Big Sigh of Relief As Supreme Court Majority Upholds Affordable Health Insurance Nationwide

June 25, 2015

This is a post I’ve been hoping to write. And now I can because, as you’ve undoubtedly read, the Supreme Court majority has preserved the subsidies low and moderate- income people have been getting to help them afford health insurance purchased on the federally-operated exchange.

You may also have read some of the dire warnings of what would happen if the Court had ruled otherwise. Perhaps not as many as I’ve ferreted out, however. So I’ll begin with them. Then I’ll briefly highlight a less publicized warning of yet further harm, presumably averted.

Nearly Three-Quarters of Subsidies Saved

As you probably know, plaintiffs contended that the federal government couldn’t subsidize the costs of health insurance purchased on the exchange it created for people in the 34 states that wouldn’t — or in some cases, decided they couldn’t — create their own exchanges.

Say five instead of three Supreme Court members had agreed.

About 6.4 million people would have lost the tax credits that serve as subsidies, according to the latest enrollment figures. That’s roughly 74% of all those who receive them.

Their subsidies average $272 a month. So if premiums stayed the same, they’d have had to come up with an additional $3,264 a year. But premiums wouldn’t have stayed anywhere near the same. They’d have increased by an average of 35% next year, according to Urban Institute analyses.

Basic market forces would have driven a so-called death spiral. First, relatively young, healthy people would have decided to forgo health insurance rather than pay what their subsidies had covered. Insurance companies then would have faced higher per-customer healthcare costs. So they’d have jacked up their premiums to compensate.

Which, of course, would have led to more younger, healthier dropouts. Which would have led to … Well, you see where this is going. Premiums would ultimately have increased by 47%, the RAND Corporation concluded — unless states belatedly set up their own exchanges.

Some might have given it a shot. But few, if any could have gotten their own exchanges up and running by next year.

Some surely wouldn’t have tried. We’ve still got 18 states that refuse to expand their Medicaid programs, even though the federal government would initially cover all the healthcare costs of newly-eligible beneficiaries — and virtually all so long as that part of the ACA remains intact.

Most of these states, as well as others were in a wait-and-see mode. Some clearly looked to Congress to let them do whatever they fancied. And indeed, the House Republicans’ latest block grant plan would have. Not a happy prospect, for various reasons.

Greatest Reprieve for Poor and Near-Poor

An adverse ruling wouldn’t have affected the very poorest Americans. They never had a chance to buy subsidized health insurance on an exchange because their household incomes put them below the federal poverty line.

Some are eligible for Medicaid, even in the recalcitrant states. Texas, for example, will cover parents in three-person families with annual incomes at or below 19% of the FPL — currently $3,817. No Medicaid for even the poorest childless adults — nor in any other non-expansion state except Wisconsin.

But the near-poor apparently took advantage of the exchange option. We see, for example, that 94.5% of Mississippi residents enrolled benefit from subsidies averaging $351 a month.

More generally, individuals and families hovering just above the FPL would obviously have been the least able to pay for unsubsidized premiums — and full out-of-pocket costs like copays too. For those Mississippi folks, the average premium hike alone would have been 650%.

Hospitals Saved From Large Losses

Meanwhile, hospitals would have faced bigger cost crunches because they’d have been obliged to provide more emergency care for uninsured people. Through their major associations, they agreed to a lower compensation rate for the uninsured on the assumption there’d be fewer.

A ruling for plaintiffs would have blown another hole in the assumption. (The earlier ruling that made Medicaid expansion optional was the first.)

But hospitals are — and would still have been — stuck with the compensation rate. Their losses due to newly-uninsured patients would have totaled $3.8 billion next year, the Urban Institute estimates.

Next Step in Gutting the Affordable Care Act Short-Circuited

A victory for plaintiffs could well have prompted another round of litigation to dismantle the ACA — or, as one of the strategists put it, to kill “the bastard … as a matter of political hygiene.”

In this scenario, the anti-ACA funders and their allies would probably have called on the courts to invalidate federal funding for Medicaid and the Children’s Health Insurance Program in those same 34 states where residents lost their subsidies.

A  bit of background to understand how they’d go at it. The case before the Supreme Court hinged on what the ACA means when it refers to “an exchange established by the state” — or alternatively, whether the use of that term was a drafting glitch, clearly at odds with the intent of the law and other provisions in it.

Well, two wholly separate provisions use the same term, as Modern Healthcare reports. The more consequential conditions federal Medicaid/CHIP funding on states’ ensuring coordination between these programs and “an exchange established by the state.”

