• So many Medicaid (and other) questions

    I’m attempting to find answers. Maybe you can help.

    1. Why did the Democrats offer exchange-based subsidies down to 100% FPL and Medicaid expansion up to 133% FPL? Why the overlap? It seems redundant.*
    2. Could a state receive federal matching funds for a Medicaid program that covered all individuals with incomes up to 100% FPL? Does the Secretary have authority to issue a waiver for such a program? Would the matching funds be at the very generous ACA level or lower?
    3. Is this what the CBO is focusing on in scoring the SCOTUS decision? See Avik Roy.
    4. Do insurers prefer to cover someone under Medicaid or the exchange? Where is the profit larger? (Most Medicaid enrollees are in a private managed care plan.)

    And here’s are non-Medicaid questions:

    1. Can you explain to me how the mandate is not a tax for the purposes of the anti-injunction act but is found constitutional under the taxing authority? I must warn you, I’m predisposed to not buy your answer. My brain just doesn’t do law. But, still, please give it a go.
    2. Is Matt Yglesias right?

    * By the way, it is worth keeping in mind that today’s Medicaid has an asset test. The expansion doesn’t. Also, in many (most? all?) one has to be categorically eligible for Medicaid, not just poor. I.e., one has to be elderly, disabled, blind, a kid, or a mom, in many states. All this goes away under the expansion.


    Comments closed
    • Re: non-Medicaid question 1, my understanding is that the penalty for refusing to buy health insurance is what John Roberts interpreted as a constitutional tax—not the mandate per se.

      As for the Anti-Injunction Act debate, the basic argument was: if Congress wanted the law to be considered a tax under AIA, it would’ve been smart enough to label the law a tax before its passage. The legalese is here: http://m.npr.org/story/155924055?url=/blogs/thetwo-way/2012/06/28/155924055/supreme-court-health-care-decision-when-a-tax-is-not-a-tax

    • The answer to this question

      “Can you explain to me how the mandate is not a tax for the purposes of the anti-injunction act but is found constitutional under the taxing authority? I must warn you, I’m predisposed to not buy your answer. My brain just doesn’t do law. But, still, please give it a go”

      can be found by applying Occam’s Razor, and as Occam requires really is pretty simple.

      Most, but not all Supreme Court decisions are outcome determined rather than determined on a legal basis. The reason for this is two fold. One is that Supreme Court Justices are ideologues, appointed by Presidents for their political positions.

      The second is that since there is no additional judicial review, the legal reasoning (if any) is not subject to further scrutiny by another court. District and Appellate Court Justices have to live with the fact that their opinions may be over-ruled, and subjected to withering criticism by another court. Supreme Court Justices do not face this risk.

      In this case the reason the penalty was determined to be a tax, in contradiction of both law and logic was that the Chief Justice wanted the outcome to be that the mandate was upheld but also wanted to limit application of the Commerce Clause.

      So the CJ simply fabricated an argument that had no legal basis. He can do that, he is the CJ. Signing on to his methodology was the price the other members of the Court who wanted the mandate to be upheld had to pay.

      See, once one accepts the obvious fact that with cases with large political or ideological impact the Court issues decisions based on its personal preferences and not the law, everything can be explained. To paraphrase Holmes (the Detective, not the Jurist), when you have eliminated the impossible explanation whatever explanation remains, however cynical, must the right explanation.

      Can you buy that Austin, do we have a sale?

    • From my reading of the decision, it appears that the Justices reasoned that because it’s not called a tax, it isn’t a tax (so far as the Anti-Injunction Act is concerned). This constitutes a very strict reading of the Anti-Injunction Act’s scope. But at the same time, even if it isn’t a tax, it may still constitute a valid exercise of Congress’s power to tax. In other words, if it looks like a duck and sounds like a duck, it’s probably a duck–but that doesn’t mean we should shoot it.

    • No incontrovertible sources, but my guesses:

      1. Maybe they were thinking of churn. If a household has insurance through the exchange, and their income drops from 140% FPL to 120%, assuming they like their insurance and the change is temporary and/or unexpected, it seems reasonable from a care-coordination point of view to keep them on their existing insurance.
      2. According to State Health Facts, Delaware, DC, New York, and Vermont already cover childless adults at a higher FPL level than that, and other states cover them with reduced benefit packages, so I have to assume yes. Some of this may be due to voluntary early Medicaid expansion under health reform, but at least some was in place before, because there’s provision in health reform for an increased federal matching rate for such states — since other states get a 100% matching rate, moving down to 90%, it was thought to be important not to leave states that had voluntarily expanded Medicaid to that level worse off than their peers that had not.
      3. —
      4. My state, at least, keeps Medicaid managed care pared to the bone, actuaries or no actuaries; they are, after all, based on Medicaid FFS rates, and we know how inadequate those usually are. I’m pretty sure anything based roughly on commercial rates will be much better – though I admit some commercial providers and insurers are still gearing up to serve the new Medicaid population.

      1. My understanding is that everyone finds the Anti-Injunction Act annoying, so it’s been settled over the years that its wording gets construed narrowly: anything not called a tax is not subject to it. With the taxing power, on the other hand, the doctrine of constitutional avoidance comes into effect, so judges will try to construe the Constitutional and legal text broadly if that’s necessary for them to find something constitutional. And that broadness allowed the majority to say if it’s essentially a tax, then it’s a tax under the Constitution no matter what it’s called.
      2. Very likely. He has the procedural history right, certainly.

      • Keep in mind, today’s Medicaid has asset tests too. The expansion does not.

