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This chapter outlines how litigation in federal court will affect the implementation and viability of the Affordable Care Act (PPACA). The ACA's statutory language and administrative fixes complicate the implementation of health insurance exchanges. The requirement that group insurance plans include coverage for contraception also spurs litigation. Challenges to ACA provisions to control health care costs may create another battle over health care reform as the Independent Payment Advisory Board's unique structure and authority raise constitutional questions that may need to be resolved by federal courts. Finally, the Supreme Court's upholding of the imposition of a tax penalty on individuals who fail to obtain qualifying health insurance coverage under the individual mandate may have constrained the federal government's ability to use this penalty as a means of combating adverse selection in health insurance markets and exposed future reforms to the threat of further legal challenge.

This chapter reviews regulation in the health care market under the Affordable Care Act (ACA). It begins with a description of the difficulties inherent in health care insurance markets. A review of the work of Rebitzer, Taylor, and Votruba follows, which is criticized on the whole for overstating the gains from regulation. Specifically, the chapter questions Rebitzer's claims of informational advantages that the insurer has over the insured, that a high turnover rate is evidence of latent market imperfection, that a public agency has the expertise to operate successfully in this market niche, and that the proliferation of consumer health care options poses an impediment to successful market operation. The chapter suggests that restrictions on entry, mandates for minimum essential benefits, privacy regulations, and the inability of private institutions to contract out of the standard-issue terms for medical practice be removed. The chapter then cites the ways in which the ACA deviates from standard insurance principles and concludes that the government's new marketplace metaphor downplays both the massive regulations and the subsidies built in to the ACA exchanges, which negate the benefits that ordinarily derive from organizing voluntary exchanges.

This chapter assesses whether cross-border health insurance plans that use foreign providers could satisfy the requirement to maintain “minimum essential coverage” under the new mandate. It examines whether plans that use foreign medical providers can provide “essential health benefits” and thus meet the requirements for “qualified health plans” to participate in the new state insurance exchanges beginning in 2014. The provisions of the Affordable Care Act impact cross-border health care in profound ways. The Act lawfully needs present immigrants to maintain insurance coverage under the mandate. It prohibits insurers from rejecting customers with preexisting medical conditions, requiring “guaranteed issue.” Many provisions in the Affordable Care Act might promote cross-border plans in the exchanges. In general, the Affordable Care Act exerts its own hydraulic pressures, in the hopes of covering more patients domestically.

This chapter addresses the issue of health care for low-income people. The United States, virtually alone among developed nations, does not offer universal access to health care, leaving many millions of individuals without health insurance or other means of obtaining necessary medical services. In 2010, Congress enacted the landmark Patient Protection and Affordable Care Act (ACA)—popularly known as “Obamacare”—marking an important but incomplete response to the nation’s health care crisis. This chapter examines the ACA in detail, including its impact on Medicaid and Medicare, the major government health programs in the United States, its creation of Health Insurance Exchanges and tax credits to help low-income households obtain private health coverage, and the reform of private health insurance markets through a patient’s bill of rights, which, among other measures, prohibits insurance companies from refusing coverage for preexisting medical conditions. Perhaps the most critical aspect of the ACA was its expansion of Medicaid to cover virtually all low-income citizens (and certain immigrants) who do not qualify for other health coverage. Although several states opted out of the ACA’s Medicaid expansion, the Medicaid program nevertheless remains the largest single provider of health coverage in the United States. This chapter also provides a detailed description of Medicaid, its eligibility criteria and scope of coverage; the Child Health Insurance Program (CHIP), a government-funded health insurance program for children in households with too much income to qualify for Medicaid; and Medicare, the federal health insurance program for aged, blind, and disabled individuals.