A ruling for plaintiffs in the case just decided wouldn’t automatically have denied Medicaid/CHIP funding to the 34 states without their own exchanges. But would it have given ACA opponents a good shot at another challenge affordable health insurance for poor and near-poor Americans? You betcha.


Can’t Work and Don’t Work Are Sooo Different

October 3, 2013

Congressman Kevin Cramer (R-ND) sparked some hostile interest when he responded to a message on his Facebook page that implicitly rebuked him for voting in favor of the Republicans’ new SNAP (food stamp) bill.

The message quoted at length a passage in the Book of Matthew in which Jesus says that, at the Last Judgment, those “on the right” will enter the Kingdom of Heaven because “I was hungry and you fed me, I was thirsty and you gave me to drink … Whatever you did for one of the least of these…, you did it for me.”*

Cramer retorts with an excerpt from Thessalonians: “If anyone is not willing to work, let him not eat.”

This has become somewhat of a trope in the right-wing side of the debate — prompted, at least in part, by strong, broad-based advocacy for SNAP and other safety net programs on the part of faith-based organizations.

Congressman Stephen Fincher (R-TN), for example, cited it during the debate over the Farm Bill that failed to pass — largely, though not entirely because the SNAP cuts weren’t big enough to satisfy enough of the Tea Party types.

I first came upon the passage as an injunction against SNAP in some comments on one of my posts — the most extreme of a fair number that trashed on the program or benficiaries thereof.

The commenter, self-identified as Proud NeoCon, A True American, asserted, among other things, that those who are purportedly too disabled to work “are just hiding behind … fake made-up illnesses” and thus “are too disabled to live.”

Don’t ask me to explain the logic here — or how one can read a passage that, as I understand it, refers to some who Paul hears are “disorderly,” idle “busybodies” as a justification for letting anyone who can’t earn enough to afford food starve.

I mention this ripple in the backwaters of my blog because the Proud NeoCon comments recently evoked a heart-wrenching response from Billy.

It speaks to the value of SNAP and also, I think, weaknesses in other parts of our safety net — one of which may soon be remedied by the Affordable Care Act.

Here’s a summary, with some inter-weaved quotations and a parting shot from Billy himself.

Billy is a former marine, married to a woman with a mild mental disability. He used to “work [his] butt off and made GOOD money.”

Then came the recession. He lost his job and, with it, his health insurance. His health “deteriorated,” and his wife was “labeled unable to work.” So the only income they had came from his disability insurance — the SSDI program that’s got the Washington Post on another of its entitlement rampages.

They couldn’t see a way to meet their children’s needs, pay the rent and electricity bills and still afford more than $2,000 a month for the medicines he’d been prescribed. “Of course, the children came first and I had to do without my life-giving medications, which is why I’m terminally ill,” Billy writes.

Now SNAP covers a portion of their expenses, making sure that he, his wife and their two boys (“ages 2 and 5, so way too young to work”) have “JUST enough food for healthy meals.”

“So to CORRECT you,” he concludes, “about ‘can’t work’ and ‘don’t work’, [t]hey are sooo different. I know. I live it.”

Perhaps Congressman Cramer intended his Bible quote to refer only to able-bodied adults without dependents, whom the House SNAP bill would toss out of the program unless they work at least half time or manage to get a slot in a workfare or job training program.

However, the bill invites states to reap rewards from reducing their SNAP rolls by imposing work requirements on able-bodied adults with very young children, even if they’ve no one to care for them.

Also on some adults with disabilities — even those for whom paying work is infeasible.

This last is a feature that the Post‘s extensive story on the sponsor — Congressman Steve Southerland (R-FL) — failed to mention.

We do learn, however, that he too finds justification in the Bible — oddly in Adam’s duty to tend the Garden of Eden, which last time I checked, was neither paying work nor training for same.

But I digress. It’s hard to know whether Billy could have paid for his medications, without depriving his family of food and a home, if he’d signed up for SNAP earlier. The maximum benefit they could have received was nowhere near $2,000 a month.

But what if they’d been able to purchase subsidized health insurance, as the ACA will soon make possible? Too late to save Billy, it seems — and, of course, even more objectionable to Cramer and his colleagues than SNAP.

Which is why we’re wondering how long the government shutdown will last — and whether it will be able to honor the debts it’s already incurred.

If Billy is worried about his SSDI checks and reloads of the EBT card for his family’s SNAP benefits, he’s got good reason.

* I am quoting one of the familiar translations. The passage as posted on the Congressman’s Facebook page ended differently, but to the same effect.


