Idaho policymakers and businesses have a better idea of the job ahead now that the U.S. Supreme Court has ruled that federal health reform efforts are constitutional. There are still many decisions to be made. Many provisions of the law, including new taxes, fees and state-level requirements, go into effect in 2014.
The Court upheld the Patient Protection and Affordable Care Act June 28 in a 5-4 ruling, saying that the individual mandate to buy insurance is a valid exercise of Congress’s power under its taxing authority.
Suzi Budge, the state director for the National Federation of Independent Business, said the ruling is extremely disappointing for small businesses. NFIB was one of the groups suing to overturn the law. Budge said the health care law creates “perverse disincentives” for growing small businesses, since requirements to buy insurance for their workers or pay a penalty kick in when those businesses reach 50 employees.
“It goes against the grain, against the kind of health reform we think is needed for small businesses,” Budge said. “There’s no good news here.”
Idaho’s Republican congressional delegation roundly condemned the Supreme Court ruling and vowed to fight many provisions of the law on the legislative level. House Republicans are planning a vote to fully repeal the law in July, though such action would likely require the support of the White House and 60 U.S. senators.
Idaho Attorney General Lawrence Wasden also joined more than 20 other states in the lawsuit. He said that while the law was upheld, the legal battle was necessary because the Supreme Court limited the federal government’s power under the Commerce Clause of the U.S. Constitution. The Court ruled that the individual mandate to purchase health insurance falls outside of Congress’s power under the Commerce Clause, but that it was valid under the Taxing Clause.
“Today is a day of vindication, because it was a serious question and the court answered in our favor on the Commerce Clause question,” he said.
Wasden said the ruling also gives states more freedom in expanding coverage through Medicaid, which offers medical services to people with low incomes who meet certain requirements. Part of the health reform law would expand Medicaid eligibility to households earning 133 percent of the federal poverty line. States share Medicaid costs and would, over time, pay for part of the expanded coverage, but the court ruled that the federal government couldn’t revoke all funding for states that don’t expand Medicaid. In his ruling, Chief Justice John Roberts said cutting off all Medicaid funding would be a gun to the head for states.
“The court found that the federal government could not coerce the state to expand its Medicaid program,” Wasden said.
Concordia University School of Law’s Chad DeVeaux said getting rid of the Medicaid requirement could allow states like Idaho to not go along with the federal requirements. He said the issue prevented the court ruling from being an unmitigated victory for President Barack Obama.
“This was a really big hammer that the president had to get the states to go along,” DeVeaux said.
Another action Idaho could take is in establishing a state-run health insurance exchange, another provision of the law. Idaho lawmakers rejected laying the groundwork for setting up an exchange, which would help small businesses and individuals compare and pick insurance plans and provide some federal subsidies for buying insurance. Under current rules, if the state doesn’t have a working exchange in place by 2014, Idaho will have a federally run exchange. Instead of taking federal money to prepare for an exchange, the Legislature opted to wait for the Supreme Court ruling, hoping that a rejection of the law would end the requirement for an exchange.
Rep. Fred Wood, R-Burley, who favors a state-run exchange and served on a state board ironing out state-level exchange requirements, said there’s draft legislation that, with a few tweaks, lawmakers could pass. Gov. C.L. “Butch” Otter could call a special session to do so or, Wood said, pass an executive order to continue steps to set up an exchange.
“I don’t know the timeline and how much leeway now we will have from the federal government to catch up and try to do what we thought about doing last year,” said Wood. While many Republicans in the Legislature balked at taking federal money to set up a state exchange last year, Wood said that could change in 2013.
“There’s going to be a significantly new legislature come next session. Who knows what’s going to be able to come out of that Legislature?” he said.
Other advocates of a state-run exchange still favor that option, if it is possible.
“We would support a state insurance exchange even if it wasn’t an option under the affordable health care act, because it would be an insurance marketplace that would be beneficial for small business and individuals,” said Ray Stark with the Boise Metro Chamber of Commerce.
“I think most Idahoans would say they would like to see it controlled at the state level and not a federal mandate,” said Karen Early, Blue Cross of Idaho’s director of corporate communications. She said insurance companies, agents and other local leaders would have more influence on a state-run exchange as opposed to a federal exchange.
“We need to try to make it happen,” Early said.
Blue Cross and other insurance companies have been following the new requirements of the health care law since it was passed in 2010. Early said the company had considered a variety of outcomes and potential paths of action if the Supreme Court struck down part or all of the law.
“Now, none of that is necessary,” she said. “We’ve been implementing the law. We’re going to continue to implement the law.”