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Two health-care questions

National View

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There are two great mysteries about the Supreme Court's ruling on the Affordable Care Act that befuddle commentators. First, why was Chief Justice John G. Roberts Jr. the crucial fifth vote upholding the requirement that individuals buy health insurance? And what will be the impact of declaring unconstitutional the penalty for states that decide not to expand their Medicaid programs to everyone who earns less than 133 percent of the income defined as the poverty level?

Other considerations may have motivated Roberts, like not wanting his court to be tarred with another very controversial, politicized decision, but we should not overlook the role his health might have played.

Roberts has a pre-existing condition but is just 57, thus not eligible for Medicare. Remember his unexplained seizure soon after he became chief justice? He is the only justice with a pre-existing condition who is not eligible for Medicare. If he did not have employer-provided insurance, he would be denied coverage at almost any price. Maybe his precarious status made Roberts more sensitive to the need for the Affordable Care Act requiring insurance be available to all with pre-existing conditions.

In a 7-to-2 decision, with Justices Elena Kagan and Stephen G. Breyer joining the five conservatives, the court ruled that the new provisions giving coverage to all Americans under 133 percent of the poverty level constituted not an expansion but a new Medicaid program. The court viewed this Medicaid provision as coercion, a gun to the head forcing states to acquiesce.

How are states likely to respond? For ideological reasons some states, like Texas or Florida, may decide not to expand their Medicaid programs. But for most states, the Medicaid expansion is simply too good a deal to pass up.

Under the act, the federal government will be extremely generous in helping states pay for Medicaid expansion. Between 2014 and 2016 the federal government will pay 100 percent of the Medicaid expansion; in 2017 the federal government will cover 95 percent of the expansion. That will slowly decline to 90 percent by 2020 and remain there.

Many states may save money by expanding Medicaid. How? According to a September 2009 report by the Council of Economic Advisers, states currently pay for the uninsured in two ways.

First, the hidden cost shift. Insurance premiums are higher for state workers (and for others whose employers cover them) because of the uninsured. Second, many states pay for uncompensated care at hospitals and clinics. While states may have to pay 10 percent of the Medicaid expansion in 2020, they will save money from eliminating the cost shift and uncompensated care.

The report estimated California would pay about $195 million for expanding Medicaid when the federal government paid 90 percent in 2020, but would save more than $210 million in reduced state employee premiums and more than $2 billion in uncompensated care, for a net savings of more than $2 billion. Similarly, Wyoming would save about $1 million, and Montana about $9 million. Thus, if they acted rationally, most states should go along with the Medicaid expansion.

If states don't go along with it, some Americans who make less than 100 percent of the federal poverty line ($11,170 for individuals and $23,050 for families of four in 2012) will not be eligible for subsidies to buy insurance in the exchanges and yet will not be eligible for Medicaid. Exactly how many Americans might be denied access will depend on how many states refuse to expand Medicaid and how many uninsured residents they have.

In 2019, Texas could have more than 2 million people who would go into an expanded Medicaid, bringing the state's total on Medicaid to 6 million. Thus, if Texas refuses to expand Medicaid, some of those 2 million people will lack health insurance.

Overall, this is a great day for the American health-care system. Millions will have access to affordable care. And it removes significant uncertainty about how the system will evolve, allowing everyone — physicians, hospitals, insurers, governments, and others — to focus on improving our health-care system.

Ezekiel J. Emanuel, an oncologist and professor at the University of Pennsylvania, advised President Obama during the crafting of the Affordable Care Act. Theodore Ruger is a law professor at the university. Their piece was first published in the New York Times.

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