Summary of the ACA
In 2010, the Patient Protection and Affordable Care Act (the “ACA”) was signed into law.  The ACA is a comprehensive law featuring changes to the health care system intended to expand health insurance coverage, control health care costs, and improve health care delivery systems.  Key components of the ACA include:

• Individual Mandate:  Requires U.S. citizens and legal residents to have qualifying health coverage.  Those without coverage must pay a tax penalty that will be fully phased-in by 2016.  Exemptions are permitted for certain individuals, such as those with religious exemptions or those with documented financial hardship.
• Employer Requirements:  Requires employers with 50 or more full-time employees to offer coverage or pay a penalty for each full-time employee.
• Medicaid Expansion:  Requires states to expand Medicaid to all non-Medicare eligible individuals who have household incomes up to a certain threshold.  Currently, Medicaid is only available to individuals who are categorically eligible (for example, individuals who are pregnant, under 19, or aged, blind or disabled) and who have household incomes up to a certain threshold.  States and the federal government will continue to share in the costs of the Medicaid program, with states receiving an enhanced share from the federal government for the expanded population.
• Premium Credits for Individuals:  Offers income-based, sliding-scale premium credits to individuals who have household incomes above the Medicaid threshold but below a certain level.  Premium credits are only available to individuals who do not have coverage through their employer and the credits may only be used when purchasing a private policy through a health insurance exchange.
• State health insurance exchanges:  Requires states to create and administer state health insurance exchanges through which individuals and businesses with up to 100 employees (or more than 100 employees beginning in 2017) can purchase health plans.

After the ACA is fully implemented, individuals will be able to obtain coverage through one of the following methods depending on income and availability of employer-sponsored coverage:

Summary of the Supreme Court Decision
On June 28^th, 2012, the U.S. Supreme Court issued its decision on the Patient Protection and Affordable Care Act.  Two main issues – the individual mandate and Medicaid expansion – dominated the challenge and the ruling.

Individual Mandate
With rare exception, the ACA requires all Americans to obtain qualified health coverage beginning in 2014.  Those without the minimum coverage would be required to pay a “penalty” to the federal government that would gradually increase until it reaches its full value in 2016.  The government defended the constitutionality of this provision by arguing that Congress can require individuals to purchase health insurance using its power under the Commerce Clause of the Constitution.  Although this argument was rejected by the Court, the individual mandate was ultimately upheld.  The Court argued that the individual mandate imposes what essentially amounts to a “tax” assessed on people who choose not to purchase mandated health insurance coverage.  This, they held, is within Congress’ constitutional power to tax.

Bottom Line:  The individual health insurance mandate is upheld by the Supreme Court as constitutional under Congress’ taxing power.

Medicaid Expansion
Medicaid programs are a federal/state partnership.  The federal government sets broad eligibility requirements and provides matching funds to the states to administer their own state Medicaid programs.  Medicaid coverage is then made available to individuals who are both low-income and “categorically eligible”.  In order to be “categorically eligible”, an individual must fit into one of several categories, such as being pregnant, under age 18, or being aged, blind or disabled.  Under the ACA, states would be required to expand their state Medicaid programs to cover virtually all low-income Americans under the age of 65 (regardless of their “categorical eligibility”) or risk losing all of the current funding the federal government provides to the states to run their existing (i.e. non-expanded) Medicaid programs.

The Court acknowledged that Congress can put strings on the money it gives to the states as a way of expressing “relatively mild encouragement”.  The Court argued, however, that the funding penalties attached to the new Medicaid expansion requirements amounted to a “gun to the head”.  Thus, the Court did not uphold the provisions of the ACA that permit the federal government to withhold all state Medicaid funding to states that choose not to participate in the ACA Medicaid expansion.  The Court held that the federal government can only withhold the new Medicaid funds reserved for the expanded Medicaid program should a state chose not to comply with the expansion.

Bottom Line:  The ability of the federal government under the ACA to withhold all Medicaid funding from states that choose not to expand their state Medicaid programs is not upheld by the Court.  Instead, the federal government may only withhold new Medicaid funds if a state chooses not to expand its current Medicaid program.

Implications for Oklahoma
Barring repeal by Congress of the Patient Protection and Affordable Care Act, Oklahoma will be required to comply with the provisions of the new law.  Compliance will largely depend on how the state addresses the provisions under the ACA requiring states to create a state health insurance exchange and calling for an expansion of state Medicaid programs.

State Health Insurance Exchanges
The ACA requires states to create and administer state health insurance exchanges whereby individuals and some businesses may purchase private health plans.  The U.S. Department of Health and Human Services must deem that a state is making sufficient progress toward being “health insurance exchange ready” by January 1, 2013.  Each state’s health insurance exchange must also be deemed “fully operational” by October 1, 2013 and available to the public by January 1, 2014.  If a state is unable to meet one or all of these deadlines, the federal government may take actions to create and operate a health insurance exchange on the state’s behalf.

As of the Supreme Court’s ruling on the ACA, the Oklahoma Legislature has not enacted legislation to create an Oklahoma health insurance exchange.  Because the Oklahoma Legislature will not be in session until February 2013, Oklahoma will be unable to pass such legislation before the ACA’s “exchange ready” deadline of January 1, 2013 unless a special session is called.  Thus, Oklahoma’s ability to meet the health insurance exchange requirements of the ACA is currently unknown. 

Medicaid Expansion
Under the U.S. Supreme Court’s decision, a state may choose not to expand its existing Medicaid program and still maintain its current level of federal Medicaid funding.  It is uncertain whether or not this new flexibility will cause Oklahoma to decline the option to expand its current Medicaid program to include all low-income Oklahomans under age 65.

Should Oklahoma choose to expand its Medicaid program, the Oklahoma Health Care Authority estimates that coverage would be made available to 200,000 newly qualified adults.  The federal government would provide enhanced financial assistance to the states for this population.  For the first three years of the expanded Medicaid program, the federal government would cover 100% of program costs.  Beginning in 2017, the federal government’s share would be reduced to 95% and would eventually taper to 90% by 2020.

Should Oklahoma choose not to expand its Medicaid program, it is unclear how this option would affect the individual mandate requirements of Oklahomans who would have otherwise become eligible for the expanded Medicaid program.