Author: Reema Taneja

Supreme Court Argues Over Health Law Subsidies

On March 4, 2015, the Supreme Court participated in a divided and heated argument addressing the issue of whether the Internal Revenue Service (IRS) may permissibly promulgate regulations to extend tax-credit subsidies to coverage purchased through exchanges established by the federal government under Section 1321 of the Patient Protection and Affordable Care Act.

The Affordable Care Act (ACA) is also known as Obamacare, which is a law enacted to ensure access to affordable health insurance for all Americans. To achieve this, Obamacare offers consumer discounts, or tax credits, on government-sponsored health insurance plans by expanding Medicaid to include more consumers who cannot afford health care. To receive discounts, one’s household income must be between one and four times the Federal Poverty Level, a government regulated number used to determine the minimum amount of money needed for basic living expenses. These credits can be applied to premiums to lower monthly insurance bills or they can be declared on tax returns at the end of the year. For individuals whose income does not fall within that range, the option to purchase a plan on the federal insurance marketplace or through state exchanges is still available, but he or she will not get any discounts.

King v. Burwell, the case addressing this issue, centers on the language of the ACA. The statute approved federal subsidies to help Americans purchase health insurance on state exchanges. Instead of setting up their own exchanges, some states permitted the federal government to do so for their residents. Conservatives, contesting Obamacare, argue that those states are now being illegally subsidized, because the statute’s language specifically applies to state exchanges. Liberals, supporting Obamacare, argue that the law contains a typo regarding this provision, and the subsidies should continue.

After eighty minutes of controversial debate at the Supreme Court, it seemed that Obamacare’s future could depend on what was conveyed to the states when the Act was passed, whether tax credits could be offered in state and federal exchanges, or only in state exchanges. Under the first interpretation, the statute survives. Under the second interpretation, the law could still survive if the Supreme Court judges find that interpretation unconstitutionally coercive.

The plaintiff, challenger of Obamacare, argued that the issue rests on statutory interpretation, and the statute’s language does not include federal exchanges in its provision addressing the application of tax credits. The Supreme Court’s liberal wing responded by asserting that they do not just look at a few words, but the whole text to provide context. Justice Scalia then responded that the law “means what it says” even if that generates negative consequences.

Justice Kennedy, whose vote may decide the case, acknowledges that the plain reading of the statute may support the argument that tax subsidies are only permissible in state exchanges, but that that interpretation may be unconstitutional. Suggesting that the statute may be ambiguous enough to give the IRS deference to allow tax credits in federal health exchanges, Kennedy also recognized that authorizing the IRS that power might be a “drastic step” since billions of dollars is at risk.

Perhaps the statute should be expanded to include federal exchanges because the purpose of Obamacare is to make health insurance more affordable for those less fortunate. By refusing to incorporate federal exchanges, many citizens will not be able to participate in tax credits only because their state decided not to set up its own exchanges. However, if federal exchanges are included, the government may not be able to afford to offer everyone tax credits. The court’s decision is expected by late June, and will decide whether seven million low and middle-income people in around forty states will continue to receive discounts to aid them in affording health insurance. If the Supreme Court rules that the subsidies in federal exchanges were not authorized by the Act, most of those people will no longer be able to purchase health insurance, which could cause insurance markets in those states to downfall.

Growth of Health Care Spending at its Lowest

In 2013, the rate of health care spending grew at its lowest rate since 1960, which was when the federal government first began tracking it.  Health care spending added up to $2.9 trillion in 2013, a 3.6 percent increase, or $9,255 per person, from 2012. The next lowest increase was 3.8 percent in 2009, as published in the report in the journal Health Affairs.  Those rates fall within the range of recent low annual growth rates in health care spending, between 3.6 and 4.1 percent from 2009 to 2013.  Spending on health care grew at a similar pace as the economy and reflected 17.4 percent of the gross domestic product, which accounts for the total output of goods and services.

The Obama administration suggests that limits on Medicare payments to hospitals and health maintenance organizations, cuts in federal spending, and the prevalence of high-deductible health insurance plans have contributed to discouraging the use of care by requiring consumers to pay more health costs, and in turn have controlled the growth of health care spending.  However, quicker growth in Medicaid spending offset some of the restraint on Medicare and private insurance spending.  The 2013 statistics did not include the effects of Medicaid expansions that were implemented this year.


