The Federal Health Care Reforms

The federal health care reforms aim to improve American’s access to affordable healthcare, improve the quality of health care, increase access to healthcare insurance, and curb the federal government’s spending on health care. The reforms require that from the beginning of 2014, an individual is legally required to purchase health insurance and which should be attached to the tax return as proof of compliance. Failure to do so will attract a penalty which is the higher of $695 or 2.5% of an individual’s adjusted gross income. Also, employers must offer their employees’ health insurance and the failure to do so attracts a fine of $2,000 per employee each year.

The health care reforms allow an individual to buy insurance he or she can afford. Persons with pre-existing health conditions will be able to purchase insurance without any discrimination, and more uninsured people will now be able to afford health insurance. However, many individuals have questioned whether the health care reforms have improved access to health care and as a result, they have been faced with severe criticism with some groups calling for the changes to be abolished. This paper discusses the health care reforms and an emphasis are paid to the constitutional authority of which Congress used to justify its action as well as looking at the major legal arguments used by opponents. The paper also discusses the agency that oversees the Act and any regulations that those agencies have issues.

Constitutional Authority used by Congress

When the Congress in 2010 chose to enact the federal health care reforms, it was faced with opposition and lawsuits to challenge the provisions and legislation of the Affordable Care Act were filed. Opponents made the argument that the health care reforms were unconstitutional and the Congress was acting beyond its powers. However, the Supreme Court in its ruling upheld the requirement that individuals should purchase their health insurance beginning from 2014 (Swendiman, 2012). In enacting the reforms, the Congress had constitutional authority from the tax clause, the “necessary and proper” clause and the commerce clause (Somin, 2012).

The tax clause provides that “the collect shall have the power to lay and collect taxes, to provide for the general welfare of the U.S” and have the power and authority “to make all laws which shall be necessary and proper for carrying into execution the preceding powers.” Swendiman (2012) points out that the Congress as a result of this section possesses the authority and power to tax and spend for the welfare of the U.S. The Supreme Court made the judgement that the requirement for each to buy insurance or one is charged a penalty for not adhering confirms the power of the Congress to levy taxes. The ruling stated that the buying of insurance is not a “legal command” but the penalty for non-adherence is similar to any other thing that the government taxes. Therefore, the penalty should be viewed as a hike on tax for the individual who will not have the insurance, and it is within the Congress constitutional powers to levy such a tax (Swendiman, 2012).

The power to spend means that the Congress spending decisions and programs to serve the welfare of the public cannot be questioned. Therefore, the Congress has the authority to spend on whatever program it thinks provides for the general well-being of the U.S, and this is an issue which cannot be determined in a court. However, the power to spend is limited because Congress cannot withdraw all the federal Medicaid funds from the states which decline to expand their Medicaid Coverage as per the mandate of the Affordable Care Act (Swendiman, 2012). The Congress does not have the authority to impose any conditions on the federal grant funds and therefore, the various states can decline to expand their Medicaid coverage and not be subjected to any penalty.

The commerce clause gives the Congress the power to regulate interstate commerce (Somin, 2012). The commerce clause enables the Congress to have powers over the regulation of health care matters, and it was exercised in 1986 when the Consolidated Omnibus Budget Reconciliation Act which affects health care was passed. Sunder the commerce clause, the Congress has also passed some health care insurance plan requirements, such as “breast reconstruction payments for mastectomies and mandates for childbirth delivery hospital stays” (Swendiman, 2012). Therefore, the power to regulate interstate commerce gives Congress constitutional authority to pass the health care reforms under the Affordable Care Act. However, is limited in the fact that the Congress cannot force people to enter in whatever activity they regulate. The effect of this would be that since the Congress asks that each should buy insurance, it could pass mandates that would compel people to buy something as a solution to the U.S problems (Swendiman, 2012).

The “necessary and proper” clause gives the Congress authority to pass laws which are “necessary and proper” to enable it to carry its mandate which is to provide for general welfare. Segall & Carroll (2012) point out under this clause; the Congress cannot be prohibited from exercising its “enumerated powers.” The Congress has the mandate to regulate the health care sector and therefore, the exercise of enacting the reforms was valid under the necessary and proper clause. 

