If Individual Mandate Is Overturned, States Still Have Lots of Options

No individual mandate? No problem.

That’s the attitude of some state health care officials who are bracing for a Supreme Court decision expected in June, a ruling that could overturn some components of the Affordable Care Act and national health care reform, including the individual mandate.

That pending federal ruling scares some state officials, particularly because a number of states already have started to build a health care reform infrastructure and now depend on federal dollars to implement reform.

The most common concern is the loss of the individual mandate, the requirement that most people purchase some form of health care insurance or pay a penalty. If the Supreme Court decides that Congress does not have the authority to require an individual mandate, then the health care reform effort could be hampered by an inability to get a pool of participants large enough to make the system work.

But there are a number of ways around that problem, and state health officials are busy examining those options and working out a Plan B to implement health care reform, depending on the court’s decision in June.

One Choice: Mandate Anyway

Striking down the federal authority to issue a mandate would put states in a precarious position. According to Politico, this would be much like the coyote in the “Roadrunner” cartoons — running hard and then suddenly seeing no ground beneath his feet. But it’s not a hopeless position, as states could implement their own individual mandates, much like Massachusetts did in 2006 with its health reform law. There are no legal cases challenging a state’s right to mandate health insurance.  

At this point, though, “mandate” has become a politically dirty word, and it’s likely that states would come up with other language to propose similar solutions.

A senator from Nebraska recently floated his idea for a variation on the mandate that’s not a mandate. He called it the carrot-and-stick approach, to offer incentives and deterrents to move more people to buy health care insurance. It’s a little like urging people to sign up for the Medicare prescription drug program by having them pay lower premiums when they first become eligible and higher premiums later, he said.

Long List of Other Choices

When states take a look at options beyond an individual mandate for expanding insurance, the choices are legion.

In a recent article, Bloomberg BusinessWeek described 11 different choices for an individual mandate alternative. Options range from giving health care providers government funding for caring for those who remain uninsured to providing a number of other incentives — such as more tax subsidies — to induce more people to enroll in health plans.

And the Government Accountability Office issued a report last year that laid out nine similar individual mandate alternatives:

  • Modify open enrollment periods and impose late enrollment penalties;
  • Expand employers’ roles in auto-enrollment and facilitating employees’ health insurance enrollment;
  • Conduct a public education and outreach campaign;
  • Provide broad access to personalized assistance for health coverage enrollment;
  • Impose a tax to pay for uncompensated care;
  • Allow greater variation in premium rates based on enrollee age;
  • Condition the receipt of certain government services upon proof of health insurance coverage;
  • Use health insurance agents and brokers differently; and
  • Require or encourage credit rating agencies to use health insurance status as a factor in determining credit ratings.

Despite Uncertainty, States Prepare

Health care officials have to wait for the Supreme Court ruling before fleshing out any statewide efforts, but they are clearly thinking about what to do next. Washington state and Georgia are just two examples of states that are planning to implement their exchanges, the New York Times recently reported.

It quoted Washington state Sen. Karen Keiser (D): “We’re always working on Plan B — always.”

Georgia Health Commissioner Ralph Hudgens, who opposes the individual mandate, told the Times that he recognizes he likely will have to set up a health insurance exchange, regardless of what the Supreme Court decides. He believes the exchange will help consumers find better health coverage options.

In California, the first of 11 states to pass a law establishing a health benefit exchange, the push to make meaningful health reform will continue beyond the Supreme Court ruling, according to Peter Lee, executive director of California’s exchange.

“The shape and speed and nature of that effort may change a little,” Lee told California Healthline. “We need to see, how do we adjust course after that decision.”

But there is little doubt, Lee said, that the effort will keep moving — just because the need for it is so great.

“It’s misleading and not productive to just look at all of the ‘what-ifs,'” Lee said. “California will address the needs of Californians. And that includes the exchange.”

While observers and state officials continue to weigh their options ahead of the Supreme Court decision, here’s a look at other health reform developments.

Administration Actions

  • The federal health reform law has helped to increase the number of nurses in community health centers by 20% and expanded “nurse-managed” clinics, according to a report from the Obama administration. The law provides funding for a range of training programs for nurses. According to the report, nearly 2,000 new National Health Services Corps members now work “to not only treat illness or injury, but also keep people healthy” (Viebeck, “Healthwatch,” The Hill, 5/7).
  • Last week, HHS announced $728 million in grants under the federal health reform law to support construction, expansion and renovation projects at nearly 400 community health centers (Morgan, Reuters, 5/1). The department also said the overhaul by 2014 will have funded the construction of more than 300 new health centers, 67 of which already have been completed (Viebeck, “Healthwatch,” The Hill, 5/1). The health reform law allocated $11 billion for community health centers, including $1.5 billion for renovation projects at existing facilities and $9.5 billion for new construction and expansion projects (Reichard, CQ Today, 5/1).

On the Campaign Trail

Public Opinion on Reform

  • A new Pew Research Center poll has found that public approval of the U.S. Supreme Court has fallen to an all-time low of 52% (Baker, “Healthwatch,” The Hill, 5/1). Observers say the results could affect Republicans’ and Democrats’ strategies for addressing the court’s ruling this summer on the constitutionality of the federal health reform law (Little, Reuters/Hartford Courant, 5/1).

Studying Its Effects

  • A trend toward declining access to health care services for both uninsured and privately insured U.S. residents could continue if the federal health reform law is struck down by or repealed by the U.S. Supreme Court, according to an Urban Institute study published in Health Affairs. The researchers noted that adults would benefit from provisions in the reform law that were designed to lower costs, increase Medicaid payments for health providers and improve the social safety net (Morgan, Reuters, 5/7).

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