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High court ruling opens Medicaid escape hatch for states

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While upholding President Barack Obama’s health care law, the U.S. Supreme Court on Thursday also opened an escape hatch for states that do not want to take on the project of expanding their Medicaid programs.

Whether Indiana decides to opt out of the expansion — which was projected to cover an extra 500,000 Hoosiers — remains to be seen. But the ruling will give states more leverage with the federal government to create favorable arrangements, noted Mike Grubbs, a health care attorney at Barnes & Thornburg LLP in Indianapolis.

“It changes the states’ bargaining position from ‘boot on neck’ to traditional bargaining,” Grubbs said. He added, “If they choose to expand Medicaid, they don’t have to do it through traditional Medicaid. I think it’ll give more flexibility to the states in how they propose to do that.”

For example, Grubbs said, the Obama administration might be more likely to approve Gov. Mitch Daniels’ proposal to expand Medicaid coverage by using his Healthy Indiana Plan, which creates health savings accounts for low-income Hoosiers. The Obama administration had delayed ruling on Daniels’ proposal, pending the Supreme Court decision.

Traditional Medicaid is a state-federal health insurance program for low-income citizens under which Indiana pays about 25 percent of the costs.

Daniels spoke out forcefully against the expansion when the law was being debated and just after it passed in March 2010. He issued a statement Thursday, saying the immediate implications for Hoosiers are a huge increase in health insurance rates – especially for young people – and the need to decide whether to try to construct an “exchange” or let the federal government do so.

“The Court’s ruling that the federal government has the constitutional power to do what it has done must be respected,” he said. “But many actions that are constitutional are still unwise. The now undisputed facts that this federal takeover of one-fifth of our economy will worsen deficits, increase the national debt, raise health care costs, and force Americans off insurance coverage they have chosen, still argues for repeal of a dangerously misguided law and its replacement by major reforms based on individual freedom and consumerism.”

But Daniels is on his way out of office and will be replaced by Republican Mike Pence or Democrat John Gregg in January. So the decision might ultimately fall to the winner of that contest.

The Medicaid expansion would raise eligibility for the program to people with incomes up to 133 percent of the federal poverty limit. Currently, adults in Indiana can only qualify for Medicaid coverage if their incomes are no more than 26 percent of the federal poverty level, although the income thresholds are higher for children and mothers with children.

Dr. David Orentlicher, a law professor and former state legislator, said he does not expect Indiana to opt out entirely from the Medicaid expansion.

“I think we’ll see few people opt out of the Medicaid expansion,” said Orentlicher, who is co-director of the Hall Center for Law and Health at the Indiana University Robert H. McKinney School of Law in Indianapolis. “The new Medicaid costs to the states really don’t kick in for a while. What they’re really worried about is the impact of the individual mandate on the Medicaid expansion.”

Orentlicher was referring to the likelihood that the health law’s requirement for all Americans to obtain health insurance coverage — the individual mandate — would lead more Hoosiers who are currently eligible for the Medicaid program to sign up, thereby driving up the state of Indiana’s costs.

Indiana will have no new federal aid to help pay for such an occurrence. However, for Hoosiers that qualify for Medicaid under the new, higher income thresholds, the federal government will pay for all of their Medicaid coverage.

Still, an analysis of the law commissioned by the Daniels administration found that expanding Medicaid to 133 percent of the federal poverty limit could, by itself, cost the state an extra $95 million per year.

"This is going to be an immorally — and I choose that word carefully — immorally huge burden we're about to place on our children,” Daniels said in a speech to the Economic Club of Indiana shortly after the health care law passed.

Otherwise, the Supreme Court ruling left the rest of the Patient Protection and Affordable Care Act in place by finding that the controversial individual mandate can be enforced under Congress’ powers to tax.

Chief Justice John Roberts joined the court’s four liberal justices in affirming that view. Roberts, however, also agreed with the four conservative justices who dissented from the ruling in their finding that the individual mandate could not be justified under Congress’ power to regulate interstate commerce.

Lawyers for the Obama administration had advanced both arguments in their defense of the law in March.

