The Decision is In: The Impact on Elders of the

Supreme Court Ruling on the Affordable Care Act

Paul GionfriddoOur Health Policy Matters

http://pgionfriddo.blogspot.com

Palm Beach County Partnership for Aging

July 13, 20121

Summary and Introduction

What the Court Decided. The Effect of the Court’s Decision on

You and Me. What the Decision Means for the Future

of Medicare and Medicaid. A Gathering Storm – Public Policy and

Health in the Post-ACA World.

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What the Court Decided

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Insurance is the Biggest Driver in Increasing HC Costs to Families

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We Spend More on Insurance Bureaucracy Than…

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Government Pays Most of our $2.5 Trillion HC Bill

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Partial Listing - 80 Million With a Stake in the SCOTUS ACA Decision

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13.7 14.317

13 12.8

4.5 4

The ACA Supreme Court Challenge

Is the individual mandate constitutional either because it relates to interstate commerce or because it is a tax?

Is the Medicaid expansion to 133% of poverty constitutional, or does it “coerce” states into participating in Medicaid?

If either answer is no, can the unconstitutional part be “severed” from the rest of the law?

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The Decision

Individual mandate is constitutional, but not as a “command” under Commerce Clause, but because it is a tax.

Mandatory Medicaid expansion is unconstitutional; states can opt out of expansion and keep their existing Medicaid programs.

Unconstitutional portion is severable from the rest of the law.

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Why the Court Found the Individual Mandate Constitutional “It is estimated that four million people each year will choose to pay the IRS rather than buy insurance. … That Congress apparently regards such extensive failure to comply with the mandate as tolerable suggests that Congress did not think it was creating four million outlaws. It suggests instead that the shared responsibility payment merely imposes a tax citizens may lawfully choose to pay in lieu of buying health insurance.” Roberts Decision, p.37-38

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Why the Court Found the Mandatory Medicaid Expansion Unconstitutional

“Nothing in our opinion precludes Congress from offering funds under the Affordable Care Act to expand the availability of health care, and requiring that States accepting such funds comply with the conditions on their use. What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding.”

Roberts Decision, p. 55

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The Effect of the Court’s Decision on You and Me

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ACA More About Affordable Insurance Than Affordable Care

Subsidies for families earning up to $91,000+.

Medicaid eligibility up to 133% of poverty.

Equitable pricing of mental health benefits.

Consumer protections – pre-existing condition coverage, no cancellations for chronic illnesses, no annual/lifetime caps, children stay on parents’ plan until age 26.

Mandated minimum loss ratios of 80% to 85%.

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Medicare: The Gold Standard in Loss Ratios

Medicare pays out 93-96 cents for every $1 in.

$1.1 billion in ACA-mandated 2012 rebates to private insurance company customers by plans not meeting 80-85 cent MLR requirements.

Over $124 million in rebates to1.25 million Florida residents.

Average rebates in FL: $94 (large group), $190 (small group), $240 (individual).

Source: DHHS, June 2012

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ACA Decision: Who Wins and Who Loses?

You or your family member has a chronic disease or condition, such as mental illness, cancer, heart disease, or diabetes. Affects 133 million people.

Winner – no exclusions for pre-existing conditions for anyone as of 2014.

Jury’s Out – newly Medicaid eligible people in a state thinking of opting out of the Medicaid expansion.

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Population Winner or Loser?

ACA Decision: Who Wins and Who Loses?

You are a Medicare recipient. Affects 48 million people.

Winner. Donut hole closes and prevention services are intact.

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Population Winner or Loser

ACA Decision: Who Wins and Who Loses?

You want a single payer, Medicare-for-all program or you want a totally market-driven insurance system with little or no government involvement.

Loser. Maybe next generation.

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Population Winner or Loser

Private Insurance Share of Nation’s Health Services, Pre- and Post-ACA

2011 2021

34% 33%

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Source: CMS Projections, 2012

What the Decision Means for the Future of Medicare and Medicaid

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Medicare Trust Fund Assets Are Shrinking

Assets as of 1/1/11: $344 billion 2011 Income: $530 billion 2011 Expenditures: $549 billion Assets as of 1/1/12: $325 billion Enrollment: 48.7 million (8.3 million

disabled) Average benefit per enrollee: $12,042 Part D (Drug) benefit only: $1,870Source: Medicare Trustees Annual Report, 2012

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But Medicare Didn’t Cause Budget Imbalance

Medicare did not contribute to the debt. Medicare funding deficit is a

downstream threat – trust fund has enough money for 12 more years.