A key component of the Affordable Care Act (ACA) is the creation of state-based health insurance exchanges, which have the potential to substantially improve the functioning and expand the reach of the private health insurance market. This chapter describes salient features of the current market for health insurance and explains how the exchanges will build on this system by altering incentives for individuals, employers, and insurers. The U.S. private health insurance market has been dominated by employer-sponsored insurance (ESI). In 2009, more than 90 percent of the 172 million non-elderly individuals with private health insurance obtained it through their, or a family member’s, employer. Individuals without ESI coverage can buy private health insurance on the individual market, though without the tax subsidy ESI enjoys. Additionally, individuals with existing health problems often find it difficult or impossible to obtain coverage at affordable rates. The ACA will increase health insurance coverage beginning in January 2014, through two channels: First, Medicaid eligibility will be extended to individuals with incomes up to 133 percent of the federal poverty line (FPL). Second, the creation of state-based health insurance exchanges will allow individuals to select from qualified health plans operating in their area of residence.

The growth in medical spending in the United States is both more important for fiscal policy and raises more potential problems than consumer spending growth in other sectors of the economy. Given the growing importance of Medicare and Medicaid, the impending expansion in Medicaid eligibility, and subsidies for health insurance exchanges under the recent health care reform – as well as high-priced technological advances in providing medical care – growth in federally-financed spending on health care poses a major challenge to present and future fiscal stability. This chapter, by Mark Pauly, examines how the United States can return to sustainable financing while doing as little harm as possible. Pauly’s proposed solution to restricting the growth in public medical spending includes a politically determined level of spending growth that corresponds to the preferred rate of taxpayers who receive fully subsidized insurance. This growth rate would reflect both the taxpayers’ preferred rate of spending growth and growth in the availability of new technology. For the population above the poverty level, the growth of public medical spending would be means tested.

Mississippi is the only state in the country to have a proposal for an exchange rejected by the federal government. This was a fascinating outcome considering how badly the Obama administration wanted Republican-led states to run their own exchanges. The debate in Mississippi was unique because an independently elected Republican insurance commissioner believed he could establish an exchange without his governor’s support. It seemed he would be able to—until the Tea Party joined the fight, with the support of national and state-level conservative think tanks. They made their presence felt at obscure meetings in highly technical parts of the process. Fellow-Republican Governor Phil Bryant then put his foot down and said no exchange would be created in Mississippi without his support. The Obama administration may have been tempted to approve the exchange anyway, but decided to stay out of the intrastate fight.

Michigan very nearly was the first Republican-led state to create its own health insurance exchange. By November 2012, legislation to create an exchange had passed the Michigan Senate and was supported by Governor Snyder and the Speaker of the House. A broad coalition of interest groups lobbied in favor of a state-based exchange, including insurers, businesses, providers, hospitals, and consumer advocates. They were opposed by passionate Tea Party leaders using “targeted activism” to make their presence felt. As in Mississippi, they were supported by national and state conservative think tank organizations. Opponents at the last minute attached an abortion amendment to the key bill and the House Health Policy Committee voted down authorizing legislation in November 2012, killing the possibility of a Michigan-run exchange. Governor Snyder tried to establish a partnership exchange but was blocked by the legislature refusing to appropriate money the state had been promised in federal grants.

Idaho was the only state in the nation led entirely by Republicans that chose to run its own health insurance exchange. There were many twists along the way, including the rejection of federal grants, nullification bills, a veto, and an executive order. The issue split Republicans, with enough joining the Democrats to pass legislation. Prominent interest groups strongly supported state control, although they faced intense opposition from the Tea Party and conservative groups. Governor Butch Otter played a prominent role, working with key legislative leaders who happened to have particular expertise in health policy. However, the decision was made too late and the state did not have time to set up its exchange in time for the first enrollment period. It relied on the federal website the first year but had its own fully functional website one year later.

