KHN’s Mary Agnes Carey moderates a panel discussion with KHN’s Marilyn Werber Serafini, Politico’s Jennifer Haberkorn and the L.A. Times’ Noam N. Levey. The reporters field your questions and break down Thursday’s landmark Supreme Court decision on the constitutionality of the health law. A transcript follows.
MARY AGNES CAREY: As the dust settles on the historic Supreme Court health care ruling, questions have begun to surface about the justices’ decision to make the law’s Medicaid expansion optional for states. For example, if a state doesn’t participate, what happens to residents who would have qualified for the program? And what role will the court’s decision play in the November elections as Republicans try to gain control of Congress and the White House?
With us today to answer those and other questions from our viewers are: Noam Levey, a staff writer for the Los Angeles Times and the Tribune’s Washington bureau; Jennifer Haberkorn, staff writer for Politico; and Marilyn Werber Serafini of Kaiser Health News. Thanks to all of you for joining us.
Now, as we all know, the Supreme Court ruling settled legal questions that had surrounded the health law for the last two years, but there are clearly many other challenges ahead for the health law. The public is split in its support. The individual mandate remains unpopular. Noam, I know you recently wrote a story on some of the other obstacles ahead for the health law? What are they?
NOAM N. LEVEY: I think there are two primary ones. The first is the election in November. If Obama loses and Republicans take control of the Senate, I think there is little doubt that there will be a lot of pressure to dismantle the law. And I don’t think that it will be that hard to do.
MARY AGNES CAREY: They’re expected to keep the House.
NOAM N. LEVEY: Republicans would be expected to keep the House. And in that scenario, where you have a President Romney, who has pledged to repeal the law, and congressional Republicans who have said very clearly that they want to do that, they could use budget reconciliation — this process that can circumvent filibusters in the Senate with a simple majority — to strip out most of the funding for the Medicaid expansion and the subsidized insurance coverage through the exchanges. And without those two thing, the law does a lot of other important things, but that really is the guts of the law.
MARY AGNES CAREY: That’s where the big money is. And, again, reconciliation is 51 votes, where a filibuster is 60. So even if Republicans have that slim margin, as long as it’s got a revenue impact – that’s where the Medicaid money is, and the subsidy creation – that’s where they could go in and strip out those really, really big chunks.
Jennifer, is it politically perilous for the GOP to go after the health law? And if — let’s say the scenario is that Republicans take everything in November, they repeal the law — do they have anything left to replace it with? And, in your opinion, do you think the economy is really more the dominant issue in the election, more than the health law?
JENNIFER HABERKORN: I think, if anything, this ruling has re-energized Republicans to stick with their message of repeal. Because none of the law went down, they don’t need to come out and say what their replacement would be. So they can just stick with their repeal message. It’s going to be: Repeal, repeal and it’s a tax, repeal, repeal, repeal — and that will be their message through November.
I think if Gov. Romney is elected and Republicans run the table in Congress, they will move forward with reconciliation, but that’s when it will get really difficult. That’s when they’re going to have to answer for the age-26 provision that’s so popular, guaranteed issue, which is also very popular. [They’re] going to actually have to deal with those questions, and that’s when it’s going to get really difficult.
MARY AGNES CAREY: And to your point about the repeal message, the House of Representatives has already scheduled yet another repeal vote, when they come back from the July 4th break, right?
JENNIFER HABERKORN: Absolutely. And I think we’re going to see exactly what we saw before. Every Republican is going to vote for it, maybe a couple of Democrats, but it’s just more and more of their message, “repeal, repeal, repeal.”
MARY AGNES CAREY: For now, the law is in place and implementation is moving forward. Marilyn, as you’ve written about, states may not be ready. About 14 states and the District of Columbia have passed legislation to enable these exchanges, but is there concern about the rest of the country being ready? And could that deadline, that 2014 implementation, be pushed back?
MARILYN WERBER SERAFINI: That’s the talk here in Washington right now. There’s a lot of discussion about the potential that states might not be ready. There are a lot of conservative states. They were waiting. They wanted to see what the Supreme Court was going to say. They were hoping, beyond all hope, that the court was just going to kill the whole law and that they wouldn’t have to move forward with exchanges.
