that Americans carry health insurance or pay a penalty will be struck down. In fact, if they follow their normal practice, the justices have not even met yet to take a preliminary vote in the case.

Audio of Wednesday morning's argument can be found at: http://apne.ws/GX1p23 .

In their questions, the liberal justices took issue with Paul Clement, the lawyer for the states seeking to have the Patient Protection and Affordable Care Act tossed out in its entirety.

"What's wrong with leaving this in the hands of those who should be fixing this?" asked Sotomayor, referring to Congress.

Chief Justice John Roberts also spoke about parts of the law that "have nothing to do with any of the things we are" talking about.

For example, Ginsburg observed that the act deals with issues such as black lung disease.

"Why make Congress redo those?" she asked. "There are many things" that have "nothing to do with affordable health care."

But Clement said the court would be leaving "a hollow shell" if it decided to excise the several key provisions. "The rest of the law cannot stand," he contended.

Roberts and Justice Anthony Kennedy also asked hard questions of Deputy Solicitor General Edwin Kneedler that indicated they are at least considering Clement's arguments. Kneedler said that the only other provisions the court should kill in the event the mandate is stricken are revisions that require insurers to cover people regardless of existing medical problems and limit how much companies can charge in premiums based on a person's age or health.

Justice Antonin Scalia suggested many members of Congress might not have voted for the bill without the central provisions, and he said the court should not go through each and every page to sort out what stays and what goes.

"What happened to the Eighth Amendment?" Scalia asked, referring to the Constitution's ban on cruel and unusual punishment. "You really expect us to go through 2,700 pages?"

As the arguments resumed Wednesday morning, a smaller group of demonstrators than on previous days gathered outside.

Supporters of the law held a morning news conference where speakers talked about the importance of Medicaid. And, marching on the sidewalk outside the court, supporters repeated chants they've used the past two days including "Ho, ho, hey, hey, Obamacare is here to stay." Most of their group departed not long after arguments began inside.

Opponents of the law, including Susan Clark of Santa Monica, Calif., also stood outside the court. Clark, who was wearing a three-cornered colonial-style hat, carried a sign that read "Obamacare a disaster in every way!"

"Freedom, yes. Obamacare, no," other opponents chanted.

The first two days of fast-paced and extended arguments have shown that the conservative justices have serious questions about Congress' authority to require virtually every American to carry insurance or pay a penalty.

The outcome of the case will affect nearly all Americans and the ruling, expected in June, also could play a role in the presidential election campaign. Obama and congressional Democrats pushed for the law's passage two years ago, while Republicans, including all the GOP presidential candidates, are strongly opposed.

But the topic the justices took up Wednesday only comes into play if they first find that the insurance mandate violates the Constitution.

The states and the small business group opposing the law say the insurance requirement is central to the whole undertaking and should take the rest of the law down with it.

The federal appeals court in Atlanta that struck down the insurance requirement said the rest of the law can remain in place, a position that will be argued by a private lawyer appointed by the justices, H. Bartow Farr III.

On Tuesday, the conservative justices sharply and repeatedly questioned the validity of the insurance mandate.

If the government can force people to buy health insurance, justices wanted to know, can it require people to buy burial insurance? Cellphones? Broccoli?

Audio for Tuesday's court argument can be found at: http://apne.ws/Hft6z3.

The court focused on whether the mandate for Americans to have insurance "is a step beyond what our cases allow," in the words of Justice Kennedy.

"Purchase insurance in this case, something else in the next case," Chief Justice Roberts said.

But Kennedy, who is often the swing vote on cases that divide the justices along ideological lines, also said he recognized the magnitude of the nation's health care problems and seemed to suggest they would require a comprehensive solution.

And Roberts also spoke about the uniqueness of health care, which almost everyone uses at some point.

"Everybody is in this market, so that makes it very different than the market for cars or the other hypotheticals that you came up with, and all they're regulating is how you pay for it," Roberts said, paraphrasing the government's argument.

Kennedy and Roberts emerged as the apparent pivotal votes in the court's decision.

___

Associated Press writers Jesse J. Holland and Jessica Gresko contributed to this report.

View the original article here

Health-care reform: Main issue after 2 years is, will it survive?

Two years to the day after President Obama signed it into law, the Affordable Care Act remains very much a work in progress.

Skip to next paragraph

The White House says its health-care reforms have improved the lives of millions, though the legislation’s most important provisions have yet to take effect. Detractors – a category that includes every GOP presidential hopeful – scorn Mr. Obama’s health reforms as Treasury-busting infringements on American freedoms.

Yet the most important question dealing with the ACA may be not how it’s doing, but whether it will survive. Next week the Supreme Court hears oral arguments on the constitutionality of the law’s lynchpin requirement that individuals carry health insurance.

“What’s at stake basically is whether or not the signature domestic achievement of the Obama administration is sustained,” says Russell Wheeler, a visiting fellow in governance studies at the Brookings Institution, in an online interview on the Affordable Care Act’s future.

Obama himself did not make a big live appearance promoting the ACA’s birthday. That could be in deference to the upcoming Supreme Court arguments, or it could be a reflection of the fact that polls show US voters remain split on whether the law’s passage was a good thing.

White House spokesman Jay Carney said Thursday it is “absurd” to think that Obama is distancing himself from the health law. Carney noted that Obama’s campaign has produced a video featuring Americans who have benefited from the ACA.

And the White House itself on Friday issued a report highlighting what it called the progress produced by the legislation.

Among its assertions: 2.5 million more young adults have health insurance, thanks to an ACA requirement that they continue to be covered on parental policies; 5.1 million Medicare recipients have saved $3.1 billion on prescription drugs because of increased ACA coverage limits; and insurance firms can no longer drop policy-holders who get sick if they made a mistake on their applications.

“And thanks to health reform, all Americans will have the security to know that you don’t have to worry about losing coverage if you’re laid off or change jobs, and insurance companies are required to cover your preventive care like mammograms and other cancer screenings,” concludes the White House report.

Meanwhile, Republican presidential frontrunner Mitt Romney blasted the Affordable Care Act on Friday.

View the original article here