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Supreme Court Upholds Health Care Law

What the Supreme Court Decision Means for You and for Michigan

In the wake of the Supreme Court’s  5 – 4 decision upholding  nearly all of the central features of the Patient
Protection and Affordable Care Act of 2010 (ACA), two elements stand out:

  • By construing the penalty for individuals who refuse to carry insurance coverage as a tax, Chief Justice John Roberts, who rendered the majority opinion, ruled that the individual mandate falls within Congress’ authority to levy taxes.
  • The Court also ruled that the federal government cannot require states to participate in the expansion of Medicaid by taking away funds from the existing Medicaid program. Many states are resisting the Medicaid expansion, a central objective of the legislation. Michigan is not among them.  Up to a half million citizens in Michigan will be eligible for Medicaid, in addition to the 1.9 million currently covered, and 90 percent of that newly expanded coverage will be paid by the federal government.

What It Means

The high court’s decision upholds the ACA as the law of the land. With the exception of the Medicaid opinion, the ruling upholds all of what has been done to date and what will be done through 2019 to implement the law. Significant parts of the implementation have already occurred, such as eliminating exclusions for pre-existing conditions, preventing medical underwriting, limiting insurers’ administrative costs, covering young people up to age 26, and offering subsidies to individuals and small employers to opt for insurance. Most of the remaining key provisions of the ACA will continue to unfold through 2014 – and most of those by January 1, 2014 – when employers of 50 or more will be required to offer credible coverage or pay penalties, and when individuals will also be required to carry coverage.

In Michigan, steps to create a Health Insurance Exchange for smaller businesses and individuals were put aside by the House of Representatives until the high court rendered its decision. Now, the state must move quickly to create its own exchange, or be covered by an exchange to be created by the federal government.  Within the exchange, the designation of what benefits are essential in an insurance product will be a key decision that will affect the cost of the products approved for listing on the exchange. The federal government has issued guidelines, but a lot of interpretation has been left to the states.  For their part, businesses will have to decide 1) whether to offer coverage to employees and 2) whether to use products in the exchange. In part, those decisions may reflect their interest in going beyond exchange benchmarks to compete for talent and to develop a more healthy, more productive team to improve their competitive position.

What the Future Holds

The court’s decision will not end the controversy surrounding ACA, where polls show a divided nation.  Nor will it resolve the nation’s health care ills. Cost and quality issues will persist, combined with an increasingly older population with growing chronic care needs. But it does provide a public policy road map for the next seven years, and it will certainly be tweaked from time to time by Congress. Over the next several months, Republicans will continue to challenge the law on the campaign trail. The November election will be the next major referendum, and the composition of the Executive Branch and Congress will determine the future of the ACA.  As things stand today, there are not sufficient votes in Congress to overturn the ACA. Whatever the outcome, expect the transformation of health care to continue and to accelerate – through private sector initiatives as well as public – simply because the size and costs of health care are far too big for anyone to ignore.

Where the Chamber Stands

The Detroit Regional Chamber has not taken a position on the Affordable Care Act. The Chamber, along with most of the business community, opposed the creation of a “public option” during the early discussion of the legislation. Once this provision was dropped, the Chamber assumed a neutral position. The Chamber has members that are strongly supportive of, strongly opposed to, and uncertain of, the ACA.

The Chamber is concerned about the rising cost of health care and its impact on the ability of businesses (especially small businesses) to thrive, grow the economy and create needed jobs.  The status quo is not acceptable as high costs and the uncertainty around health care legislation is contributing to a sluggish economic recovery. The Chamber respects the process the ACA went through.  It was legislation passed by Congress, signed by the President, challenged in court, and now the U.S. Supreme Court has settled that challenge. Now our attention must turn to how this law gets implemented.

The Chamber supports Governor Rick Snyder’s efforts to create a health care exchange in Michigan, as required by the recently upheld law, that will use market forces to allow greater access and lower health insurance costs to businesses and individuals.