Now some of them are still going to wait, they want to see what happens in the elections, to make all kinds of decisions. But, what it’s done is it’s put many states in the position of potentially not being ready. These exchanges, they have to be ready to go in 2014. That means they have to be ready before then. And, ready in enough time so that insurers can plan and create new insurance products that can be approved by the states and get onto the exchanges, and everything is ready to go, with enrollment time, all leading up to 2014. That’s not a lot of time.
So there’s concern that states might not be ready. If states are not ready, then the federal government can and will step in either to partner with the states on exchanges or to come in and totally run the exchange. So there’s also concern that the federal government has a lot to do and will it be ready. The Obama administration says absolutely, we’ll be ready, we’ll get it done. But not everyone is so sure.
MARY AGNES CAREY: What’s the practical impact if, let’s say, the Medicaid expansion or the exchanges were delayed for a year? What’s the impact for people? Noam?
NOAM N. LEVEY: It would depend on the state, obviously. Some states are going to go forward, so if you live in a state that’s decided that it’s going to move ahead, presumably you would be able to sign up for insurance in 2014. If you live in a state where perhaps they’re delaying things, you may have to go somewhere else to get your health insurance coverage. The bigger question nationally is whether the Obama administration would sanction some kind of legislative move that would delay the implementation of the law to save money, for example. Starting in 2017 or 2018, it’s $200 billion a year to expand Medicaid and to offer subsidies for private insurance. So, if there’s a lot of pressure to cut money, would there be a scenario in which the federal government might say: You know what, let’s just put this off for a year until 2015. So, maybe people would have to wait to get health insurance.
MARILYN WERBER SERAFINI: And we all know there is going to be that huge budgetary pressure at the beginning of next year to negotiate some kind of a deal to reduce the budget deficit and to avoid automatic cuts for everything from defense to Medicare. If the pressure’s going to be on to do that, this might be one way to avoid some of the real sting of automatic cuts.
JENNIFER HABERKORN: And imagine if in 2013 Republicans control Congress and Obama is still in the White House. Can you imagine a vote to delay the individual mandate for a year? That would easily pass. And then that just kicks things down the road a little further along with the exchanges. I could definitely see some kind of: Postpone the mandate a year [proposal], postpone it another year if Republicans control Congress.
NOAM N. LEVEY: I think the only thing that mitigates possibly against that is Obama was challenged during the 2011 budget fight to delay or to even cut parts of the law, and he clearly drew a line in the sand when he was negotiating with House Republicans and said: That’s a no-go area. And they also fought pretty hard to maintain funding for Medicaid. So could there be a scenario in a second term in which the Obama administration might say yes there are ways we might save money by changing ways of the health care law? Yes, maybe, but I would also think it would be pretty hard for the President to acquiesce in anything that would push off major implementation for more than a year, because he’s not going to want to wait until after his second term because then there obviously is no guarantee at all.
MARILYN WERBER SERAFINI: Right, he wants people to start feeling the benefits of this law as soon as possible and delaying the benefits could be a political problem.
MARY AGNES CAREY: Speaking about delaying or a lag in getting the benefits, there have been a lot of questions about the court’s decision to make this Medicaid expansion optional for states. Marilyn, what does this mean for 17 million Americans who qualify under the health law to be part of the Medicaid program? What happens if their state doesn’t participate?
MARILYN WERBER SERAFINI: No one is expecting every state to not participate. There are a number of conservative states where officials in the state or the governor has made comments in the last few days – Florida, Texas, Wisconsin, Missouri, Idaho – there are a number of them that said: Maybe we shouldn’t do this; it’s going to cost us money to do this. If you take a step back and you look at really what it does cost them and the way the Medicaid expansion is going to work: The federal government picks up the entire cost for the first three years. After that the percentage gradually goes down until the federal government is picking up 90 percent of the cost. So really they’re covering quite a bit of the cost of Medicaid. But the states, since the recession, their budgets have been extremely tight. They’ve been under an extraordinary amount of spending pressure. And so they’re saying: Look, it doesn’t matter; it’s still money we can’t afford.
MARY AGNES CAREY: So 10 percent is still too much?
