Health Reform from a Provider’s Perspective
Article Date: Monday, March 19, 2012
Written By: Scott Whisnant & Lori Feezor
Editor’s Note: This article is presented as an op-ed, and does not necessarily reflect the views of the Health Law Section, the NCBA or the NCSHCA. We invite you to discuss these matters on the NCBA’s Section LISTSERV at firstname.lastname@example.org.
The word “mandates” has a decidedly un-American ring, and appears to be in direct opposition to the notion of “freedom.” But ask any hospital, physician who has been on call for the emergency room, or private insurance company like Blue Cross, Cigna, or United, and they would tell you that mandates have been a way of life in the health care industry for some time. For hospitals with emergency rooms that accept government insurance (or, to put it another way, almost all of them), and the physicians who staff them, mandates have been a federal requirement since 1986. 42 U.S.C. § 1395dd.
The next time someone in your community who has a job and makes a little bit (but not much) money decides on his own volition to drive drunk and wrap his car around a tree, stop for a moment to consider whether your community hospital has a “mandate” to provide as much free care as that patient needs. The answer is of course it does. No one wants to live in a community where the hospital doesn’t treat everyone – and that means everyone – who needs care, regardless of income, race, citizenship, or the fact that spectacularly poor decisions may have preceded the need for it.
The question that often gets neglected in the health care debate is who pays for this mandated care, and the answer is you do. By “you,” that means everyone who either has insurance or has taken other responsible steps to afford health care. Just as stores charge more for products because of shoplifting, insured patients pay more for health care because of “cost-shifting,” a polite phrase coined to cover the additional costs you pay for those who don’t. Some cynics at this point may suggest that hospitals are large revenue-generators, and taking care of the poor is the cost of doing business. The fact is, in North Carolina, 95 percent of hospitals are nonprofit or government entities, and a substantial number of them operate in the red.
This system of health care has just about run its course. Insurance companies, through their business customers, have said “enough” to the cost-shift, as have Medicare and Medicaid. But that doesn’t mean the costs go away; as a result, hospitals and physicians are getting more vocal about funding cuts, just as insurers and taxpayers are getting more vocal about the spiraling cost of health care.
All of which led us to health care reform. For much of the health care industry, the carrot at the end of the stick was the prospect of 32 million additional insured U.S. residents, which means when they access the health care system, they come with an income stream, or ability to pay. For this relief, the American Hospital Association, the American Medical Association, and many of the major insurers went “all in” on the plan. The hospital industry alone put $155 billion in cuts on the table as part of the negotiation, as long as the effort promised to do something about the uninsured and non-payor problem. See, e.g., http://www.ama-assn.org/amednews/2009/07/20/gvsb0720.htm.
This is the backdrop against which the mandate debate is set. At the time of this writing, three lower courts and one appeals court have upheld the constitutionality of the mandates, while two lower courts and one appeals court have not. Thomas More Law Center v. Obama, No. 10-2388 (6th Cir. June 29, 2011). One of these lower courts (in Florida) that struck down the mandates, ruled that because there is no severability clause that would allow invalidating this part of the law and retaining the rest, the entire health reform law must fail. That judge, Roger Vison, clarified that his decision should be stayed pending appeal. Florida v. U.S. Department of Health and Human Services, No. 3:10-cv-91-RV-EMT (N.D. Fla. March 23, 2010). On Aug. 12, 2011, the United States Court of Appeals for the Eleventh Circuit issued its ruling in which it agreed with Judge Vinson that the mandates were unconstitutional, but refused to uphold his decision regarding the lack of severability. Florida v. U.S. Department of Health and Human Services, No. 11-11021 (11th Cir. Aug. 12, 2011).
The underlying arguments for and against the mandates are constitutional to be sure, and should be granted the weight and deliberation of any such challenge. No less than our sovereign rule depends upon it, not just for health care, but for other decisions that would implicate the reach of the federal government over its citizens. Therefore, it’s worth examining these constitutional challenges.
At the heart of the matter are two constitutional concepts – the Supremacy Clause and the Commerce Clause. The Supremacy Clause essentially holds that, with regard to certain matters reserved to the federal government (including the right to regulate interstate commerce), the federal government shall have the right to enact laws “necessary and proper” and its law “shall be the supreme law of the land.” U.S. Constitution, art. VI, cl. 2.
Before discussing the Commerce Clause, U.S. Constitution, art. 1, § 8, cl. 3, it is important to note that those opposing federal mandates conclude that nothing in the Constitution would prevent states from mandating – as Massachusetts famously has – insurance coverage for all its citizens. 2006 Mass. Acts, Ch. 324. The reasoning is found in the Supremacy Clause noted above. Even if the federal government is ultimately determined to have no right to mandate coverage (because it’s not “commerce”) the states could still do so.
So what is commerce, and does the failure to purchase health insurance amount to interstate commerce? That will be one of the quintessential questions in the health reform debate, that will likely be decided by the U.S. Supreme Court sometime this spring. If the answer is yes, then this part of the health reform law stands; if no, then at least the part of it addressing mandated insurance must fail.
Those that hold the mandated purchase of health insurance is not interstate commerce will argue that inaction (in this case, not buying insurance) cannot be, and never has been, deemed to be an economic act, and thus cannot be “commerce.” See, e.g., Testimony of Kenneth Cuccinelli, Virginia Attorney General, before the U.S. House Judiciary Committee on Constitutionality of Health Insurance Mandate, Feb. 16, 2011.
Those arguing that failure to purchase health insurance has an economic effect will point out that it is in fact a decision to self-insure, and that decision has significant financial consequences on everyone. Brief of American Hospital Association et al. as Amici Curiae, Florida v. U.S. Department of Health and Human Services, No. 11-11021 (11th Cir. Aug. 12, 2011). They will note the implications in the scenario above. They will attempt to demonstrate that everyone who has insurance pays a higher bill because some individuals choose not to get coverage, and then come to hospitals that have an unfunded mandate to treat them.
All of it makes for interesting fodder in boardrooms, on Facebook, over backyard grills, or in bars. Meanwhile, our health care system is already treating those who exercise their “right” not to buy insurance and passing as much of the costs on to you as they can. Hospitals have already sacrificed $155 billion, and even if the Affordable Care Act is repealed, those cuts aren’t coming back, and hospital care in every community will suffer. Our nation is piecing together a national health care system that is inefficient, costly, and unsustainable, and every day we weigh whether we can continue services that lose money.
If the mandate gets killed, if health reform gets killed, so be it. But from a provider’s perspective, indeed from a societal perspective, something else needs to be done. The current system isn’t working and won’t pretend to for much longer. •
Scott Whisnant is Director of Government Affairs for New Hanover Regional Medical Center. He worked as a journalist for the New York Times Company for 14 years prior to joining the health care industry 13 years ago.
Lori Feezor is General Counsel at New Hanover Regional Medical Center, has worked in, and written about, health care for over 20 years. She is licensed in both North Carolina and California, and in 2011, received the Distinguished Service Award issued by the Health Law Section of the North Carolina Bar Association.
Views and opinions expressed in articles published herein are the authors' only and are not to be attributed to this newsletter, the section, or the NCBA unless expressly stated. Authors are responsible for the accuracy of all citations and quotations.