Which Benefits Will Californians Lose if Court Strikes Down Health Care Act? (And Which Will Remain No Matter What?)

Tomorrow when you wake up, it’s widely expected you will be living in a country in which the Affordable Care Act (“health care reform” if you’re a Democrat, “Obamacare” if you’re a Republican, and “The End of the American Way of Life As We Know It” if you’re a devotee of conservative talk radio) has either been sanctioned by the Supreme Court of the United States — or struck down by that body as unconstitutional.

Or something in-between. It’s complicated.

Debate about the law, you may have observed, has become something much more than an argument over a specific policy. Opposition to the act among Republican politicians is virtually mandatory, and its fate has come to feel like a proxy for the success or failure of the entire Obama presidency.

Furthermore, one might argue, opponents’ extreme interpretations of the law’s provisions are indicative of not just the gaping partisan divide, but an almost metaphysical chasm between two distinct sets of Americans.

But there’s more at stake than just politics. A substantial number of people are already receiving insurance or other benefits under the law that they otherwise would not be eligible for. So I checked in today with Mina Kim, who has been reporting on health care for KQED, to see just what’s at risk.

I asked Mina to break down the possibilities into two categories:

1) What happens if the entire law is struck down
2) What happens if only the individual mandate — the requirement that everybody buy health insurance — is nixed

What happens if the entire law is struck down

Through the federal health care law, Mina Kim reports, about 400,000 Californians currently receive health care under a low-income health insurance program. After the health care law was enacted, California received a Medicaid waiver from the federal government that has enabled counties to receive matching federal funds to expand coverage to low-income, childless adults. Currently, 47 of California’s 58 counties participate in this program.

In 2014, when the full federal law is supposed to go into effect, these individuals would be transferred to a newly expanded Medicaid program that mandates people below 133 percent of the poverty level qualify for coverage (another component challenged in the Supreme Court).

If the entire law is struck down, or just the Medicaid expansion, there will be no federal funds to keep these 400,000 low-income Californians enrolled.

California is also using federal funds provided under the health care law to insure more than 10,000 people with pre-existing conditions. (The state already has a “high-risk pool” under which it insures about 7,000 people, but it’s expensive and there’s a waiting list.) These are people who can’t get insurance on the individual market because they are already sick to some degree.

This program would be phased out in 2014 and replaced with an online health insurance exchange.

Some senior citizens who receive prescription drug benefits under Medicare would also be affected if the entire law is struck down. The law requires pharmaceutical companies to provide 50 percent discounts on brand-name drugs and 7 percent on generics when people are caught in the so-called “doughnut hole” — a gap in coverage. The Centers For Medicare & Medicaid Services says that Californians have saved $311 million dollars on prescription drugs under this provision since the law passed.

What happens if the just the individual mandate is struck down?

This will primarily affect the way the health exchange — on track for 2014 — is intended to operate, says Mina Kim. The individual mandate compels people to buy insurance — the healthy and the sick alike — and theoretically if the mandate doesn’t exist, healthy people will not participate, thus not offsetting the cost of insuring the sick and keeping premiums affordable.

It’s been estimated that 2.5 to 3 million people in California will buy insurance over the exchange. The UCLA Center For Health Policy Research predicts 900,000 fewer people purchasing a plan if they’re not forced to. Peter Lee, the Executive Director of the California Health Benefit Exchange, estimated the decrease will be more like 500,000 people.

In any event, California intends on going forward with its exchange even if the mandate is struck down, because the income-based subsidies that individual purchasers of insurance qualify for will remain.

“Peter Lee, who used to work on health policy in the Obama administration, said that the striking down of the individual mandate will absolutely not inhibit the ability of the exchange to go forward,” Mina Kim says. “Lee says he’s not even doing any contingency planning for the decision.”

But what if the entire law is struck down — meaning no subsidies for people to buy insurance on the exchange?

“Lee thinks for the justices to strike down all the parts of the health care law would be such an incredible overreach of judicial power, that it’s not even worth considering. That’s how he feels about it. California has already even contracted with an IT vendor to create an online portal for the exchange. But he’s willing to concede the mandate may be struck down.”

Additionally, state lawmakers could try to legislate around a decision striking down the mandate, creating something akin to it that would still meet constitutional muster. “There has been support for that in the past,” says Mina Kim. “There are lawmakers considering laws to that effect should the court strike the mandate down.”

What will stay no matter what the court rules?

Some provisions of the health care act will remain in California even if the court strikes the entire thing down, because the state has passed legislation duplicating those laws.

• Children will still be able to stay on their parents’ health plan up to the age of 26.
• Insurers will still not be able to reject anyone under 18 with pre-existing conditions
• Insurers will not be able to cancel someone’s coverage when they become sick (called “recission”) because the insured made an unintentional error in his or her original application.