MARILYN WERBER SERAFINI: That’s what they’re saying. And, of course, the federal government is coming back and saying: How can you not take it? We’re giving you first 100 percent of the cost, and then 90 percent of the cost. We feel like if you don’t do this, then you’re going to have a lot of uninsured people.
Not everybody would be uninsured. For instance, if Florida decided not to move forward with the expansion, there’s a slice of people who would have qualified for the Medicaid expansion who will now qualify instead for subsidies, so they can take those government subsidies to help them purchase insurance on the exchanges. These are people who are between 100 percent [of the] poverty level, which is about $11,000 for an individual, up to 133 percent of poverty, which is about [$15,000].
MARY AGNES CAREY: But is this political posturing now? We’ve got an election coming up. We know that some Republican governors have said they’re going to wait for the election: The Supreme Court ruling is fine, but we’re going to wait for the election before we move forward. Are governors really going to leave this money on the table? Won’t you have hospitals, other providers who care for these uninsured folks who’ve gotten no compensation who want at least the Medicaid money?
NOAM N. LEVEY: There’s something interesting that’s sort of happened in the last week: There are a number of states around the country led by Republican governors who were party to the lawsuit but had been working quietly to implement the law – or were prepared to implement the law, should the court have upheld it. And I think some of those people actually had anticipated that they would be able to move on and have been somewhat taken aback by the pressure from the national Republican party to not implement anything.
That pressure is real, and I think it certainly is going to manifest itself between now and November, but maybe even going forward, I think a couple things to watch at the state level are yes, the providers, hospitals, doctors are going to pressure state government to take this money. It is a very good deal.
I think the other thing that’s going to be interesting to watch, having a national debate, or a state-by-state debate about Medicaid, I think that’s a little unpredictable, because the polling is interesting on Medicaid. I mean, if you ask people whether they support the provision of the law that expands Medicaid coverage to low-income Americans who are uninsured, two-thirds of people say they support that aspect of the law. So it’s not like a typical welfare program where you may have a lot of public resistance to it. I think you may actually see some pressure from the public to not leave this population uncovered.
MARY AGNES CAREY: Let’s shift for a moment to our viewers. They also had a lot of questions about Medicaid and the Supreme Court ruling. Here’s one of those questions: Does the health law require states to take an all-or-nothing approach to the Medicaid expansion or may states expand eligibility for specific populations? Will this be an item for negotiation with the administration?
For example, the questioner wants to know if states could take Medicaid expansion money to fund something below 100 percent of poverty. For example, could they choose to expand Medicaid for up to 50 percent of poverty? Is there that latitude?
MARILYN WERBER SERAFINI: That’s the big question right now, and there is no answer yet. There’s no answer to that question. States would really like to know whether they could do that. They’d also like to know whether they could come in and out of the program. Could they get in for three years when the federal government is picking up the full cost and then perhaps come out when the federal government pays a little bit less? Of course, it’s awfully hard to offer a benefit and then take it away.
JENNIFER HABERKORN: I think it’s going to be interesting to see if this really opens the door for states to have a lot of leverage when they’re talking with CMS about the future of Medicaid in their state. I mean, the federal government is going to want these states to do it. But they’re going to also want them to do the entire thing. But they’re going to also – if they know that a state can’t do everything – they’re going to say, “Well, OK, you can get some of the money if you do some of this.” It’s really going to open the door to a lot of negotiation, I think.
NOAM N. LEVEY: I think that’s actually something that’s not appreciated about the importance of what the court did in the sense that one of the central precepts of the Affordable Care Act was this idea that all of this variation that existed in the United States that differentiated the kind of health care you could get – the kind of protection you could get – whether you lived in Massachusetts or Mississippi – the law was designed to iron out a lot of that and kind of standardize a basic level of protection. What this ruling does, I think, it allows not just states to say: No, we don’t want to do this expansion, but do exactly what you’re talking about which is to negotiate their own deals. So some states might be 50 [percent of poverty], some might be 100, some might be 75. So you’re basically perpetuating this disparity that exists between states and the kind of health protection people would get.
