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What’s next for healthcare reform?

Finally! With the reelection of President Obama at long last the future of health reform has been decided and Obamacare is here to stay. In just over a year, the law’s health care exchanges will be up and running, and an estimated 30 million Americans will gain coverage under what journalist Ezra Klein has called “the first iteration of a uniquely American universal healthcare system.”

Now the big question is, how well will it work?… and that will depend largely on decisions that the federal government, state governments, and the courts make over the coming months. Here’s a look at some of the big ones coming up.

The fiscal cliff

Even before the end of Obama’s first term, he and Congress will have to deal with what’s being called the fiscal cliff— a combination of tax increases and spending cuts scheduled to take effect automatically at the start of the new year.

None of the pieces of the fiscal cliff are terrible in and of themselves (with the exception of a sharp cut in Medicare reimbursement rates– see below). The problem is that they’re all scheduled to happen all at once, in an economy that’s still weak– raising taxes and cutting spending so quickly could drive us back into a recession. On the other hand, simply repealing all these laws would dramatically increase the deficit. Congress needs to work out a plan that won’t hamper the recovery, but will reduce the deficit in the long-term.

Right now, there are only a  few parts of the fiscal cliff that relate to health care:

  1. A 2% cut in Medicare reimbursement rates that was included as part of a trigger in last year’s debt ceiling deal. [For more on that deal check out our earlier post, The Debt Ceiling Deal Explained.]
  2. A separate sharp cut in Medicare reimbursements to doctors, automatically scheduled to take effect, thanks to a broken formula for increasing reimbursement rates that Congress passed in 1997. Rather than repeal the formula, Congress passes a temporary measure (known as the “doc fix”) every year or so. [We have a post explaining the “doc fix” in more detail here.]
  3. The Affordable Care Act’s new taxes on income and investments for those who make more than $250,000 per year are scheduled to take effect this year.

As it stands now, Medicaid and Obamacare would be left untouched, and that 2% cut to doctor’s reimbursement rates isn’t all that severe. However, as part of a deal to avoid the cliff and reduce the deficit, Republicans will be pushing for big cuts to those programs.


Under Obamacare, the uninsured will get coverage through insurance exchanges, but there are a few options for how those will be run. States have until November 16 to decide if they want to (1) run their own exchanges, (2) have the federal government run one for them, or (3) form a joint federal/state partnership. So far 13 states and Washington D.C. have elected to run their own exchanges, an approach that gives them more control over the insurance marketplace. The Washington Post’s Sarah Kliff gives some examples:

California, for example, wants to build an exchange that is an “active purchaser,” meaning it only sells the plans it thinks are really, really high quality. If it relied on the federal exchange, it probably wouldn’t have that option. The District of Columbia has set up an exchange that specifically prohibits any individual plan sales outside the new marketplace. Oregon created a consumer advisory committee within its exchange.

Meanwhile, some states with governors who wanted nothing to do with Obamacare, like Texas and Florida, have said they’ll let the federal government run the exchange. Other Republican governors were waiting to see who won the election, and are now scrambling to decide what to do in time for the November 16 deadline. Ironically it’s these states that claim to be the most in favor of local control who will likely end up with the federal government running their exchanges.

[Map via Center on Budget and Policy Priorities.]

Essential Benefits

The Affordable Care Act laid out some broad categories of “essential health benefits”– things that plans are now required to cover, including preventive care, emergency services, maternity care, and prescription drugs– but it’s up to states to determine the specifics.

States will have to make sure that plans are required to provide enough coverage to ensure quality health care, yet not so much that they become too expensive. Again, there’s a lot of flexibility here, as The Washington Post explains:

California legislators say acupuncture makes the cut. Michigan regulators would include chiropractic services. Oregon officials would leave both of those benefits on the cutting-room floor. Colorado has deemed pre-vacation visits to travel clinics necessary, while leaving costly fertility treatments out of its preliminary package.

Medicaid expansion

One of the main ways the Affordable Care Act provides coverage is by expanding Medicaid to anyone making less than 133% of the poverty line (currently in most states only certain categories of poor people, like pregnant women and the disabled, are eligible). But the Supreme Court ruling in June said that states can choose whether or not to participate in this expansion of the program.

Some states have already said they won’t  participate, which will leave many of their poorest residents without coverage, since you have to be above the poverty line to qualify for subsidies (the law assumed that anyone making less than that would get Medicaid). Here’s where each state currently stands:

[States marked with scales participated in the lawsuit against Obamacare.]

In the end though, most health policy experts believe that every state will come around to the expansion:

“The states are not going to give up the money,” said Gerard Anderson, professor of health policy at The Johns Hopkins University Bloomberg School of Public Health. “There are just too many dollars. The hospitals and insurers, but mostly the hospitals, are going to say, ‘Excuse me, we need the money.'”

Already some Republican governors who said they’ll refuse the Medicaid expansion are starting to backpedal. For example, the Miami Herald reported on a possible softening of Florida Governor Rick Scott’s total opposition to the law.


The case before the Supreme Court wasn’t the only legal challenge to Obamacare. There are a few other lawsuits that, while they couldn’t take down the whole law, could hamper it:

  • One lawsuit claims the Affordable Care Act says only state-run exchanges can provide insurance subsidies– meaning people who live in the states where the federal government runs the exchange would be out of luck.
  • Liberty University filed a suit claiming the requirement that businesses with more than 50 full-time employees provide health insurance or pay a fine is unconstitutional.
  • There are a bunch of suits against the rule that plans have to provide contraceptive coverage.

Benefit dodging rules

We’ll let the website Think Progress explain this one:

Obamacare requires large employers to offer full-time employees a minimum level of health benefits or pay a fine — but some companies have been toying with the idea of shifting more workers to part-time status in order to avoid the extra coverage costs. This would be a devastating labor practice for the low-wage workers who cannot afford private insurance but are not poor enough to qualify for Medicaid — and often work nearly as many hours as their full-time co-workers. HHS will likely issue rules to either prevent this kind of benefit-dodging or encourage large employers to insure part-time workers.

Making sure people sign up

The Congressional Budget Office estimates that under Obamacare 30 million Americans will gain health coverage, but another 30 million will be left uninsured. Some who remain without coverage simply aren’t eligible under the new law: undocumented immigrants and people who live in states that opt out of the Medicaid expansion.

But the rest of the uninsured will be people who are eligible for benefits but don’t enroll. A study by CVS Caremark found that 78% of the uninsured who will qualify for subsidies or Medicaid had never heard of the law’s health insurance exchanges. That’s why, for example, the CBO estimates that 6 million people who are newly-eligible for Medicaid simply won’t sign up for the program.

According to Sarah Kliff of The Washington Post:

This leaves open a pretty wide playing field for a group like Enroll America. If it does its job really well, the number of Americans who go way past 30 million. If it doesn’t, the number who sign up could fail to meet CBO projections.

Clearly there’s a lot of work to be done to get health reform up and running. We’ll be here covering it, so stay posted!

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