The figures did not answer the question debated by health policy experts: whether the recession or the Affordable Care Act had a hand in the slowdown in health care spending.  The writers of the report asserted that some provisions of the Act “exerted downward pressure” on health spending, while others “exerted upward pressure.”  The report suggests that the key question is whether the growth will accelerate once the economy significantly improves; it is speculated that it will due to historical evidence.

A factor that may have contributed to the slower rate of increase is the retail market of prescription drugs, which amounted to $271 billion in 2013.  This accounted for 9.3 percent of all health spending.  This share of health care spending has not increased significantly recently, due to an increase in use of high-cost specialty medicines and a greater use of low-cost generic drugs.

Additionally, the Affordable Care Act requires federal and state officials to review insurance rates to identify “unreasonable increases in premiums,” and requires insurers to spend at least 80 percent of premium revenue on health care.  The report stated that these provisions contributed to controlling health spending.  Further, the government stated that inpatient and outpatient hospital services were used less in 2013, overlapping with requirements for patients to share more of the cost under some types of insurance.

In conclusion, the report asserted that medical prices increased 1.3 percent last year, which was marginally less than prices in the general economy.  Medical price growth is calculated using the chain-weighted national health expenditures (NHE) deflator for NHE.  Prices for doctors’ services increased less than one-tenth of 1 percent, which amounted for the smallest change since 2002.  Prices for home health care services also declined.  Medicare spending for doctors’ services increased 2.5 percent, while Medicaid spending for these services increased 14.9 percent, essentially because of a short-term increase in payment rates for primary care physicians who were treating Medicaid beneficiaries.  Medicare and Medicaid accounted for more than one-third of all health spending.

The government should continue to impose limits on health spending through different areas of health care to sustain the growth of health spending in the United States, especially while the general economy has yet to recover.  It is important for the government to use its resources wisely when deciding where to allocate them.  As health advocates and the general public realize, it is essential to find a balance between providing high quality medical care while controlling health spending relevant to the general economy.

Expanded Health Law Provisions Are Influencing the Rate of Premature Births

Preterm birth is the leading cause of death in newborns. In 2013, there were more than 450,000 premature births, which are live births at less than 37 full weeks. An annual March of Dimes report card released this November, indicating that the percentage of premature births decreased to 11.4 percent in 2013, which is the lowest level in 17 years. Officials state that the health law’s expansion of Medicaid for adults earning up to 138 percent of the federal poverty level has been a major influence on the decline. Women’s health advocates speculate that other health law provisions are likely to cause further reductions in preterm births. Until now, 27 states and the District of Columbia have expanded their state Medicaid programs to adults as allowed under the health law.

The report measures states’ preterm birth rates with the March of Dimes’ goal of 9.6 percent and assigns letter grades. The United States’ earned a “C” grade with an 11.4 percent rate, improving from the previous year. The report also follows states’ progress in executing tactics to reduce risks of preterm birth. For example, the report noted that 30 states and the District of Columbia decreased the percentage of women of childbearing age who were uninsured in 2013. Further, the percentage of women who smoke, including “women ages 18-44 who currently smoke either every day or some days and have smoked at least 100 cigarettes in her lifetime,” fell in 34 states, the District of Colombia, and Puerto Rico. The late preterm birth rate, which constitutes babies born between thirty 34 and 36 weeks, also decreased in 30 states and Puerto Rico.

In terms of Medicaid’s expansion in this area, pregnant women who qualify under their state’s income eligibility standards can receive Medicaid services until 60 days after they deliver their baby. States’ income eligibility standards are generally around 200 percent of the federal poverty level, or $23,340. Medicaid also offers more reliable coverage to help guarantee that women are healthy prior to becoming pregnant and that they receive early prenatal care. Further, newborn and maternity care is now required under coverage in plans sold in the individual and small group markets. These plans require that a range of preventive services, including folic acid supplements, smoking cessation counseling, screening for gestational diabetes, and prenatal care, are provided free of charge to pregnant women.

Although there is no direct, causal link between Medicaid expansion and the decrease of preterm births, it is reasonable to believe that the expansion has had an influential impact on the rate of preterm births. As noted above, the percentage of uninsured women decreased along with the percentage of preterm births. By including more categories of beneficiaries under the eligibility provision of Medicaid, more pregnant women are receiving the opportunity for coverage, which in turn is improving the quality of their health and their babies’ health. Better access to health insurance helps a woman plan her pregnancies, and better access to preventive care aids her in ensuring that she is healthy. Health law advocates and experts recognize that expansion of private and public health insurance coverage for millions of women will probably be the largest contributing factor in reducing preterm births.

