The Affordable Care Act was designed to make affordable health insurance accessible to most all Americans via a two-part system: the expansion of Medicaid and the creation of insurance exchanges where individuals will be able to comparison-shop for health insurance policies in online marketplaces, using their collective bargaining power to foster competition and drive down prices. Subsidies in the form of tax credits will also make coverage more affordable for the exchange enrollees that qualify.
However, because of both the intrinsic qualities of the United States’ federal system of government and the very partisan reaction the legislation has produced in legislatures, the success of the health care reform depends largely on the state of an individual’s residence.
“We have a long history of relying on private sector markets and resorting to government regulation and provision of services only where markets fail,” wrote Alice M. Rivlin, a senior fellow in the Economic Studies Program at Brookings, to explain the complexities of Obamacare implementation. Plus, “as a big diverse country formed originally by sovereign states, we still fear central government power and rely heavily on the states to formulate and execute domestic policy. Our federal system has great strengths, but it is inherently complicated.”
When President Barack Obama signed the health care reform into law on March 23,2010, fourteen state attorneys general filed lawsuits against the law’s requirement that most Americans purchase health insurance. They asserted that it was unconstitutional, even though it had been central to the GOP’s health-care reforms for two decades.
In response to the legal opposition, Erwin Chemerinsky, the dean of the law school at the University of California at Irvine, told The New York Times, “There is no case law, post 1937, that would support an individual’s right not to buy health care if the government wants to mandate it.” And, indeed, Chief Justice John Roberts sided with Justices Ruth Bader Ginsburg, Sonia Sotomayor, Stephen Breyer, and Elena Kagan in deciding that Obamcare was a valid exercise of Congress’s power to tax, meaning the government could require individuals to purchase insurance or face a tax penalty.
What the court did rule unconstitutional was the mandated expansion of Medicaid; it determined that taking away all a state’s funds for its entire Medicaid program because it refused to make the expansion would be coercive.
Instead, the Medicaid expansion was made optional, and twenty-two states decided not to move forward with the program while three states have yet to come to a decision. This is a problem for the success of the health care reform because states whose citizens are more likely to be uninsured are also more likely than not to refused the extra aid.
Six of the ten states with the lowest rate of insured residents have no plans to expand Medicaid, according to a new analysis of Census data. Furthermore, of half of the states with the lowest coverage rates, fifteen have no plans to expand the program. In comparison, eight of the ten states with the highest rate of insured individuals have decided to allow the expansion.
Data compiled by the Urban Institute shows that there is a big coverage cap; of the 15 million potentially eligible adults, more than half live in states that have refused to expand Medicaid or remain undecided. The fact that a majority of the people most in need of access to affordable health care will likely remain uninsured is a predicament unforeseen by the president and congressional Democrats who designed the provision in the first place. The law’s pledge that all U.S. residents will be able to afford health insurance will not be fulfilled as its writers envisioned.
Still, even though as many as half of all U.S. states may not expand Medicaid, enrollment is expected to expand; since the law requires most Americans to have insurance coverage or be penalized, many state officials predict that the individual mandate will prompt more of those currently eligible for Medicaid, but not enrolled, to sign up.
Mirroring the partisan trend in Medicaid expansion, many of the states that declined to set up and run their own insurance exchanges are also those with high numbers of uninsured residents. Originally, the federally-run exchange was meant as an emergency provision, but only sixteen states and the District of Columbia have created their own online marketplaces, while seven more have partnered with the federal government to operate their exchanges, and in twenty-seven states, insurance coverage will be available through federally-facilitated exchanges.
Of the 48 million Americans who were without insurance in 2012 — a figure that represents 15.4 percent of the total U.S. population – 59.4 percent lived in states that chose a federally-facilitated exchange. Those states are also home to 54.6 percent of the nation’s population. That means that, in states with federally-facilitated exchanges, the uninsured account for 16.8 percent of the total population, which compares to 14 percent in states that have organized their own exchanges and 12.8 percent that are considered “partnership” states. A disparity is evident in the numbers, and that fact may make the complex implementation of Obamacare even more difficult.
The character of the state’s exchange — be it federally-facilitated, state-run, or a partnership — corresponds slightly to the knowledge residents have about the health care reform in general. While every state will have an exchange of some variety, according to a recent Pew Research Center Study, only 44 percent of Americans surveyed in the “federal default” states responded that they would have access to one, versus 59 percent in the states with state-based health care exchanges or state-federal partnerships.
When these two statistics are considered together, the percentages of uninsured Americans and the understanding of the exchanges, a problem emerges: the individuals who will likely receive the greatest benefits from the exchanges also have an inadequate understanding of the reform’s implications.
That reality, plus the tendency of those states with high rates of uninsured individuals to reject the proposed Medicaid expansion, puts the successful functioning of the reform in question.
Here’s how the major U.S. indexes traded on Monday:
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