OK-SAFE, Inc. Blog

July 3, 2012

Supreme Court Decision on the Affordable Care Act


OK-SAFE, Inc. – On June 28, 2012 the Supreme Court of the United States struck down the “individual mandate” contained in the Patient Protection and Affordable Care Act, (PPACA), aka “ObamaCare”.

At least, some of the Supreme Court Justices struck down the individual mandate, others did not.

The Court’s Opinion is divided into Parts I through IV, each with a decision, with the opinions rendered via different pairing of Justices.  Scalia, Kennedy, Thomas, and Alito, JJ., filed a dissenting opinion.  The dissenting opinion is where the controversial exchanges are cited.

Justice Roberts wrote that the commerce clause of the U.S. Constitution cannot be used to compel an individual to purchase something, whether that something is a product or a service.  This includes health insurance.

Roberts went on to render an opinion that the “penalty” described in the Affordable Care Act is in reality a “tax”.  The Court did affirm that Congress does have taxing authority under the Constitution – and taxing us is apparently what Congress aims to do.

The opinion reads, in part, “The Affordable Care Act’s requirement that certain individuals pay a penalty for not obtaining health insurance may reasonably be characterized as a tax.  Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”[1]

The U.S. Congress is now in the uncomfortable position of being caught in a very big lie about the true effect of “ObamaCare”, which was never really about caring for health.   What the Affordable Care Act has done is set out the parameters for a complex series of interconnected information technology systems; insurance exchanges (voluntary, by the way) that fundamentally redesign the insurance industry; and (apparently) set up an onerous taxing mechanism.

The Court also seems to have struck down the penalty to States that choose not to participate in the Medicaid expansion program “by taking away their existing Medicaid funding.”  The Government argued that this expansion was a modification of the existing program, but Justices Roberts, Breyer and Kagan disagreed, stating that the “expansion accomplishes a shift in kind, not merely degree. The original program was designed to cover medical services for particular categories of vulnerable individuals.  Under the Affordable Care Act, Medicaid is transformed into a program to meet the health care needs of the entire non elderly population with income below 133 percent of the poverty level. ”[2]  (Bold and italics added throughout.)

Roberts further declared, “A State could hardly anticipate that Congress’s reservation of the right to “alter” or “amend” the Medicaid program included the power to transform it so dramatically. The Medicaid expansion thus violates the Constitution by threatening States will the loss of their existing Medicaid funding if they decline to comply with the expansion.[3]

Health Insurance Exchanges and Their Federal Subsidies

The Scalia, Kennedy, Thomas, and Alito dissenting opinion contains roughly 22 mentions of the insurance exchanges.[4] The dissent links the exchanges to the federal subsidies (again, voluntary) and reads, in part, “The ACA requires each State to establish a health ­insurance “exchange.” Each exchange is a one-stop mar­ketplace for individuals and small businesses to compare community-rated health insurance and purchase the policy of their choice. The exchanges cannot operate in the manner Congress intended if the Individual Mandate, Medicaid Expansion, and insurance regulations cannot remain in force. The Act’s design is to allocate billions of federal dollars to subsidize individuals’ purchases on the exchanges.”[5]

Regarding the insurance exchanges, these are intended to plug into the health information exchange “network of networks” currently being established in the states, including Oklahoma.[6]

The dissent continues, “Individuals with incomes between 100 and 400 percent of the poverty level receive tax credits to offset the cost of insurance to the individual purchaser. By 2019, 20 million of the 24 million people who will obtain insurance through an exchange are expected to receive an average federal subsidy of $6,460 per person. See CBO, Analysis of the Major Health Care Legislation Enacted in March 2010, pp. 18–19 (Mar. 30, 2011). With­out the community-rating insurance regulation, however, the average federal subsidy could be much higher; for community rating greatly lowers the enormous premiums unhealthy individuals would otherwise pay. Federal subsidies would make up much of the difference.”

“The result would be an unintended boon to insurance companies, an unintended harm to the federal fisc, and a corresponding breakdown of the “shared responsibility” between the industry and the federal budget that Congress intended. Thus, the federal subsidies must be invalidated.”

Further, “Without the federal subsidies, individuals would lose the main incentive to purchase insurance inside the exchanges, and some insurers may be unwilling to offer insurance inside of exchanges. With fewer buyers and even fewer sellers, the exchanges would not operate as Congress intended and may not operate at all.”

The insurance exchanges continue to be a problem, but despite the warnings and the evidence of their failure (Utah), proponents continue to advocate for their establishment.  Perhaps this is due to the expectation that an insurance exchange would result in “an unintended boon to insurance companies”?

OK-SAFE maintains its’ position against the establishment of an insurance exchange in Oklahoma, state-based or otherwise.

Endnotes:[1]National Federation of Independent Business v. Sebelius, page 44. Page 50 of the pdf.

[2] Ibid, page 5

[3] Ibid, page 5

[4] Ibid. pp. 52-63 of the Scalia, Kennedy, Thomas, and Alito, JJ., dissenting. Pp. 178 – 189 of the pdf

[5] Ibid, page 59 of the dissent.  Page 185 of the pdf.

[6] The information exchange works via information technology (i.e. computers) systems that connect the patient, the provider and the payer, where the payer means the insurer. The American Recovery and Reinvestment Act, or ARRA, which passed in 2009, was the real health care reform law, funding the creation of an electronic health record on everyone, and the necessary information exchanges for data sharing.  Oklahoma took $8.8 million to set up Oklahoma’s exchanges.  Created in 2010, the Oklahoma Health Information Exchange Trust, or OHIET, is busy setting this up in this state The insurance exchange detailed in PPACA fits into this “network of networks”, linking the patient, the provider, and the payer into one interconnected system.  There is only one exchange system and it i the federal system.  There is no such thing as a state-based exchange that is functionally different than the one designated in ObamaCare.  See the Model is the Message diagram at http://www.exposinghealthcareform.com

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