Legal Arguments used by Opponents Argument against the Taxing Power

Opponents challenged the taxing power of the Congress based on three premises. First, they argued that the purpose of a tax is to raise revenue and not to be used as a means of regulating an activity. The penalty for the individuals who will not comply with the requirement of buying insurance is a means of forcing people to obtain health care coverage, and not to raise any revenue (Levy, 2011). Secondly, the interpretation of the court that the penalty is similar to tax is a complete misinterpretation of the definition of tax. Taxes are classified as either income, excise, or direct, and the penalty does not fit in any classification. Levy (2011) points out that it is not an income tax because it is not as a result of any income earned, it is not an excise tax because it does not stem from any transaction between individuals, nor is it a direct tax because it is not assessed on population of individuals or any property. Therefore, terming the penalty as a tax is unlawful and unconstitutional.

Thirdly, the penalty should not be confused as a tax at all. The argument was that in an earlier version of the affordable care act, the Congress had written it as a tax, but it was further amended and written “penalty.” The reforms also prohibit the Internal Revenue Service from using any of its enforcement methods to collect the penalty and the funds raised should not be included in the revenue estimates of the Congressional Budget Office (Levy, 2011). The motive to term it as a penalty seems to stem from the fact that the Congress wanted to avoid any scrutiny that might come from an increase in tax, especially after President Obama had made promises of not imposing any additional taxes on the middle class. 

Argument against the Commerce Clause

Levy (2011) strongly points out that the commerce authority of the Congress is not designed to give it extensive powers over the regulation of anything and everything that affects commerce. The clause only gives the Congress powers to facilitate and regulate free trade among states and not the vast limitless powers that it currently has. Commerce means the exchange of goods and its transactions involve either manufacturing, growing among others. However, under the ACA, the Congress forces a commercial transaction to occur, and it compels an individual to buy a health insurance. The action by Congress amounts to the forceful occurrence of commerce and then it makes the blatant claim that it has the authority to regulate such a transaction. Commerce must involve a voluntary economic activity, and the actions of the Congress of imposing health insurance on everyone is against the powers of the commerce clause (Levy, 2011).

The Argument against the “Necessary and Proper” Clause

The clause is a means that allows the Congress only to exercise its “enumerated ends,” and such ends must pass the test of being “necessary and proper.” Necessary and proper means that congress choices must be in respect to the constitution’s structure and spirit of limited government”. The Congress argued that the health reforms fit in this framework, but a closer look reveals that there is a flaw in their reasoning. There is no justification at all given to the effect that the health care reforms represent a necessary and proper means to regulate the health care system (Levy, 2011). A proper mandate allows the people to make voluntary decisions but the Congress is taking the away the free will and is forcing the people to buy insurance, and this is against the meaning of a proper mandate.

Agency that has Oversight over the Act

The Center for Medicare & Medicaid Services (CMS) has total oversight authority over the health care reforms, and it works at the discretion of the Congress and the federal government. However, it is through the Center for Consumer Information and Insurance Oversight (CCIIO) that implementations of the various health reforms enacted. The CCIIOO has the primary role in implementing the various provisions that are related to private health insurance ("Consumer Information and Insurance Oversight - Centers for Medicare & Medicaid Services," 2017).

The first role of the CMS is to ensure that the states have complied with the various health insurance reforms. The Public Health Service Act indicates that the states are responsible for ensuring that the different issuers of health insurance comply with the reforms. However, events arise that a state may inform CMS that they lack the power to enforce or are unwilling to enforce the reforms, then it is the role of the CMS to enforce the various provisions in such states ("Consumer Information and Insurance Oversight - Centers for Medicare & Medicaid Services," 2017).

The CMS plays the role of forming collaborative arrangements with the states that are willing and have the ability to perform regulatory functions, but they lack the enforcement authority. In such a situation, the CMS allows such a state to complete the regulatory functions as required by the ACA reform provisions. Also, in case a state detects a possible violation and it finds it difficult to obtain a voluntary compliance from the issuer, the issue is referred to the CMS for an enforcing to be undertaken. The collaborative arrangement benefits consumers because it enables them to contact the state in case of any inquiries and complaints they may have about the health care reform requirements ("Consumer Information and Insurance Oversight - Centers for Medicare & Medicaid Services," 2017).

Three Regulations Issued

The Act does allow the different agencies to issue regulations. Such three regulations are the Health Insurance Market Reforms proposed by the CMS, the essential benefits suggested by the Department of Human and Human services (HHS), and the wellness programs by the HHS ("ObamaCare Health Insurance Rules, Regulations, and Standards," 2017).