House Ways and Means Shifts Costs, Wipes Out Services Grants

May 7, 2012

I wouldn’t want to leave the impression that the House Agriculture Committee’s attack on the food stamp program was the only threat to low-income people spawned by the Republican majority’s effort to protect defense spending.

The Ways and Means Committee also had to find more savings — $53 billion over the next 10 years. And it too met its target by shifting costs to low-income people. But they’re not the only ones who’ll be harmed by what it’s come up with — far from it.

Here’s what the committee passed — and what the full Republican majority in the House almost surely will pass before week’s end.

Child Tax Credit Restriction

Ways and Means dusted off a proposal that earlier surfaced a way to offset some of the costs of extending the employee payroll tax cut and what remains of long-term unemployment insurance benefits.

Under the proposal, only parents with Social Security numbers could claim the Child Tax Credit. Immigrants who pay their income taxes using a number issued by the Internal Revenue Services would have to pay more because they’d lose the credit.

And those toward the bottom of the income scale would lose the partial reimbursement the tax credit provides.

First Focus reports that 5.5 million children would no longer benefit from the extra money their families have to spend on basic needs.

Elimination of Social Services Block Grant

Ways and Means would wipe out the Social Services Block Grant altogether. This also is a rerun, already revived in the current House budget plan.

SSBG is a relatively small program that provides states and the District of Columbia with funds they can use to meet a wide range of needs.

It’s commonly used for subsidized day care, services to protect both children and vulnerable adults from abuse and neglect, foster care and services that help seniors and people with disabilities live independently, e.g., Meals on Wheels, transportation.

Many states and the District also use SSBG funds for casework services that link people to programs that can help them.

The House Budget Committee calls the services “duplicative” because other pots of federal money fund them too.

This is misleading for two reasons. First, some states use the block grant for services that aren’t covered under other programs, e.g. protective services for elderly victims of abuse and neglect.

Second and more importantly, services aren’t duplicative just because states can draw on more than one program to fund them. Low-income parents who get child care subsidies funded by SSBG, for example, don’t also get subsidies funded by the Temporary Assistance for Needy Families program.

In other words, SSBG enables states to extend services they consider essential to more people who need them — over 22.6 million, according to the latest official figures.

Unlimited Health Care Subsidy Repayments

This is a bit technical, but it’s a big deal. So bear with me here.

Under the Affordable Care Act, people who aren’t poor enough to qualify for Medicaid can get subsidies to purchase health insurance through the exchanges, i.e., the upcoming state-level insurance markets, if they meet two conditions.

Their incomes must be at or below 400% of the federal poverty line. And they can’t get adequate, affordable health insurance through their employers.

The initial size of the subsidy is based — as it must be — on their income at the time they purchase or renew their health insurance. The lower their income, the bigger the subsidy.

What if their income rises substantially during the year? They’re unemployed at the beginning, but get a job, for example.

Under current law, they have to repay the excess they received, but only up to a fixed amount. Congress established a limit so that people wouldn’t choose to forgo health insurance because they might get stuck with a big repayment.

As the Center on Budget and Policy Priorities notes, Congress has twice raised the repayment cap to offset the costs of other health care legislation.

House Ways and Means would eliminate the cap altogether. The repayment some people could face would be more than five times the amount of the penalty they’d have to pay for not having health insurance.

An estimated 350,000 people — mostly the healthiest — would chose the penalty over the potential shock to their budgets later. Some, of course, would then be devastated by unexpected health care costs.

Meanwhile, people still in the insurance pool would, on average, have higher health care costs. So premiums would rise and, with them, the costs of subsidies.

The added stress on the exchanges would undermine the basic structure of the ACA — not an unintended consequence for the Republican majority. Nor is the outrage some people would feel when hit with a big repayment bill.

More support for the ACA repeal Republicans promise, if the Supreme Court doesn’t kill the law first.

Well, the House Ways and Means proposals, in their current form, won’t even get a vote in the Senate. But what we see here is that bad ideas don’t die just because they’re not enacted right away.

We should expect to see these and others resurface when House and Senate negotiators sit down to work out a way to avert the across-the-board cuts due to begin next January.

Lots of pressure. Lots of horse-trading then.

UPDATE: The House vote on these proposals, the food stamp cuts and some other nasty things I haven’t written about is now scheduled for Thursday, May 10. If you want to weigh in, the Coalition on Human Needs has an editable letter that will automatically go to your Representative.

CHN has also just posted a clever, informative video that shows what the proposals will mean in human terms. Well worth five minutes of your time.


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