This chapter examines the four key insights from the case study states, looking at the degree to which these lessons apply elsewhere. I ask what the Obama administration should have done differently in its intergovernmental negotiations with states and whether the decision to accept or reject control of an exchange matters. In other words, what are the policy implications of this decision? A Supreme Court case in 2015 would have dramatically raised the stakes of this decision, though the Court’s ruling in favor of the Obama administration ensures that any person with a qualifying income can receive financial assistance to purchase coverage on an exchange—regardless of their state’s decision. I conclude by examining the future of health insurances in particular, and health reform and U.S. federalism more broadly.

The Affordable Care Act (ACA) is the most significant health reform legislation enacted in generations. However, politics does not end after a bill is signed into law. This chapter outlines why states were given such a prominent role in the implementation of core elements of the ACA, including the health insurance exchanges. This sets the stage for the question of this book: given that state leaders say they want flexibility and that Republicans say they prefer market-oriented reforms, why did so many states reject state control over exchanges? I outline the four main insights from the case study chapters: (1) the importance of governors, (2) the power of the Tea Party, (3) the ways in which differences in institutional design and procedures shaped policy outcomes, and (4) the importance of leadership. I ask whether this episode supports or undermines the federalism notion of states as laboratories of learning.

This chapter discusses the four main obstacles faced by the Affordable Health Care Act (ACA). The first hurdle is judicial. Several states are challenging the constitutionality of the individual mandate—the requirement that everyone who is not insured at work or covered by a public program must personally buy health insurance. Second, Republicans have sworn to seek repeal of the ACA. The third challenge is implementation. The technical challenges of implementation are enormous. For example, many observers believe that health insurance subsidies should be based on data that are more current than the tax information currently available to the IRS. Collecting such data, processing the information, paying out subsidies, and recovering overpayments are daunting tasks. The fourth group of obstacles is found in state capitals. The ACA requires each of the fifty states to set up health insurance exchanges. It grants the states wide discretion as to how to organize the exchanges and where to place them in the state governmental structure. How well the states do this job is of critical importance. Insurers will be tempted to try to dump high-cost patients in the exchanges. If they succeed, premiums charged in the exchanges will be very high, rendering insurance through the exchanges burdensome or unaffordable for many people.

The fight over an exchange had a very different dynamic in New Mexico because there were no loud voices on the right calling for the state to reject control. Republican Governor Susanna Martinez supported retaining control, but strongly preferred a governance model that allowed insurers to serve on the board of directors and limited the degree of oversight by the board on the types of plans that could be sold on the exchange. Governor Martinez vetoed legislation in 2011 that would have set up a different model of an exchange. Institutional quirks meant the legislature did not have the opportunity to weigh in again for two years, until 2013. By this point it was too late and the state had to rely on the federal website despite passing legislation to run its own exchange.

The 2010 Patient Protection and Affordable Care Act (ACA) is introducing extensive changes to the US health care system, including new requirements around the provision of health insurance coverage for employers. There is much debate as to how employers will respond to those new requirements, with estimates of the likely impacts on employer-sponsored coverage varying widely. This chapter capitalizes on the real-world experience under health reform in Massachusetts, the template for the ACA, to examine how employers responded to that state’s 2006 health-reform initiative. Although details of the employer requirements in the national legislation differ somewhat from those in the Massachusetts law, the broad tenets of the two initiatives are similar and so the response by employers in Massachusetts provides objective evidence of the potential response by employers to the national legislation.

Policymakers designed the Patient Protection and Affordable Care Act (ACA) to address the lack of access to affordable health insurance, a problem plaguing the United States for decades. However, the cost of health insurance remains a strain on the wages employers pay to workers and thus a contributor to income inequality. The ACA presents a significant opportunity to help low-wage workers and individuals with income below the poverty line by reversing at least some of the decades-long trends in inequality. But the act’s success depends on the success of the health insurance exchanges, how employers integrate the new system into their compensation practices, and how widely Medicaid is expanded. In the next few years, the ACA should be evaluated on the extent to which it meets the goals of reducing income inequality, as these goals, from a social-justice perspective, represent the right social and public health outcomes for the ACA.