The ruling had wild effects on health care stocks. Indianapolis-based WellPoint Inc. saw its share price plunge nearly 8 percent right as the court starting reading decisions Thursday morning — but before the substance of the health care ruling was known.

The New York Stock Exchange halted trading of the health insurance giant’s shares until after the ruling, and WellPoint’s shares recovered some of their losses.

In a statement, WellPoint spokeswoman Kristin Binns said, “The road to implementing health care reform will be a challenge; however, we look forward to working constructively with policymakers and other key stakeholders to build a health care delivery system that provides security and affordability to all Americans.”

Some hospital stocks spiked on the news — since the law’s attempts to insure 30 million more people should bring them more paying customers.

The same will likely be the case for medical device and drug firms, such as Indianapolis-based Eli Lilly and Co.

“Even with today’s decision, we expect that the debate about health care and health coverage will continue, and that further reforms and changes are likely in the years ahead,” Lilly CEO John Lechleiter said in a statement.

That’s largely because government budgets are already crimping payments to hospitals, drug companies and medical device firms. Belt-tightening by private employers is adding to the effect.

That is why many predicted that the trend of health care reform would have continued even if the Supreme Court had struck down the law. Thursday’s ruling just makes the coming changes a certainty, noted Ken Weixel, a senior advisor at the Deloitte Center for Health Solutions.

“It’s kind of, here we go,” Weixel said.

 

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  3. All these sites putting up all the crap they do making Brent Look like A Monster like he's not a good person . First off th fight actually started not because of Brent but because of one of his friends then when the fight popped off his friend ran like a coward which left Brent to fend for himself .It IS NOT a crime to defend yourself 3 of them and 1 of him . just so happened he was a better fighter. I'm Brent s wife so I know him personally and up close . He's a very caring kind loving man . He's not abusive in any way . He is a loving father and really shouldn't be where he is not for self defense . Now because of one of his stupid friends trying to show off and turning out to be nothing but a coward and leaving Brent to be jumped by 3 men not only is Brent suffering but Me his wife , his kids abd step kidshis mom and brother his family is left to live without him abd suffering in more ways then one . that man was and still is my smile ....he's the one real thing I've ever had in my life .....f@#@ You Lafayette court system . Learn to do your jobs right he maybe should have gotten that year for misdemeanor battery but that s it . not one person can stand to me and tell me if u we're in a fight facing 3 men and u just by yourself u wouldn't fight back that you wouldn't do everything u could to walk away to ur family ur kids That's what Brent is guilty of trying to defend himself against 3 men he wanted to go home tohisfamily worse then they did he just happened to be a better fighter and he got the best of th others . what would you do ? Stand there lay there and be stomped and beaten or would u give it everything u got and fight back ? I'd of done the same only I'm so smallid of probably shot or stabbed or picked up something to use as a weapon . if it was me or them I'd do everything I could to make sure I was going to live that I would make it hone to see my kids and husband . I Love You Brent Anthony Forever & Always .....Soul 1 baby

  4. Good points, although this man did have a dog in the legal fight as that it was his mother on trial ... and he a dependent. As for parking spaces, handicap spots for pregnant women sure makes sense to me ... er, I mean pregnant men or women. (Please, I meant to include pregnant men the first time, not Room 101 again, please not Room 101 again. I love BB)

  5. I have no doubt that the ADA and related laws provide that many disabilities must be addressed. The question, however, is "by whom?" Many people get dealt bad cards by life. Some are deaf. Some are blind. Some are crippled. Why is it the business of the state to "collectivize" these problems and to force those who are NOT so afflicted to pay for those who are? The fact that this litigant was a mere spectator and not a party is chilling. What happens when somebody who speaks only East Bazurkistanish wants a translator so that he can "understand" the proceedings in a case in which he has NO interest? Do I and all other taxpayers have to cough up? It would seem so. ADA should be amended to provide a simple rule: "Your handicap, YOUR problem". This would apply particularly to handicapped parking spaces, where it seems that if the "handicap" is an ingrown toenail, the government comes rushing in to assist the poor downtrodden victim. I would grant wounded vets (IED victims come to mind in particular) a pass on this.. but others? Nope.

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