The Patient Protection and Affordable Care Act (the “Act”) (Pub. L. No. 111-148, 124 Stat. 119), was signed into law on March 23, 2010. The Act attempts to simultaneously increase healthcare coverage for Americans, control healthcare costs, and improve outcomes.
The primary thrusts of the Act include:
- Improving, expanding, and preserving Americans’ insurance coverage (see Pub. L. No. 111-148 tit. I)
- Making changes to Medicaid, CHIP, and other government programs (see id. tit. II)
- Improving the quality and efficiency of health care (see id. tit. III)
- Preventing chronic disease and improving public health (see id. tit. IV)
- Improving access to and delivery of health care services for all individuals, particularly low income, underserved, uninsured, minority, health disparity, and rural populations (see id. tit. V)
- Increasing transparency and program integrity throughout the healthcare field (see id. tit. VI)
- Improving access to innovative medical therapies (see id. tit. VII)
- Establishing a national voluntary insurance program for purchasing community living assistance services and support (the CLASS Act) (see id. tit. VIII)
- Various tax and revenue provisions (see id. tit. IX)
The Act was amended as part of the reconciliation process by the Health Care and Education Reconciliation Act of 2010 (“Reconciliation Act”) (Pub. L. 111-152, 124 Stat. 1029), which was signed into law on March 30, 2010. For an analysis of the Act as amended, see the Democratic Policy Committee’s section-by-section summary, available at http://dpc.senate.gov/healthreformbill/healthbill96.pdf (accessed July 16, 2010). The various provisions of the Act and the Reconciliation Act are set to go into effect at (or create deadlines at) different times, spanning from immediately after the enactment of the legislation through 2020.
Healthcare reform efforts have been prompted in part by concern over the number of people who are uninsured. See, e.g., President Obama’s Remarks at Arcadia University, March 8, 2010, available at http://www.whitehouse.gov/the-press-office/remarks-president-health-insurance-reform-arcadia-university (accessed July 9, 2010). The U.S. Census Bureau reported that 15.4% of U.S. residents were uninsured during 2008. U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2008 21 (2009), available at http://www.census.gov/prod/2009pubs/p60-236.pdf (accessed July 9, 2010). It should be noted that the Census numbers include all U.S. residents, regardless of legal status. The Act targets health insurance coverage for Americans; however, non-citizens living in the country (legally or otherwise) are not included. According to some sources, approximately 21% of those who are uninsured are not U.S. citizens. George Will, The stealth single-payer agenda, op-ed, Jewish World Review, June 21, 2009, available at http://jewishworldreview.com/cols/will062209.php3 (accessed July 27, 2010).
Many uninsured people list cost as a reason for not buying insurance. See Ctrs. for Disease Control and Prevention, Summary Health Statistics for the U.S. Population: National Health Interview Survey, 2004 62 (2006), available at http://www.cdc.gov/nchs/data/series/sr_10/sr10_229.pdf (accessed July 12, 2010); see also Stephanie Cohen, Top 8 reasons single people don’t buy health insurance, Healthcare Fin. News, Oct. 27, 2009, available at http://www.healthcarefinancenews.com/blog/top-8-reasons-single-people-don%E2%80%99t-buy-health-insurance (accessed July 12, 2010). According to the CDC’s survey, 53.3% of people gave cost as one reason, while 26.9% listed lost job or change in employment as a reason. Id. Some 14.1% reported that their employer did not offer insurance or the insurance company refused coverage. Id. Regardless of the reason, George Will asserts, a substantial number of people are able to obtain health insurance but choose not to do so. See Will, The stealth single-payer agenda. In addition, more than 20 million Americans change jobs every year, which can result in a brief period without health insurance. See id. In fact, he says, approximately half of those uninsured at any given point are no longer uninsured six months later. See id. As many as 30% of the uninsured are eligible for existing government programs such as Medicare, Medicaid, and SCHIP, but have not enrolled. See id. Another 20% have high enough household incomes to enable them to purchase private health insurance. See id. Half of the uninsured, then, are Americans who could obtain health insurance if they so chose. See id. Combined with those who are not American citizens, this leaves, at most, about 12.9 million people, approximately 4% of the total population, who are Americans currently uninsured due to cost or unavailability of coverage.