      • Re, Minivet on June 29th, 2012 at 09:20

        Regarding item 1, my understanding is that if you are eligible for Medicaid (or another credible coverage source) then you are NOT eligible for exchanged based subsidies. So this implies that switching eligibility status would result in churn between coverage types. The overlap doesn’t help because you can’t remain eligible for the subsidy if you could get Medicaid.

        As a practical matter there has to be a limit on how often you recalculate eligibility. Once a year makes sense to me because it would then line up with the tax year. However many states re-verify current Medicaid eligibility every 6 months and I suppose they could continue to do that.

        Therefore I tend to assume that the two different thresholds (133% and 100% FPL) reflect the process of writing the bill. The two different numbers came from different sources and if there had been enough time they would have been reconciled, but there wasn’t and they weren’t.

        • Well, the subsidy levels were amended by the budget reconciliation process. If there was enough time to do that, there was enough time to reconcile the two FPL thresholds. So, I don’t think we have found a plausible answer yet.

    • >>Can you explain to me how the mandate is not a tax for the purposes of the anti-injunction act but is found constitutional under the taxing authority?>>

      The anti-injunction act is a law. Congress can amend laws. If congress says that something is not a tax for purposes of the AIA, it is not a tax for purposes of the AIA. Their statement is the functional equivalent of amending the AIA to exempt the ACA penalty.

      Taxing authority is a constitutional provision, therefore we have to look to substance, not labels. In substance, this is a tax, whatever congress calls it. Congress can’t just amend the taxing authority provisions of the constitution, so rationale under the AIA does not apply.

      >>Is Matt Yglesias right>>

      The Senate’s Byrd Rule says you can’t use reconciliation (i.e., majority rule which can’t be filibustered) to increase the deficit and general Senate rules say you can only use reconciliation for budget matters, repealing the ACA could not be done under reconciliation.

      On the other hand, there does not appear to be any way to challenge the Senate’s decisions on its own rules, as courts have refused to consider these sorts of disputes. If a Republican majority violated Senate rules and repealed the ACA under reconciliation, no one would be able to challenge that action.

      • Your AIA answer is superb, if correct. (I don’t mean to suggest it isn’t correct, only that I am not qualified to judge.)

        • Thank you.

          Here’s a quote from the syllabus of the opinion distinguishing between analyses of a tax under a law and under the constitution: “The Affordable Care Act describes the “[s]hared responsibility payment” as a “penalty,” not a “tax.” That label is fatal to the application of the Anti-Injunction Act. It does not, however, control whether an exaction is within Congress’s power to tax. In answering that constitutional question, this Court follows a functional approach,“[d]isregarding the designation of the exaction, and viewing its substance and application.” United States v. Constantine, 296 U. S. 287, 294. Pp. 33–35.”

    • Darn, was I at least in second place?

    • You ask: “Why did the Democrats offer exchange-based subsidies down to 100% FPL and Medicaid expansion up to 133% FPL? Why the overlap? It seems redundant.”

      A great many people who are eligible for Medicaid today never apply for it because:
      1) many states purposefully make the application forms long and difficult
      2) they don’t know they are eligible
      3) they have heard that if you’re on Medicaid, it’s hard to get a doctor to see you (which is true because Medicaid pays doctors 30% less than it would pay a doc providing the same treatment to a Medicare patient.
      In addition in many states (such as N.Y.) a doctor can wait months to be paid by Medicaid.
      But under the ACA, primary care docs who take Medicaid patients will
      be paid Medicare rates–which means more doctors will take Medicaid.

      By contrast, getting a subsidy will be quite easy. In the Exchanges, people will verify your income and approve you for a subsidy. The goal of the Exchanges is to make the process smooth. Insurers wil be paying “user’s
      fees” to fund the day-to-day operatoins of the Exchanges, and they have a vested interest in everyone getting their subsidies.

      Thus, the overlap. Many who won’t sign up for Medicaid will get

      • I thought the exchanges were supposed to direct people to Medicaid if eligible and make it just as easy to enroll in it. Hence, if someone Medicaid eligible applies for exchange coverage for the reasons you suggest, they’d end up on Medicaid anyway. Or am I wrong?

    • Folks need to keep in mind there are two different “subsidies”: Premium subsidy and cost sharing subsidy. These have two different income limits. The premium subsidies have no bottom end, so up to 133% FPL, individuals can get 2% subsidy to pay the premium. Beginning at 100% FPL, there are ALSO cost sharing subsidies to help with out of pocket expenses. So there is no gap for premium subsidies. There is a potential out of pocket gap for the small population of people that may not qualify for Medicaid in a state that refuses the ACA expansion. Does that sound right?

      Separate from the two subsidies, individuals below 133% FPL will likely be exempt from the mandate tax for income hardship. I think this is what Kavita was highlighting on the previous post.

    • couple other points on this:

      1) Folks in the new so-called donut-hole would likely have access to a bare-bones catastrophic plan the ACA makes available to people under age 30 or who are exempt fromm the mandate. This is a truly bare-bones plan: aside from preventive services and like 3 primary care doc visits a year, a beneficiary would have to pay ~$6k in cost sharing before coverage really kicks in. Clearly, this plan would carry a lower premium than a bronze plan (actuarial value would probably be in the 0.40 range). So there are low cost coverage options available to them, albeit with very high OOP costs for all but a few primary care visits and emergencies.

      2) At some point i believe the proposed regulations allowed people with incomes *initially* above the medicaid income threshold (133%+5% disregard), but whose incomes dip below 100% FPL during the year, to claim premium tax credits (@2% income). Not sure if that made it through to the final rule though. So a select few people who end up <100% FPL would be able to claim the credit. But only if their income drops during the enrollment year.