MARILYN WERBER SERAFINI: And Medicaid historically is a negotiated program because of its nature. It is a program that’s run by the states and state spending is matched by federal spending. Now the federal spending comes with a lot of strings attached: You have to cover people up to this income level, you have to cover these populations, kids up to this level, you have to cover these benefits. But nevertheless, it is negotiated. Every state has at least one Medicaid waiver to do things a little differently. Some states have waivers to do coordinated care, to do managed care. There are all kinds of waivers out there. So this would not be a new thing for the federal government to sit down with the states and negotiate different programs for each state. Already across the board every state has a different Medicaid program.
MARY AGNES CAREY: We should note here, too, that this Medicaid expansion is really aimed at a population that is not covered in most states, childless adults. And so you could have a situation where if a Medicaid expansion issue goes forward in one state you would be covered in that circumstance, but in another state, maybe not.
NOAM N. LEVEY: I don’t think that’s actually something that most people realize. I was writing a story the other day and had a question actually from our copy desk, because we explained how low the income was for a parent to qualify in Arkansas. I think we said $1,800 a year is the threshold for [Medicaid]. It’s like 17 percent of poverty. Most people don’t realize that, and when there is no discussion about it, it’s the status quo. But once that becomes a topic of discussion a lot of people are going to be surprised, I think, at how skimpy Medicaid actually is in a lot of places.
MARILYN WERBER SERAFINI: And you’re talking about parents. It’s even lower for childless adults.
NOAM N. LEVEY: Or barred by law.
MARY AGNES CAREY: Marilyn, you hinted to this a minute ago. Are there any rules about taking and then refusing federal funds? This is another question we had. Could a state opt in at the federal level while it’s that 100 percent level, where they’re covering the whole cost and then opt out and drop people from Medicaid rolls after three years when the match goes down?
MARILYN WERBER SERAFINI: I can’t say absolutely for sure, but my understanding is that the way Medicaid has always worked is that you can be in, you can be out, you can be in, you can do this. So it’s not really clear whether you can come in and go out at this point.
MARY AGNES CAREY: The point you made earlier, it’s awfully hard to take a benefit away.
MARILYN WERBER SERAFINI: It’s very hard.
MARY AGNES CAREY: You set it up, and it would be hard to imagine — you do it for three years and then take it back. Here’s a question you mentioned a second ago. It’s about Florida Gov. Rick Scott. He’s been vocal in his continued opposition to the health law following the Supreme Court’s decision. The questioner wants to know does the federal government have leverage, you mentioned CMS, the Centers for Medicare and Medicaid Services earlier, which oversees the Medicare and the Medicaid programs. What kind of leverage can the government bring to bear on a governor that doesn’t want to participate.
JENNIFER HABERKORN: Well, the federal government can remind his constituents that he’s taking a benefit away from them. And I think also, Noam hinted to this before, we’re going to that see federal Republicans putting a lot of pressure on governors not to accept it. And I think in the states we’re going to see state hospitals, which are very, very powerful, put pressure on the governor to accept it. So we’re going to see a situation where nationally it will be a lot of political pressure, but in the state it’s policy pressure. These are dollars and people, and that’s going to be hard for some of these governors to sort that out.
MARY AGNES CAREY: Noam, you talked about this a moment ago, how there could be some flexibility but the administration may be in a tough spot where they want the law to begin so they may be more interested in working with a governor, being a little more flexible, because it would be kind of difficult to have maybe Florida, for example, surrounded by states that didn’t participate or only participated at certain levels. It’s kind of an artful dance for them, isn’t it?
NOAM N. LEVEY: It is, but on the other hand, it’s been an artful dance for the past two plus years. If we noticed anything about the way the Obama administration has acted since the law was signed, it is this incredible interest in keeping the peace and satisfying stakeholders whether they be state governments or employers, insurance companies, what have you. There are numerous sorts of waivers or some kind of change in the regulations to accommodate complaints, and I think that’s just going to continue.
MARY AGNES CAREY: Sure. Absolutely. If a state doesn’t participate in a Medicaid expansion, one of our questioners wants to know if that’s their state and they make less than the federal poverty level: Am I eligible for subsidies to buy insurance coverage? What options do I have?
MARILYN WERBER SERAFINI: Yes, if you are below the poverty level, which is about $11,000 for an individual, you don’t really have much in the way of options. You might be able to qualify, most states have some sort of high-risk pool to insure people who really have a hard time getting insurance, but there’s a cost to that. And there are often long waiting lists for that kind of coverage. Other options?
