The National Voice for Special Needs and Medicare-Medicaid Plans

Supreme Court Ruling on ACA

On June 28, 2012, the U.S. Supreme Court ruled on two key aspects of the Affordable Care Act. It upheld the individual mandate requiring individuals to purchase health insurance or pay a penalty based on its right to impose a tax on individuals who fail to purchase health insurance. It also ruled that mandate requiring states to expand Medicaid to 133% of the Federal Poverty Level or risk having all Medicaid funding revoked was unduly coercive and, therefore, unconstitutional. As a result, the Medicaid mandate is now a state option.

Special Needs Plans (SNPs) and other integrated specialty care organizations (ICOs) had two primary concerns about the SCOTUS ruling. First, if the Court had stricken the individual mandate and determined that the rest of the law was unconstitutional as well, SNPs would have lost their statutory authority since it was last extended via the ACA. Second, since funding for Duals Office initiatives such as the Financial Alignment Demonstration was provided by the ACA, if this funding were revoked, CMS would have been forced to find new resources to maintain the demonstrations and related activities. This could have resulted in more pressure on states and plans to find savings via the demonstrations. As a result of the Court ruling, however, SNP authority remains intact until the end of 2013 and the Duals Office funding for integration activities was preserved.

One remaining question is whether the ruling making Medicaid expansion a state option will affect SNPs, ICOs and the Dual demonstrations either directly or indirectly. This issue clearly was the “sleeper” in the Supreme Court rulings. Fifteen states with Republican Governors have now either indicated that they will reject the expansion or are undecided but leaning against, while 12 Democratic governors and one independent have declared their intent to expand Medicaid. The question for SNPs and ICOs is whether the Medicaid expansion would lead to an expanded pool of potential insureds, more generous Medicaid benefits for existing members, better rates, or other advantages. Our initial read is that state decisions are not likely to have a significant effect on SNPs, ICOs or Dual demonstrations. SNP primary target groups, including the elderly and disabled who qualify for Supplemental Security Income already qualify for Medicaid coverage. The Medicaid mandate was intended to expand coverage to parents and non-elderly, non-disabled adults who currently do not qualify for coverage or qualify at very low levels of poverty.

CLICK HERE for the document that includes a more detailed discussion of these issues. It includes a chart offering a snapshot of the direction states are currently leaning on the Medicaid expansion question and the projected increase in number of insureds they stand to gain or lose as a result of their decision. While the governor’s positions are likely to remain a moving target between now and the election, many believe that even most Republican governors will sign up for the expansion after the election rather than forfeit their share of the nearly one trillion dollars on the table over the next 10 years – and an ongoing FMAP rate of 90%.

“The Supreme Court upheld the constitutionality of the Affordable Care Act. . . In doing so, they've reaffirmed a fundamental principle that here in America -- in the wealthiest nation on Earth – no illness or accident should lead to any family’s financial ruin. . . Whatever the politics, today’s decision was a victory for people all over this country whose lives will be more secure. . .” President Barack Obama

“The president’s health care law is hurting our economy by driving up health costs and making it harder for small businesses to hire. Today’s ruling underscores the urgency of repealing this harmful law in its entirety. What Americans want is a common-sense, step-by-step approach to health care reform that will protect Americans’ access to the care they need, from the doctor they choose, at a lower cost.” Representative John Boehner, Speaker of the House of Representative