Massachusetts insurance coverage rates are of particular interest. The state, which enacted health care legislation in 2006 similar to the Act, has the highest percentage of insured residents. U.S. Census Bureau, 2007 Health Insurance Coverage Status for States, available at http://www.census.gov/did/www/sahie/index.html. Massachusetts’ insurance coverage rates are historically high compared to other states, particularly states which are entry points for immigrants. Cf. id. with prior years’ statistics (available from the U.S. Census Bureau on the same website). The state increased insurance coverage from 87.5% of the non-elderly population in 2006 to 95.2% in 2009. Robert J. Samuelson, As Massachusetts health ‘reform’ goes, so could go Obamacare, op-ed, Washington Post, July 18, 2010, available at http://www.washingtonpost.com/wp-dyn/content/article/2010/07/18/AR2010071802733.html? waporef=obinsite (accessed July 27, 2010). The state is also seeing an increase in wait times for primary care. Christine McConville, Rx needed for Mass. doctor shortage, Boston Herald, August 3, 2010, available at http://www.bostonherald.com/business/healthcare/view/20100803rx_needed_for_mass_doctor_shortage_ physicians_health-care_reform_has_had_ill_effects (accessed August 3, 2010). This raises concerns that unless this issue is addressed, other parts of the country may see similar shortages under the Act, which could create a serious nationwide problem.
Health insurance coverage is linked with economic status. Anil Kumar, Who Doesn’t Have Health Insurance and Why, S.W. Econ., November/December, available at http://www.dallasfed.org/research/swe/2004/swe0406a.html (accessed July 12, 2010). Total health expenditure per person, however, remains fairly constant regardless of economic status. http://www.brookings.edu/papers/2008/0819_health_care_burtless.aspx (click “Download PDF”) (accessed July 9, 2010).
Another concern has been the increased costs of healthcare and health insurance. The Centers for Medicaid and Medicare Services, an Agency of the U.S. Department of Health and Human Services, estimates that total health expenditures in 2008 were $2.3 trillion, or $7,681 per person. Ctrs. for Medicare & Medicaid Svcs., National Health Expenditure Accounts, available at http://www.cms.gov/NationalHealthExpendData (accessed July 9, 2010). This totals 16.2% of the nation’s Gross Domestic Product. Id.
Other issues of concern included the situation of uninsured Americans with preexisting conditions, the possibility of insurance companies’ dropping a person’s coverage, the affordability of preventive care under existing insurance plans, lifetime or annual limits on insurance payouts, and the nonexistence of insurance pools for individuals and small business owners. See, e.g., President Obama’s Remarks at Arcadia University, supra. The Act addresses each of these.
No case law on the Act exists yet, although related lawsuits have been filed. Fourteen attorneys general filed suit on March 23, 2010, the day the Act was signed into law. Virginia’s Solicitor General filed suit against the federal government over the Act’s “individual mandate”: provisions requiring Americans to buy health insurance or face civil penalties. See, e.g., Larry O’Dell, Hearing held in Va. health care reform suit, Bus. Wk., July 2, 2010, available at http://www.businessweek.com/ap/financialnews/D9GMTCG80.htm (accessed July 13, 2010). Thirteen other attorneys general (Alabama, Colorado, Michigan, Idaho, Louisiana, Nebraska, Pennsylvania, South Carolina, South Dakota, Texas, Utah, and Washington) filed a separate suit. See, e.g. Pete Williams, State attorneys general sue over health bill, NBC News, available at http://www.msnbc.msn.com/id/36001783 (accessed July 13, 2010). Alaska, Arizona, Georgia, Indiana, Mississippi, Nevada, and North Dakota have since joined the latter suit. See, e.g., Erica Bolstad, Alaska joins states’ suit against federal health care overhaul, Anchorage Daily News, April 21, 2010, available at http://www.adn.com/2010/04/20/1241989/alaska-to-join-states-health-bill.html#ixzz0tZw9VR00 (accessed July 13, 2010). Both suits challenge the constitutionality of the Act. Virginia and 37 other states have passed some version of the Healthcare Freedom Act, exempting state residents from any requirement to buy health insurance. See, e.g., Virginia First State to Pass Health Care Freedom Act: 38 States Lining Up Against ObamaCare, PR Newswire, available at http://www.prnewswire.com/news-releases/ virginia-first-state-to-pass-health-care-freedom-act-38-states-lining-up-against-obamacare-86418607.html. This raises federalism and preemption issues.