The Health Insurance Market Reforms aims to stop the insurance companies from practicing discrimination against the pre-existing conditions to shield consumers from any abuse. The regulations aim to address issues such as the denial of insurance to individuals with some pre-existing health condition or the inability of small business owners to obtain the health insurance. The CMS issued the “guaranteed availability of coverage” to address the issue of individuals with a pre-existing condition being denied insurance coverage ("ObamaCare Health Insurance Rules, Regulations, and Standards," 2017). The fair health insurance premiums proposal under this regulation states that all health insurance providers will only vary the premiums they charge based on age, tobacco use, family size, and geography. The implication of this is that insurance providers will no longer use factors such as occupation, employer size, the status of health as a basis to increase the premiums.

The essential health benefits plan issued by the HHS calls for consistency among the health insurance plans, and this offers consumer’s protection by ensuring that they access plans that cover the same core package of services ("ObamaCare Health Insurance Rules, Regulations, and Standards," 2017). The aim is to achieve the goal that all Americans can access quality and affordable health insurance by ensuring that all plans offer ten essential services and items.

The wellness programs aim at strengthening the current wellness programs and workplace health programs to lead to the improvement of the health of Americans that will reduce the federal health care spending ("ObamaCare Health Insurance Rules, Regulations, and Standards," 2017). The regulation places great emphasis on the wellness programs in the workplaces, and it proposed that employees reimbursed for the cost of enrolling in a fitness program. Protection of consumer from abuse is a key concern for this regulation, and it provides that the program’s design must be aimed at promoting health and preventing disease. Employers who support a workplace wellness program receive a 30% deduction on the cost incurred and the rate increases to 50% for employers who discourage the use of tobacco.

Delayed Mandated Regulation

A mandated regulation that has been delayed is the Cadillac tax until the year 2020. The Cadillac tax is levied on the high-premium health insurance plans providers, and it refers to the 40% excise tax levied on health coverage cost that will exceed the pre-determined threshold amount ("ACA in 2016: 10 changes to the Affordable Care Act", 2017). The regulation behind this tax was that any insurance coverage plan that costs above $850 for an individual and $2,292 monthly for a family would be subject to the tax. However, the Internal Revenue Service in consultation with various stakeholders pointed out that there were still some unresolved issues on the excise tax and therefore, this regulation cannot be passed yet. The main concern among many individuals with this regulation is that by the year 2029, above 75% of the current employee health plans will be subject to the tax.

Lessons Learned from Enactment of the Healthcare Reforms

An administrative lesson learned from the adoption of the healthcare reforms is that the continuous involvement of all stakeholders in such a process is essential in overcoming the obstacles to be faced. Raymond (2011) points out that a reform process where all consumer, business owners, insurer issuers, and the federal policymakers are engaged enables for solutions to be designed fast. Bringing all stakeholders to the table will avoid the situation where a group of individuals opposes the reforms because all groups involved will understand how the reforms affect them and their feedback is incorporated to make improvements to the formulation and implementation process (Raymond, 2011). Also, it is important to recognize that implementing the reforms will not be instantaneous, but rather, it should be a continuous process where feedback from the stakeholders is applied.
A vital lesson learned is that processes must be formed to aid in the facilitation of collaboration and accountability in the regulatory process. All the concerned government agencies must be strongly coordinated to improve the implementation of the reforms. All the parties involved in the regulatory process must share the same responsibilities, information, and agree on the resources at hand. The regulatory bodies such as the Medicaid, the Internal Revenue Service, the Congress, and the Division of Insurance must agree on the formulation and implementation of the reforms for effectiveness.

References

ACA in 2016: 10 changes to the Affordable Care Act. (2017). Benefitspro.com. Retrieved 17 January 2017, from http://www.benefitspro.com/2016/07/01/aca-in-2016-10-changes-to-the-affordable-care-act?page=2&slreturn=1484681019&page_all=1

Consumer Information and Insurance Oversight - Centers for Medicare & Medicaid Services. (2017). Cms.gov. Retrieved 17 January 2017, from https://www.cms.gov/cciio/

Levy, R. (2011). The Case against President Obamas Health Care Reform. Massachusetts: Cato Institute.
ObamaCare Health Insurance Rules, Regulations and Standards. (2017). Obamacare Facts. Retrieved 17 January 2017, from http://obamacarefacts.com/obamacare-health-insurance-rules/

Raymond, A. (2011). Lessons from the Implementation of Massachusetts Health Reform. Massachusetts: Blue Cross Blue Shield of Massachusetts Foundation.
Somin, I. (2012). Why the health care reform law is unconstitutional - CNN.com. CNN. Retrieved 17 January 2017, from http://edition.cnn.com/2012/03/26/opinion/somin-health-supremes/

Swendiman, K. (2012). Health Care: Constitutional Rights and Legislative Powers. Congressional Research Service.