Over the last year as the myriad court cases about the federal health care law have made their way to the highest court in the land, California has spent that time moving ahead aggressively in implementing the Affordable Care Act (ACA). California was the first state to pass legislation to set up a health insurance exchange. The state also set up a new high risk pool so people with pre-existing conditions can get health insurance.
But what happens if the Supreme Court declares the individual mandate unconstitutional? Or overturns the entire law? What can still go forward in California?
The answer depends in part upon whom you ask. But for the most part California — like all states — will find it tough to move forward without the backing of the federal law.
Let’s start with today’s question — is the individual mandate constitutional? The purpose of the individual mandate is to get everyone into the health insurance pool, to spread risk. If the Supreme Court overturns the mandate, but leaves the rest of the ACA intact, the big question is: “Will the health insurance exchange go forward?” The exchange is a marketplace the state is establishing for individuals and small companies to buy health insurance. This market currently sports higher health insurance premiums because these groups don’t have the same purchasing power as large employers, for example. But without a mandate, there are numerous problems.
First, one of the ACA’s most popular provisions is its requirement that insurance companies can no longer disqualify people with pre-existing conditions. Bill Kramer is Executive Director for National Health Policy at the Pacific Business Group on Health, a coalition of large employers that is working to improve health care quality and reduce cost. He says if the mandate was overturned, “a fair number of people would choose not to get coverage, and you’d end up with the sickest people continuing to get coverage. It would be a high cost risk pool in individual markets.”
Indeed. In January the UCLA Center for Health Policy Research released a study [PDF] that estimated one million fewer Californians would obtain insurance without the individual mandate.
Diana Dooley is California’s Secretary of Health and Human Services Agency and also serves on the exchange board. She said whether the exchange could operate if the mandate were struck down is a “question that cannot be answered.” Still, she sounded cautiously optimistic in an interview. She pointed out that if the rest of the ACA is upheld, the law includes subsidies to help people purchase insurance. “If there are subsidies,” she told me, “if there is a way to make health insurance more affordable for the uninsured and spread the cost more fairly … we could still have a robust exchange.” But that’s a big “if.” It’s unclear if the federal government would be able to provide subsidies if the individual mandate is overturned.
But one other popular part of the ACA already enacted which would still go forward is children staying on their parents’ health plan until age 26. Pre-existing conditions exclusions for children have already been done away with and, presumably, would also go forward.
With one exception, every county in California has enacted a “Low Income Health Program” (LIHP). This “Bridge to Reform” is intended to help the poor who are not eligible for Medi-Cal obtain coverage until 2014 when the ACA goes into effect. At that point, they will be eligible for Medi-Cal coverage through an expansion legislated by the ACA. The Supreme Court hears oral arguments on the expansion tomorrow, which brings us to…
What if the Supreme Court strikes down the entire law?
Again, Dooley sounded a bit more optimistic on this front, even though the federal subsidies would go away. “If we don’t have the additional federal funding and the law of the Affordable Care Act, I think it will be a few years before California can get its feet underneath it to go it alone.” She believes California would ultimately pass its own individual mandate, something attempted in 2007 during under former Governor Arnold Schwarzenegger that ultimately lost by a few votes in the state senate.
But Bill Kramer pointed out that all the pieces of the ACA already put into place in California are all intertwined. “The reality is given the state’s fiscal condition,” he says, “it’s very difficult to put together all the pieces at the state level.” In addition, while the federal government can run a budget deficit, California cannot. Kramer points out that the Congressional Budget Office found the ACA to be “budget neutral” over ten years, but individual years will run deficits. Most states do not have the luxury of spreading spending for a major program over ten years.
Meanwhile, tomorrow is the last day of oral arguments before the Supreme Court. The Court’s decisions are expected in late June.