To keep Medicare as we know it solvent for 75 more years, Medicare taxes would have to increase by 0.67% on Medicare taxpayers and 0.67% on their employers. Source: Medicare Trust Fund Trustees 2012 Report

Current and Projected Medicare Cost as Percent of GDP

Current Year

FY2040 FY20850.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Current - With ACAACA Provider Cuts OverriddenAll ACA Cuts Overridden

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Source: Medicare Trustees Annual Report, 2012

The Effect of ACA on Medicare Donut Hole

3.6 million donut hole recipients saved drug money in 2011.› Florida: 238,362

Total savings: $2.1 billion› Florida: $142 million

Savings per person: $604› Florida: $596

Source: CMS Fact Sheet, 2/2/2012

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Effect of ACA on Medicare Preventive Benefits

14.3 million Medicare recipients received at least one free preventive service during the first 5+ months of 2012.

Source: CMS Release, June 11, 201224

Projected Growth of Medicare and Medicaid

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2012 2021

$590.80

$1,006.90

$458.90

$957.30

Current and Projected Medicare and Medicaid Costs (Billions)

Medicare MedicaidSource: CMS 2012 Projections

Federal61%

ACA: Medicaid Expansion At Risk

Florida family Medicaid eligibility limit 2012: $23,052 for a family of four.

Medicaid eligibility to 133% of poverty - $30,700 for a family of four (2012).

Fed pays 100% of the expansion cost first three years, 90% thereafter.

Affects 17 million people nationally.

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Why Medicaid Funding Matters

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FL Future Medicaid Cost Problems Not the Fault of ACA

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$574,000,

000 $351,000,

000

Source: FL Attorney General Pam Bondi, Supreme Court Brief, 2012

If States Reject Medicaid Expansion…

Effects on people with mental illnesses and other chronic conditions.

Affects basic benefits package – would not have to cover all mandated services or drugs.

Affects single adults with chronic conditions/disabilities, because single adults are among those newly eligible for Medicaid.

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A Gathering Storm – Public Policy and Health in the Post-ACA World

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Prevention, not treatment, accounts for half of our

health gains over the last century.

Will Prevention’s Share of Spending Go Down?

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States/Counties Don’t Support Prevention

29,000 local public health employees were lost between 2008 and 2010.

› NACCHO Survey, March 2011 “Cuts to Essential Public Health

Services Jeopardize Americans’ Health”› ASTHO Press Release, April 2011

FL cut $55.6 million and 229 FTEs from DOH in 2011.

› Health News Florida, August 2011

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Will the Federal Prevention Fund Disappear?

Started with $16 billion over ten years – less than 2% of overall ACA funding.

$5 billion cut in February 2012 to help fund payroll tax cut, unemployment benefits, and MD Medicare payments.

House voted complete repeal in April 2012. (Current U.S. Senate will not agree.)

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On the Horizon…

The SCOTUS ruling doesn’t end the debate.

According to an AP/GfK poll released in June, 77% of the public still wanted the President and Congress to work on health reform.

Will a market-based approach, including Medicare privatization, get more traction in Congress as it becomes a focal point of Romney’s campaign for President?

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Romney’s Market-Based Approach High risk pools for

people with chronic illnesses.

Prevent discrimination against people with pre-existing conditions only if they maintain continuous coverage.

Insurance sale across state lines.

Medicaid block grant to states.

More managed care.

Adverse selection and high cost.

Would eventually affect nearly everyone, because over 25% of us have a lapse in coverage each year.

Plans to be regulated to the lowest state standard.

More uninsured and higher costs to insured.

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But People Want More, Not Less, Government Spending on Health

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So Where Do We Go From Here?

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“His Own Heart Laughed: and That Was Quite Enough For Him.”

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