Specifically, the states challenge the authority of Congress to require Americans to purchase health insurance or pay a civil penalty. The Act includes detailed findings on the commercial and economic nature of the individual mandate and asserts that it substantially affects interstate commerce. Patient Protection and Affordable Care Act § 1501(a). The Act also cites a U.S. Supreme Court case which held that the business of insurance is interstate commerce subject to federal regulation. Id. § 1501(a)(3) (citing United States v. South-Eastern Underwriters Ass’n, 322 U.S. 533 (1944)). Debate and comments by legislators before the Act’s passage also indicated a general understanding that Congress believed that the authority for the Act derived from the Commerce Clause. Critics of the individual mandate argue that the Commerce Clause and current precedent in that area give Congress the authority to regulate certain economic activity, but not economic inactivity. See, e.g., Randy Barnett, Is health-care reform constitutional?, op-ed, Washington Post, March 21, 2010, available at http://www.washingtonpost.com/wp-dyn/content/ article/2010/03/19/AR2010031901470.html (accessed July 26, 2010). The federal government maintains that those who choose not to purchase health insurance will need health care at some point, and many of them end up burdening those who do have insurance, thus substantially affecting interstate commerce. See, e.g., Josh Gerstein, Judge greenlights health reform suit, Politico, August 2, 2010, available at http://www.politico.com/news/stories/0810/40550.html (accessed August 3, 2010). The federal government also contends that the civil penalties imposed are an exercise of the Tax Power. See, e.g., Robert Pear, Changing Stance, Administration Now Defends Insurance Mandate as a Tax, N.Y. Times, July 18, 2010, at A14, available at http://www.nytimes.com/2010/07/18/health/policy/ 18health.html?_r=2 (accessed July 26, 2010); Randy Barnett, So Much For the Commerce Clause Challenge to Individual Mandate Being “Frivolous”, op-ed, July 18, 2010, available at http://volokh.com/2010/07/18/so-much-for-frivolous-commerce-clause-challenge-to-individual-mandate (accessed July 26, 2010). Although the Commerce Clause gives Congress broad authority to regulate things related to interstate commerce, the Commerce Power is narrower than the Tax Power. Under the Tax Power, Congress has nearly unlimited authority. The constitutional question facing the courts then becomes a question of how to handle a piece of legislation which bases its authority on the Commerce Power, but which the federal government is attempting to justify under another power.
Constitutional law scholar Richard Epstein argues that the legislation is unconstitutional because of the limitations it imposes on insurance companies. Andy McCarthy, Richard Epstein: The Reid Bill Is Blatantly Unconstitutional, op-ed, National Review Online blog The Corner, December 23, 2009, available at http://corner.nationalreview.com/post/?q=NWE3OThjYjFkYmYzYWRiNjM1NDI0NGYwMzQzYmI5NzE= (accessed July 27, 2010). Reid asserts that the Constitution protects the right of “any firm in a regulated market [to] be allowed to recover a risk-adjusted competitive rate of return on its accumulated capital investment.” Id. The Act’s regulations of insurance companies’ fees and coverage options, he says, are contrary to constitutional protections against takings without just compensation and deprivation of property without due process of law, as well as Supreme Court precedent related to rate regulation (particularly Duquesne Light Co. v. Barasch, 488 U.S. 299 (1989)). Id.; see also Reid’s full analysis, available at http://www.pointoflaw.com/columns/archives/2009/12/impermissible-ratemaking-in-he.php.
The Act gives the Secretary of the Department of Health & Human Services (HHS) the authority to make numerous regulations, determinations, and guidelines. See, e.g., §§ 2713(b)(1), 2713(c), 2714(b), 2715(a), et cetera. The IRS and the Treasury also were given administrative authority. Agency actions taken so far include:
- Medicare Program; Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs; Final Rule
- Early Retiree Reinsurance Program; Interim final rule, 75 Fed. Reg. 24450 (May 5, 2010) (to be codified at 45 C.F.R. pt. 149).
- Medicare and Medicaid Programs; Changes in Provider and Supplier Enrollment, Ordering and Referring, and Documentation Requirements; and Changes in Provider Agreements; Interim final rule, 75 Fed. Reg. 24437 (May 5, 2010) (to be codified at 42 C.F.R. pts. 424 & 431).
- Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Dependent Coverage of Children to Age 26 Under the Patient Protection and Affordable Care Act, 75 Fed. Reg. 27122 (May 13, 2010) (to be codified at 26 C.F.R. pts. 54 & 602, 29 C.F.R. pt. 2590, & 45 C.F.R. pts. 144, 146, & 147.
- Indoor Tanning Services; Cosmetic Services; Excise Taxes; Final and temporary regulations, 75 Fed. Reg. 33683 (June 15, 2010) (to be codified at 26 C.F.R. pts. 40, 49, & 602).
- Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and Affordable Care Act; Interim Final Rule and Proposed Rule, 75 Fed. Reg. 34538 (June 17, 2010) (to be codified at 26 C.F.R. pts. 54 & 602, 29 C.F.R. pt. 2590, & 45 C.F.R. pt. 147).
- Legislative Changes to Nursing Student Loan Program Authorized Under Title VIII of the Public Health Service Act; Notice, 75 Fed. Reg. 36426 (June 25, 2010).
- Patient Protection and Affordable Care Act; Requirements for Group Health Plans and Health Insurance Issuers Under the Patient Protection and Affordable Care Act Relating to Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections; Final Rule and Proposed Rule, 75 Fed. Reg. 37188 (June 28, 2010) (to be codified at 26 C.F.R. pts. 54 & 602, 29 C.F.R. pt. 2590, & 45 C.F.R. pts. 144, 146-47).
- Establishment of the Advisory Group on Prevention, Health Promotion, and Integrative and Public Health; Notice, 75 Fed. Reg. 38099 (July 1, 2010).
- Office of Consumer Information and Insurance Oversight: Privacy Act of 1974; Report of a New System of Records [“Pre-Existing Condition Insurance Plan” (PCIP)], 75 Fed. Reg. 38526 (July 2, 2010).
- Office of the Director; Notice of Establishment [of Interagency Pain Research Coordinating Committee], 75 Fed. Reg. 41211 (July 15, 2010).
- Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services Under the Patient Protection and Affordable Care Act, 75 Fed. Reg. 41726 (July 19, 2010) (to be codified at 26 C.F.R. pt. 54, 29 C.F.R. pt. 2590, & 45 C.F.R. pt. 147).
- The Negotiated Rulemaking Committee on the Designation of Medically Underserved Populations and Health Professions Shortage Areas; Notice of establishment, 75 Fed. Reg. 42755 (July 22, 2010).
The federal government may move toward a more universal “pay-for-performance” approach in the future. Before the Act, Medicare payments were tied to quality reporting from healthcare providers. Providers were required to report certain quality measures or see their payment rates cut. Under the Act, payment will be tied not simply to reporting, but to outcomes. Patient Protection & Affordable Care Act § 3007 (amending 42 U.S.C. § 1395w-4). As more insurance programs become federally funded, the government is likely to extend quality-dependent payment adjustments as well.
Another likely move is one toward the required use of electronic medical records and billing systems. The 2001 Administrative Simplification Compliance Act required Medicare providers to submit claims to Medicare electronically in order to receive payment. HHS has announced that Medicare and Medicaid will provide incentives for “meaningful use” of electronic health records. See Rules supporting “meaningful use” of electronic health records announced, CCH® Medicare, July 23, 2010, available at http://health.cch.com/news/medicare/072310a.asp (accessed July 23, 2010). In January 2009, then-president-elect Obama indicated that he wanted all medical records to be electronic within five years. Speech at George Mason University, January 7, 2009, available at http://www.cnbc.com/id/28559492/Text_of_Obama_Speech_on_the_Economy (accessed July 23, 2010). Although such an ambitious timeline is unlikely to actually occur in practice, the general movement toward electronic records is not. The federal government may further tie funding and reimbursement to the use of electronic medical records and insurance claims in the future.
Additionally, HHS and other agencies are still in the process of developing and issuing the regulations delegated to them under the Act. This process is expected to continue for the foreseeable future.
The Patient Protection & Affordable Care Act, the Health Care and Education Reconciliation Act, and the various agency regulations form a complex area of healthcare law. The legislation was intended to have broad effects on Americans’ healthcare and health insurance, and goes into effect incrementally. Thus the full effects of the legislation will not be known for some time.
AHLA would like to thank Courtney Burns, a student at Texas Tech University School of Law in Lubbock, for drafting the original article on this subject.