Health Reform After SCOTUS Nelson Mullins LLP July 20, 2012 Joseph R. Antos, Ph.D. Wilson H. Taylor Scholar in Health Care and Retirement Policy and Retirement Policy American Enterprise Institute

Do we really have to eat it? …and does it matter?

AEI  Guaranteed issue, community rating without ~full participation → selection spiral  IRS authority limited by ACA  Behavioral economics vs. simple arithmetic  Subsidized premiums = 2% to 9.5% of income (plus inflation plus “excess” premium growth in 2019+) 3 Year“Tax” 2014$95/1% of income 2015$325/2% of income 2016$695/2.5% of income rate + inflation

A moot point? Can the federal exchange distribute subsidies? Will the federal exchange provide “1-stop shopping”? Is it a state exchange managed by the feds?

Medicaid typo?  Exchange subsidies for % FPL? ◦ Premium = 2% of income ◦ Cost-sharing credits = 94% of plan value ◦ State cost = $0 ◦ Medicaid: State cost = 5% in 2017 → 10% in 2020+

AEI  Lame duck, lamer than usual  Romney: Repeal and replace? ◦ Reconciliation ◦ What goes, what stays under a new name? ◦ How much has already changed? ◦ Put health subsidies on a real budget  Obama: The economy is in charge, not him ◦ Replay of Budget Control Act, but with teeth  Major spending cuts—including Medicare, Medicaid, exchanges  Reality that ACA is not ready for 2014 prime time  Devolution to the States ◦ Difficult balance with short-term “stimulus” 6

7 Don’t worry… …Congress will work it out