Officials in states across the country including Tennessee will be anxiously awaiting a U.S. Supreme Court decision next year on the constitutionality of the federal health care reform law, which was passed by Congress last year.
The court said Monday it will consider a challenge to the Obama administration's health care law next year. The justices agreed to hear the claim by Florida and 25 other states that the health care law violates the Constitution..
The court will consider the primary question of whether Congress went beyond its constitutional authority when it included the "individual mandate" in the Patient Protection and Affordable Care Act. Under the individual mandate, nearly all individuals must either be covered by health insurance or pay a fee.
The court also said it would consider whether portions of the law might survive if the individual mandate is struck down. Even if justices eventually strike down part of the law, other parts could remain intact. The court will also be considering a challenge to the law's expansion of Medicaid coverage.
State Treasurer David H. Lillard, Jr. speaking at a public forum in Smithville Tuesday evening, said if the law is found to be constitutional it could be costly to Tennessee. One option in implementing the reforms, he said, would be for the state to establish a health insurance exchange program.
Primarily what the health insurance exchange would do is bring together private health insurance companies along with a government health insurance option to compete for business among individuals and small businesses. To be in the health insurance exchange the health insurance policies offered cannot exclude someone for pre-existing conditions. The idea is to provide more competition thus bringing down the price for health insurance. "If it does come out as being constitutional, the whole program, then there are a couple of big things we'll need to look at in Tennessee," said Lillard. "One is whether Tennessee will operate an insurance exchange. In that bill, one of the concepts of it is either each state or the federal government, if a state refuses do to it, is operate an insurance exchange for citizens in that state. The concept is that private insurers will offer their products in this exchange making it easy to compare policies, compare coverage, compare strength of companies, etc and buy that. There also is another element to it where if you are below a certain level or certain multiple to poverty rate you can get a refundable tax credit that, in effect, supplements your insurance premium. One thing that is interesting about this for government is that in our local government health insurance plan right now, we have some employees and probably some on the state plan that would qualify for this credit either partially or to a great degree. They might be better off to opt out of the state's health plan and the state's local government health plan and go into the exchange to get their credit which they wouldn't get if they stayed on the state plan. They could get their credit and buy their coverage there. It would end up cheaper in the long run by doing that. So that's one concept of the whole thing," said Lillard.
"The other concept is just the cost that the state will have. Under the federal health care legislation, the federal government does not pay for all the costs of the insurance. I wish they would get in the deal to pay for 100% of everything they send down the pike as a state or local government mandate. You can look at the Medicaid program. The TennCare program. That's a federal/state program and its largely controlled by federal regulations. The federal government pays two thirds of it and Tennessee pays roughly a third of it. The current estimate that we have in state government is that it will increase state expenditures about $1.2 billion between the years 2014-2019. That's a little more than $200 million a year. So that's another one of those back of the envelope budget challenges. If the supreme court does uphold the legislation, Tennessee state government is going to have to figure out a way to deal with that cost," said Lillard.
"Governor Haslam and his people have been going around the state and having meetings with medical providers and stakeholders in Tennessee about whether Tennessee should run an exchange or whether we should let the federal government run it. There is some cost in running an exchange. It's beneficial perhaps but it does have some requirements to it. My understanding is the feedback from this (meetings) is that most people who are stakeholders, including citizens, providers, and insurance companies, would prefer the state of Tennessee run an exchange in Tennessee rather than have the federal government run it. Again, that decision has not been made at this point," said Lillard.
The law has been in effect since March, 2010, and has dozens of provisions. Many are already in operation, including federal help for community health centers, tax breaks for small businesses that offer employees health insurance and allowing dependent children up to age 26 to stay on their parents' policies.
Funding is already being given to states to create the health care exchanges that will help consumers shop for coverage.
Starting in 2014, the law's individual mandate covers nearly everyone living in the United States except illegal immigrants, prisoners and some people with religious exemption. Those without insurance will pay a penalty on their tax return, pegged to their annual income.
Opponents of the law say the requirement violates the Commerce Clause of the Constitution,
The clause grants Congress the authority to "regulate commerce ... among the several states." This also means, though, that the clause withholds power from Congress if something isn't commerce. The coming Supreme Court fight will revolve around which category the individual insurance mandate falls into.