The ACA SCOTUS Decision in Plain English

As we all know from the "media drama" as some might call the countless media coverage, news articles, blogs and other posts, the Supreme Court of the United States ("SCOTUS") upheld the Patient Protection and Affordable Care Act ("ACA") on June 28th, 2012.  Although four questions were before the Court, it focused primarily on one--the challenge to the individual mandate to purchase insurance by 2014 or pay a "penalty". 

In an opinion closing in on almost 200 pages, the Court found, 5-4, that the individual mandate penalty was constitutional.  Although the government's Commerce Clause argument was rejected, Chief Justice Roberts bought one of its alternative arguments: that the individual mandate penalty was the functional equivalent of a "tax."  However, the Court rejected the penalty which would have been imposed on states that refused to expand coverage under their Medicaid programs. Although granting higher funds for Medicaid expansion is permissible, withdrawal of all Medicaid funds to those states that do not would not be. 

For those of you who have not and will not have the time to plow through and digest the lengthy opinion, here are some of the best "plain english" explanations of the Court's decision as well as some interesting commentary:

But for those of you with a spare weekend or a day on the beach, or those of you who may simply miss law school, break out your Kindle and a glass of wine or margarita to read the opinion and the dissents.  You can download the full opinion here, National Federation of Independent Business v. Sebelius, from the SCOTUS website.

HHS Announces Proposed Rules for Health Insurance Exchanges

In a Press Release posted yesterday, the U.S. Department of Health and Human Services (HHS) proposed a framework to assist states in building Affordable Insurance Exchanges, state-based competitive marketplaces where individuals and small businesses will be able to purchase affordable private health insurance and have the same insurance choices as members of Congress. The Press Release states, in part:

Starting in 2014, Insurance Exchanges will make it easy for individuals and small businesses to compare health plans, get answers to questions, find out if they are eligible for tax credits for private insurance or health programs like the Children’s Health Insurance Program (CHIP), and enroll in a health plan that meets their needs.

“Exchanges offer Americans competition, choice, and clout,” said HHS Secretary Kathleen Sebelius. “Insurance companies will compete for business on a transparent, level playing field, driving down costs; and Exchanges will give individuals and small businesses the same purchasing power as big businesses and a choice of plans to fit their needs.”

HHS indicates that the announcement is designed to help support and guide states in their efforts to implement Insurance Exchanges. HHS proposed new rules offering states guidance and options on how to structure their Exchanges in two key areas:

  • Setting standards for establishing Exchanges, setting up a Small Business Health Options Program (SHOP), performing the basic functions of an Exchange, and certifying health plans for participation in the Exchange, and;
  • Ensuring premium stability for plans and enrollees in the Exchange, especially in the early years as new people come in to Exchanges to shop for health insurance.

These proposed rules set minimum standards for Insurance Exchanges, give states the flexibility they need to design Exchanges that best fit their unique insurance markets, and are consistent with steps states have already taken to move forward with Exchanges.

To reduce duplication of effort and the administrative burden on the states, HHS also announced that the federal government will partner with states to make Insurance Exchange development and operations more efficient. States can choose to develop an Insurance Exchange in partnership with the federal government or develop these systems themselves. This provides states more flexibility to focus their resources on designing the right Insurance Exchanges for their local insurance markets.

Click below for a copy of the HHS's proposed rules for Insurance exchanges:

For a great summary of these new rules, click "Continue Reading" below.

For additional general information, check out

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The Antitrust Headache: What ACOs, AT&T and Blue Cross have in Common

So what exactly do a nation-wide health insurer and the second (potentially now first) largest U.S. wireless provider have in common? Upcoming battles over the antitrust implications of their actions and a not-so-beautiful friendship with the DOJ. 

For AT&T, its headache began last weekend when it announced its plans to buy T-Mobile for $39 billion, giving it effectively a 40% share of the current wireless market share and raising questions from network coverage to increased quality of service, pricing and competition.  AT&T and T-Mobile predict that the quality of calls would improve, coverage would be expanded, and more individuals would have access to faster wireless data connections as a result of the merger.

In a completely unrelated market and action, Blue Cross Blue Shield health insurance plans in the District of Columbia, Kansas, Missouri, North Carolina, Ohio, South Carolina and West Virginia recently found themselves on the receiving end of a U.S. Department of Justice (DOJ) subpoena.  The subpoenas come as part of a lawsuit filed last year by the DOJ against Blue Cross Blue Shield of Michigan alleging the insurer entered into agreements to raise hospital prices. 

Far from immune, health care providers and other stakeholders looking to form and operate Accountable Care Organizations (ACOs), the AT&T and Blue Cross cases serve as a reminder of the significant risk of antitrust scrutiny that such collaboratives can be subject to.  The development of such ACOs through hospital and physician joint ventures and similar relationships has the potential to create substantial market power and may encourage monopoly and price-fixing activity, thus coming under the watchful eye of the DOJ.  The DOJ and FTC are expected to address this matter soon in joint collaboration with the forthcoming proposed ACO regulations from CMS (see Statement of Sharis A. Pozen, Chief of Staff, Antitrust Division. before the Subcommittee on the Courts and Competition Policy, Concerning Antitrust Enforcement in the Health Care Industry (December 1, 2010)).

To read more, click "Continue Reading" below.

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Another Kind of HIE -- Health Insurance Exchanges & Recent NPRM

The Affordable Care Act (ACA), enacted in March 2010, requires states to establish Health Insurance Exchanges through which individuals and small businesses can purchase affordable insurance. Under the ACA, a state can set up its own exchange, or elect to allow the federal government administer an exchange in their state. States are also allowed to create two exchanges: one for the individual, and and one for the small business insurance market. A state is also allowed to collaborate with its neighboring states to develop regional exchanges. For a good bullet summary of what the ACA requires, the Commonwealth Fund has a posted a Power Point worth checking out.  These "HIEs" must begin operation by January 1, 2014. 

On October 22, a briefing took place that included Joel Ario, Deputy Director of the HHS Office of Consumer Information and Insurance Oversight (OCIIO), who addressed the current status of the states and their initiatives to develop HealthInsurance Exchanges, and to work together with OCIIO to produce state guidelines.  During the briefing, Mr. Ario gave an overview of what states like Massachusetts, Utah and Oregon are already doing to implement the ACA, and mentioned that the federal government is offering states Health Insurance Exchange planning grants of up to $1 million.  A transcript and other interesting materials from the October 22 briefing are posted on Alliance for Health Reform's website.

The OCIIO is currently working with the DHHS to issue regulations and implement many of the provisions of the ACA that address private health insurance. On October 29th DHSS announced in a News Release the availability of competitive funding opportunities for States to design and implement the Information Technology (IT) infrastructure needed to operate Health Insurance Exchanges.  On November 3rd, HHS's Notice of Proposed Rulemaking was published in the Federal Register and proposes that Medicaid eligibility systems will potentially be eligible for an enhanced federal matching rate of 90 percent for design and development of new systems and a 75 percent federal matching rate for maintenance and operations. HHS points out on its website that States must meet a set of performance standards and conditions, including seamless coordination with the exchanges, in order for their Medicaid technology investments to qualify for the enhanced match.

For more information on Health Insurance Exchanges, what they are and how they fit into the big HIE puzzle, visit HHS's website for HIE IT Systems and OCIIO's website.  To review some of the more detailed requirements for HIEs under the ACA, Continue Reading below...

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