The United States Obesity Rate is Still Too High

The Robert Wood Johnson Foundation (RWJF) and the Trust for America’s Health (TFAH) released their September 2014 report on the current state of obesity in the United States. TheHill. As defined in the report, obesity is “an excessively high amount of body fat or adipose tissue in relation to lean body mass.” StateofObesity. Although obesity rates are plateauing, the rates remain high, leading to increased health problems for millions of Americans. StateofObesity. Adult obesity rates are now above 35 percent in two states, at or above 30 percent in 20 states, above 25 percent in 42 states, and above 20 percent in every state. StateofObesity. Rates of severe obesity apply to children as well, as more than one-in-ten children become obese between the ages of two and five. StateofObesity. This report projects that the United States’ general obesity rate will rise to 44 percent by 2030. NBC.

As recently as 1980, no state had obesity rates above 15 percent; in 1991, no state had obesity rates above 20 percent; in 2000, no state had obesity rates above 25 percent; and, in 2007, Mississippi was the only state above 30 percent. StateofObesity. As of 2011, more than 34.9 percent of adults were obese, and more than 68.5% of adults were overweight or obese as of 2011 to 2012. StateofObesity. Between 2011 and 2012, around 16.9 percent of children (ages two to nineteen) were obese, and 31.8 percent were overweight or obese. StateofObesity.

There are many preventable causes of obesity such as physical inactivity and limited or no access to healthy food. Eighty percent of adults in the United States do not meet the aerobic and muscle strengthening standards for physical activity. StateofObesity. In cases of child inactivity, all fifty states have adopted physical education standards that schools must follow; however, the scope of these requirements and the degree to which they are enforced and funded fluctuates. StateofObesity. Additionally, the types of foods available make it difficult to maintain a healthy weight. Besides general limited access to healthy foods, low-income families are unable to afford such products as they are generally higher priced than lower quality foods. Further, those who live in rural areas tend not to have access to a grocery store closer than ten miles away. StateofObesity.

Moreover, insurance coverage does not cover community health workers and obesity counselors. Medicare does not include medicine for obesity in its Part D drug benefit, nor does it give beneficiaries access to many lifestyle programs, which makes it even more difficult for those in need to attain the proper help in preventing serious health illnesses due to obesity. In turn, these chronic diseases are consuming a shocking amount of time and money throughout our healthcare system. StateofObesity.

It is highly important and beneficial to address these causes of obesity to prevent the serious health risks obesity poses. Overweightness and obesity have been shown to lead to the following health conditions: (1) type two diabetes; (2) heart disease; (3) hypertension; (4) risks before, during, and after childbirth; (5) cancer; (6) kidney disease; (7) arthritis; (8) dementia; (9) Alzheimer’s; and (10) mental health conditions. In the past twenty years, diabetes rates have almost doubled, and over eighty percent of diabetes patients are overweight or obese. Additionally, individuals who are overweight are more prone to developing high blood pressure, high blood fats levels, and high cholesterol, leading to heart disease and stroke. StateofObesity. According to the National Cancer Institute, around 84,000 cancer diagnoses per year are related to obesity. It has also been shown that extra fat affects how cancer treatments process. Wptv

What can America do to fix this? Our nation has been recently progressing by increasingly producing healthier foods. Coke, Pepsi, and Dr. Pepper proposed that they would aim to reduce the calories Americans obtain from beverages by twenty percent over the next ten years by marketing smaller sized drinks. WashingtonPost. The United States Department of Agriculture also updated the nutrition standards for school meals, snacks, and drinks for the first time in years. StateofObesity. In order to help the low-income community, food stamps have started including healthier foods as required by Obama’s enactment of the Farm Bill. StateofObesity.

To further combat obesity, agencies should implement policies where they can, for example, with child inactivity. Children are recommended to get sixty minutes of moderate to vigorous physical activity per day, which is not being considered in many school districts. Additionally, insurance plans should consider including obesity combatting treatment within their plans so that more individuals have a higher chance in solving this health issue.