JENNIFER HABERKORN: I think it’s going to be interesting, because if you’re over 100 percent [of poverty] you are going to get the subsidy, but if you’re under – so if you’re in a state where the Medicaid program isn’t that robust and you’re at 80 percent of the federal poverty level, you’re going to get nothing. Whereas if you were 20 percent higher, you would get the subsidy. So you’re going to have this – almost a donut hole of missing coverage where you don’t qualify for anything.
MARY AGNES CAREY: It seems amazingly ironic because I think, if you step back for a minute, Republicans and Democrats would agree that those are the folks they really want covered. I mean, when there’s been discussions about expansion of policies and changes, they’ve always wanted to go to the poorest of the poor. And here, unless something changes, you might be in a situation where they don’t qualify for anything.
MARILYN WERBER SERAFINI: And this is something that Senator Chuck Grassley, a Republican from Iowa, he made this point the other day. He was very unhappy about this idea that Jennifer’s talking about, that if you’re higher income you’re going to get the – well, not high income but higher than poverty income – you’re going to get a subsidy. Whereas the poorest of the poor are going to be missing out here. And so not all Republicans believe that this is a good thing.
NOAM N. LEVEY: I think it also creates an interesting dynamic in the context of the budget discussion that we were talking about before. Because I think one of the things that, it is true most people don’t realize how skimpy Medicaid [eligibility for many adults] is, most people also don’t realize how generous the law is in providing subsidies. It’s a sliding scale, but you can qualify for subsidies in a family of four making up to $90,000 a year. In a lot of parts of the country, that’s a pretty good living. The idea that those people might qualify for a taxpayer subsidy I think is going to become fairly controversial and especially if you have people making less than 100 percent of poverty who aren’t qualifying at all. If you’re talking about ways the law could be modified to both save money and to kind of address some of the issues that are politically delicate, I don’t think you have to look too much further than how high the income threshold goes to provide subsidized health care.
MARY AGNES CAREY: Here’s a question about disproportionate share payments, also known as “dish” (DSH) payments that hospitals get, for example, for uncompensated care. Our viewer wants to know that if a state doesn’t go ahead and expand Medicaid, will those DSH reductions kick in for a state that does not have the Medicaid expansion?
MARILYN WERBER SERAFINI: This was supposed to be a give and take – these disproportionate share payments that have gone to hospitals to help them to fund their uncompensated care. The idea was, if everyone is covered – or almost everyone is covered – the hospitals really won’t need this anymore.
Those are expected to stay, those cuts in the DSH payments, but they are still tied to the levels of insurance. So if a state decides not to do the Medicaid expansion, a little bit more of that money would be there than, say, in a state that moves ahead with the Medicaid expansion.
MARY AGNES CAREY: So there’s a little bit of a comfort cushion.
MARILYN WERBER SERAFINI: A little bit.
MARY AGNES CAREY: A little bit. OK.
MARILYN WERBER SERAFINI: But believe me, the hospitals are still not happy.
MARY AGNES CAREY: We know that the health law as it stands now would cover on Medicaid about 17 million more people – have they done estimates yet of how this state flexibility provision will impact the number of new Medicaid enrollees, or is it simply too early for that?
MARILYN WERBER SERAFINI: It’s too early, because we don’t know yet. No state has said, absolutely, I’m not going to expand my Medicaid. And until we know which states, if any, decide not to expand Medicaid, it will really be impossible to know what the estimate is for coverage.
NOAM N. LEVEY: That being said, Texas and Florida are, obviously, two of the largest states. If they decide they’re not going to do this, it’s a lot of people.
MARILYN WERBER SERAFINI: Florida is over a million people, I think it’s like 1.3 million or something like that.
JENNIFER HABERKORN: The irony is everyone thought the Supreme Court was going to add some certainty to the health law, but we’re raising all these new uncertainties. We’re still two years away from 2014, but a lot of these are unanswered questions.
MARY AGNES CAREY: What about the “maintenance of effort” provisions that are in the health law? Does the Supreme Court ruling impact those in any way? I’d like the answer to explain “maintenance of effort” and then explain the health law’s relationship to it.
