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June 28, 2012: A special feature from the James A. Baker III Institute for Public Policy
Baker Institute Update: The U.S. Supreme Court upholds health care reform: Now what?
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The U.S. Supreme Court upholds health care reform: Now what?

The Supreme Court today upheld key provisions of the Affordable Care Act, President Obama's signature legislation designed to increase access to health care and rein in costs.

"This is the most dramatic legislation to influence health care in America since the creation of Medicare and Medicaid in the 1960s," said Vivian Ho, James A. Baker III Institute Chair in Health Economics. "The court's decision today means well over 30 million people who are uninsured today will get access to affordable health insurance and therefore health care."

The high court upheld the ACA's controversial individual mandate, which requires most Americans to get insurance or pay a penalty (which the Supreme Court considers a tax), and partially upheld an expansion in Medicaid coverage.

Texas, which joined a lawsuit challenging health care reform as unconstitutional, is now under pressure to comply with the law, said Elena Marks, Baker Institute Scholar in Health Policy. "The state has not yet developed health insurance exchanges, which will be a government-administered marketplace where small businesses and families can buy insurance," she said.

Ho agreed. With more than 6 million people uninsured in Texas — the most in the nation — "we've now got a gargantuan task ahead of us," she said. If Texas is unable to meet ACA deadlines, the federal government will step in to assist — not an ideal situation if the federal design isn't the right fit for Texas, she notes.

Under today's ruling, states now have a choice to opt in or out of expanded Medicaid coverage. Currently, Medicaid primarily covers children, pregnant women and the disabled. The ACA extends coverage to everyone with incomes under 133 percent of the federal poverty level — $30,000 a year for a family of four.

The federal government will pay for 100 percent of the expansion until 2016, and 90 percent thereafter. The potential to obtain billions in federal funds "is a great opportunity" for Texas, said Marks — especially since research shows that every federal health care dollar spent in Texas generates 3.25 times that amount in economic activity.

While the ACA is "the best possible solution in light of an extreme problem we're facing," Ho said, she would like to see payment reforms that improve value by driving down health care costs and improving quality. To that end, the Baker Institute Health Policy Program on July 13 will host a conference on comparative effective research (CER), which examines how different treatments, tests or procedures for specific conditions have worked for others, and at what cost. The aim of CER is to identify high quality treatments at a reasonable price.

Today's ruling marks the start of an era in which the promise of affordable health care for all is within reach, Ho said. "This is a huge shift in both how the private and public markets are going to work. There are a lot of details to work out, but a decade from now, I expect to see more Americans with access to higher quality, affordable health care."

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The James A. Baker III Institute for Public Policy is a nonpartisan public policy think tank located on the campus of Rice University in Houston, Texas. The institute's distinguished fellows and scholars research and collaborate with experts from academia, government, the media, business and private organizations on domestic and foreign policy issues with the goal of bridging the gap between the theory and practice of public policy.
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