But the Court's holding leaves Alabamians with two
important decisions to make: Should the state expand Medicaid under the PPACA
and should the state set up its own PPACA-compliant health insurance exchange?
In the PPACA opinion, seven Justices placed a
significant restriction on the coercive power of federal spending by striking
down the ability of the federal government to condition all Medicaid funding on
a state's willingness to expand Medicaid coverage under the PPACA. As a result,
Alabamians are asked to balance expanding Medicaid to include an additional
351,000 to 456,000 citizens against the reality of scarcely being able to fund
existing Medicaid obligations.
At first glance, the Medicaid expansion is enticing
for every state. Those favoring the Medicaid expansion may argue that
Alabamians paying federal taxes should not miss an opportunity to leverage even
more federal funds. The federal government will cover 100 percent of the PPACA
Medicaid expansion until 2016. After that, the federal government will pay 95
percent in 2017, gradually reducing its contribution to 90 percent by 2020.
But arguing for states to leverage more federal
spending is the equivalent of telling an alcoholic that the first sip of his
drink is on the house. Even with the federal government covering the majority
of the initial cost, the PPACA Medicaid expansion is far from free. Depending
on the extent to which Medicaid markets the new coverage, the ultimate cost to
Alabama could fall between $470 million to $693 million from 2014 to 2019.
Beyond that, what percentage Alabama will be required to fund is anyone's
guess.
The next question Alabama must deal with is whether
it will set up its own health insurance exchange under the PPACA or fall under
the yet-to-be-created federal health insurance exchange.
Alabama Governor Robert Bentley created the Alabama
Health Insurance Exchange Study Commission (AHIESC) in December 2011 to
investigate the logistics of setting up a state health insurance exchange.
However, many Alabamians may not have heard much about the commission's report
and for good reason. Politicians are not exactly thrilled to reveal the
exchange's estimated $34-$50 million annual administrative price tag.
To further curb the enthusiasm for an exchange, the
AHIESC also recommended that it be funded by assessing fees on "all
products sold in the small group and individual [health insurance] markets,
including those sold inside and outside the Exchange." In other words, the
AHIESC recommends taxing the health insurance of Alabamians to pay for the
PPACA exchange itself.
Supporters of an Alabama PPACA exchange may suggest
that failing to set up an Alabama exchange will invite legions of federal
regulators to descend on Alabama and take away healthcare options. But in
reality, individuals in Alabama participating in the federal exchange may never
notice the difference; federal insurance subsidies will attach to enrollment in
both state and federal exchanges, and the same minimum plan standards will
apply.
But there is one important difference. If Alabama
sets up its own exchange, it is left with the tab after federal funds dry up.
That could easily be another $50 million price tag per year and potential tax
increases for a state that is not exactly flush with cash.
Even as conservative and liberal ends of the
political spectrum push for radically different outcomes, the two PPACA choices
before Alabama ultimately converge into one: join the growing number of states
rejecting the PPACA exchange and Medicaid expansion or be willing to pay for
them.
About the author: Cameron Smith is General Counsel and Policy Director for the Alabama Policy Institute, a non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families, which are indispensable to a prosperous society.
This article was published by the Alabama Policy Institute.
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