NOAM N. LEVEY: My understanding of this – and correct me if I’m wrong –
MARY AGNES CAREY: You’ve got experts here. You’re good. Go for it.
NOAM N. LEVEY: – is that the maintenance of effort requirement which requires states not to cut any population from their Medicaid programs that were covered when the law was signed in March 2010 would not actually apply to this expansion, because obviously the expanded population envisioned by the law wasn’t covered in 2010. So a state presumably would be free in the scenario we discussed earlier to expand and then pull back on the new population. But they still would be subject to the maintenance of effort requirement, I believe, on the existing population that they covered in 2010.
MARY AGNES CAREY: So for adults, it’s maintained until 2014, and I believe for children, maintained until 2019. So there really isn’t an intersection there.
NOAM N. LEVEY: Right.
MARY AGNES CAREY: We received a lot of questions that dealt with the health law, several from insurance agents and brokers. Jennifer, I’m going to send this your way. What’s the health law’s role for insurance agents and brokers? There’s a lot of concern in those communities.
JENNIFER HABERKORN: Absolutely. They’re very concerned about the future – their careers. I don’t think the ruling changes too much. There’s still going to be a lot of confusion about exchanges. I know I, for one, if I were on the exchange – I’m a fairly educated person, and I’ve been writing about this law for a while. But I think I would need a broker or someone to help me figure it out.
There is legislation on the Hill to reinstate their commissions. The law’s medical loss ratio –
MARY AGNES CAREY: That’s spending at least 80 percent of the premium dollar on medical care, right?
JENNIFER HABERKORN: — and that hurt their commissions, the way it calculated them. There’s legislation on the Hill to change that. It would count their commissions differently. It’s a little complex, but it would just count their commissions a differently in the way that they think is appropriate.
I don’t think that legislation is going to go anywhere. One, fiscal concerns; two, no one seems to want to reopen the health care law. So I think there is a future for them, especially if they can get that legislation passed.
MARY AGNES CAREY: I’d like to close with this question: While no one knows what’s going to happen in November, assuming the health law moves forward, what are the areas that you’ll be watching as it’s implemented? What are your top two or three areas you think that are really going to be hot spots? Marilyn, I’ll start with you.
MARILYN WERBER SERAFINI: I’ll be watching to see readiness, specifically, speaking of the exchanges – whether the states can move forward and get everything done in time for 2014. And if they can’t, whether the federal government can get everything done in time.
I’m also going to be watching very closely the budget negotiations next year, to see how this talk of delaying the implementation plays out.
I think there’s a lot to watch. I think we all have lists that are about 20 stories long right now. And, of course, the elections.
MARY AGNES CAREY: Sure. Noam?
NOAM N. LEVEY: We’ve talked about a couple of things that I’ll definitely be watching. I would stress the budget negotiations are going to be fascinating, and I think looking at what kinds of things people are talking about, what’s on the table is going to be really important.
The other thing I’m really going to be looking for is some more detail from Republicans about what an alternative mechanism might look like, and where the health care industry is going on those, because we haven’t heard a whole lot – although there are fairly well-established general principles that are guiding the GOP approach to health reform. It’s not clear, however, that those ideas that are developed in conservative policy circles have been adopted by Republican elected officials on the Hill. And the degree to which hospitals, insurers and others in the industry pressure Republican elected [officials] to look more seriously at what alternatives may be I think is going to be an interesting story line to follow.
MARY AGNES CAREY: Jennifer, what’s on the top of your list?
JENNIFER HABERKORN: I agree with everything they’ve said.
I think two other things: One, how Gov. Romney talks about health care, if he does come out with a “replace” plan, at least a detailed one.
The other thing – I mentioned this briefly earlier – how the individual mandate is implemented and if, come 2013, we see an effort on the Hill to get that delayed a year or two, because that would really change how the rest of the law would be put in place.
MARY AGNES CAREY: I want to thank all of you. This has been a fascinating discussion. Jennifer Haberkorn of Politico, Noam Levey, Los Angeles Times, Marilyn Werber Serafini of Kaiser Health News.
And I want to thank our audience for sending in your questions and joining us for today’s webcast. I’m Mary Agnes Carey with Kaiser Health News.