3. U.S. Supreme court heard oral argument
on the constitutionality of the Affordable
Care Act on March 26-28, 2012
3
4. U.S. Health Care Spending
About 16% of the U.S. economy (in 1950, 5%)
Estimated $2.24 trillion in 2009
Most health care spending per capita in the world
4
6. Most people are insured through an employer-
sponsored plan (177 million Americans, 62% of
people are under age 65)
99% of employers with 200 or more employees
offer health insurance
78% - 10 to 24 employees
49% - 3 to 9 employees
6
Who is Insured?
7. 7
Who is Insured
(continued)
About 70 million Americans are insured
under a “public plan”
Medicare
Medicaid
Government spends about 42% of every
dollar spent on health care
8. 8
Estimated 46 million Americans lack health
care insurance (15% of U.S. population)
The Uninsured
9. 9
Who Are The Uninsured?
27 million have personal income over $50,000
66% of uninsured have family incomes of $45 - $85,000
14 million are eligible for Medicaid on the Children’s
Health Insurance Program
10 million ‘illegal’ aliens
1/3 are between 18 to 29 years of age
10. Insurance Reform and
Consumer Protections
High-risk pool created (2010)
Dependent coverage to age 26 (2010)
Children with pre-existing conditions cannot be denied coverage (2010)
No denial for pre-existing conditions eliminated (2014)
No Charge for annual wellness visit (2014)
Guaranteed issue policy (2014)
Modified community ratio (2014)
80 – 85% medical loss ratio (2014)
Long-term insurance program (2014)
10
11. All plans must provide
Essential Health Benefits
“Essential Health Benefits” requires minimum set of
benefits, with no lifetime of annual coverage limits
Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance abuse coverage
Prescription drugs
Rehab services and medical devices
Preventative and wellness/chronic disease management
11
13. Health Delivery Reforms
Research on best provider practices
Research on comparative evidence outcomes
Pilot program that pays for outcomes on flat fee
basis rather than fee for service for treatments
Medical IT
Standards for extended living arrangements
Hospice, home-health reimbursement
13
14. 14
Community Investment
Health Care Clinics
Primary Care Training
Grants to States
Diversity and Cultural Competency
Education Curricula Development in Health Sciences
Food Labeling
15. The Health Insurance Exchange
Uninsured individuals not eligible for Medicare or
Medicaid will be permitted to purchase insurance
through state Exchanges (purchasing pools).
Individuals will be eligible for subsidies.
Employers with fewer than 100 employees will be
permitted to enroll.
Employer eligibility may be expanded in 2017.
15
16. 16
Minimum Essential Coverage
Requirement
(the Individual Mandate 2014)
A federal requirement that individuals
purchase health care insurance or pay
penalty up to 2.5% of income as
penalty or capped at $95 in 2015 rising
to $695 in 2016.
17. Affordable Care Act will provide
subsidies and tax breaks to individuals
and small employers for the purchase
insurance
17
18. Hospitals, physicians, insurance
companies and others agree that without
the Individual Mandate the consumer
protection and benefits reforms would
ruin the health care market
18
19. All five congressional committees
reported out a bill containing the
Individual Mandate
19
20. The pharmaceutical industry alone spent
over $600,000 per day in lobbying (2.3
lobbyists per member of Congress)
20
21. Personal Mandate exceeds Congress’ power to
regulate commerce but is a valid tax
The Federal Government can not force the states to
accept expanded Medicaid
21
22. Florida v. Dept. HHS
11th Cir. Court of Appeals (2011)
Individual Mandate is unconstitutional
22
Seven Sky v. Holder
U.S. Court of Appeals – DC (2011)
Individual Mandate is constitutional
Thomas Moore Center v. Oblama
6th Cir. Court of Appeals (2011)
Individual Mandate is constitutional
23. 23
Congressional Authority
Express authority to regulate interstate commerce
Power to enact “necessary and proper” laws to execute
express authority
Authority to tax for the “general welfare”
24. Court must defer to Congress unless
Congress exceeds constitutional
authority.
24
25. 25
Commerce Clause
“The Congress shall have power to
regulate commerce with foreign nations
and among the several states, and with
the Indian tribes.”
Article I, Section 8
26. United States v. Southeastern
Underwriters’Ass’n.
U.S. Supreme Court (1944)
Insurance represents a “continuous and indivisible
stream of intercourse among the states”. The
“business of insurance” constitutes interstate
commerce.
26
27. Is the Individual Mandate “necessary
and proper” to regulate the health care
market?
The Individual Mandate requires the
individual to engage in a commercial
transaction (the purchase of health
care), which can be regulated.
27
28. Health care insurance is a unique
commercial product. Everyone will
consume health care sooner or later.
“Free-riders” shift the cost on to payers
resulting in higher premiums.
Individual Mandate creates more
customers to spread the insurance risk.
28
29. Congress can regulate commerce but
may not be able to require someone to
engage in commerce.
29
30. 30
The Power to Tax and Spend
Congress has authority “to pay the debts and
provide for the common defense and general
welfare of the United States” and “to lay and
collect Taxes, Duties, Imports and Excises”.
31. The Individual Mandate does not force a
person to purchase insurance. It
imposes a tax on people who don’t.
31
32. 32
Helvering v. Davis
U.S. Supreme Court (1937)
Social Security Act upheld.
Congress can tax and spend money for the
“general welfare”. Old age, relief, unemployment
are national problems. Laws of separate states
are inadequate. “When money is spent for the
general welfare, the concept of welfare is shaped
by Congress, not the states.”
33. Is the penalty a tax?
The “penalty” is paid on an IRS form
(1040) on April 15th.
But:
Penalty does not raise revenue
Penalty is not an income tax, and excise
tax, or transaction tax
33
35. 35
Hammer v. Dagenhart
U.S. Supreme Court (1918)
Federal Child Labor Act violates Commerce
Clause.
The law aimed to set a minimum age to work
in mining and manufacturing.
Holding: Workplace conditions are not
interstate commerce. They are matters of
local state concern.
36. 36
Bailey v. Drexel Furniture Co.
U.S. Supreme Court (1922)
Child Labor Tax Law unconstitutional. A
penalty is not a tax. In the name of a tax,
Congress cannot penalize conduct that it
can not regulate. The case cannot be
distinguished from Hammer v.
Dagenhart.