State Budgets Hinge on SCOTUS Health Ruling: UMD Experts

'No fix for...state and local fiscal crisis without a fix for health care' - Don Kettl, UMD Public Policy Dean

June 20, 2012

COLLEGE PARK, Md. - Maryland and other states have a lot riding on the U.S. Supreme Court's upcoming decision on the Affordable Care Act (ACA), regardless of how the justices rule, University of Maryland experts say.

The ACA was intended to help states rein in health care costs, driven up in recent years as the weak economy pushed more low-income individuals onto Medicaid.

Maryland is one of 15 states that have begun to build health care exchanges - a centerpiece of the reform care law, designed to make health insurance more accessible. If the Supreme Court upholds the ACA, Maryland still will have to figure out what to do with the exchange while trying to meet growing Medicaid expenses.

And if the justices strike down the entire law, the red ink will continue to rise, with no firm solution in sight, says Don Kettl, dean of the UMD School of Public Policy. "Only one thing is certain, and that is that states will buckle under the status quo," he says.

"There's no fix for the ongoing state and local fiscal crisis without a fix for health care," says Kettl, citing the findings of a recent study from the Government Accountability Office. He adds that many governors might wish for a proposal the Reagan administration made decades ago - to swap the federal assumption of health care for the state assumption of welfare. "I don't doubt there's a governor alive who wouldn't want another bite at that apple."

One of the central questions before the court is the constitutionality of the ACA's requirement that individuals purchase health insurance. Striking just the so-called individual mandate, "would be a survivable wound," says health care economist Jack Meyer, a joint professor at the UMD School of Public Policy and School of Public Health.

"It would require using some carrots and sticks in place of the mandate, such as allowing people to buy health coverage at standard rates only in limited enrollment periods, while requiring that those who want to enter the insurance market at other times during the year pay a substantial surcharge above those standard rates," Meyer explains.

"If this is done either nationally or at the state level, it could avoid, or limit, the problem of states covering a higher proportion of sick people in their insurance exchanges," Meyer adds.

This leaves some experts reiterating arguments that health professionals have made for years - that the key to reducing health care costs is improving the overall health of citizens. Says Meyer: "Today, one in six Americans doesn't have heath care. Imagine if we said that we were only going to educate one in every six children?"

Faculty in the UMD School of Public Health who have been instrumental in Maryland's efforts to make the state a national leader in the delivery of affordable health care emphasize the need for changes that promote health equity and improve health literacy.

Dushanka Kleinman, Public Health associate dean for research and co-chair of the Maryland Health Benefit Exchange Board's Finance and Sustainability Advisory Committee, says, "Maryland has been proactively addressing health care reform for well over the past decade and is well-positioned to continue on that path, regardless of the Supreme Court ruling."

"The strategic and coordinated effort by Maryland to implement a health benefit exchange and other provisions of the law has allowed us to see what the benefits could be for the country broadly," Kleinman adds. "There are many activities built into the law that we should be doing anyway, whether or not the law is upheld."

Public Health Professor Stephen B. Thomas, director of the Maryland Center for Health Equity, who served as a member of Lt. Gov. Anthony Brown's Health Quality and Cost Council Health Disparities Workgroup, says that racial and ethnic background still disproportionately affect health status, health insurance coverage and access to high quality health care.

"Racial and ethnic minorities make up more than 40 percent of Maryland's population, and that number is growing," Thomas says. "Eliminating health disparities is key to the success of health care reform and key to the health and wellbeing of the State of Maryland."

UMD Business experts on health reform: http://ter.ps/xd
All UMD health reform experts: http://ter.ps/xf

Jennifer Talhelm
UMD School of Public Policy
Tel. 301.405.4390
jtalhelm@umd.edu

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