What does Thursday's Supreme Court ruling mean for insurers? For the answer, we turned to Jim Roosevelt, CEO of Tufts Helath Plan in Massachusetts, he's also co-chair of Rules and Bylaws for the Democratic National Committee, and he's the grandson of FDR. We also spoke with David Cordani, CEO of the country's fourth largest insurer, Cigna. Our conversations with both are excerpted below, starting with our interview with Roosevelt.
Jim Roosevelt, this ruling is a huge victory for the Obama Administration. What's your reaction?
Well, its a victory for the American people in terms of the access to meaningful healthcare coverage. It is not a surprise to students of history, even though very few legal scholars had been talking about the taxing provision as the grounds for upholding the constitutionality.
But if you look back to 1937 and '38, a conservative Supreme Court had been striking down all the New Deal reforms when the chief justice, who was not a conservative then, told Secretary of Labor Francis Perkins the way to get these upheld is, as he put it, "The taxing power, my dear", and from then on the New Deal reforms were upheld, just as this one is being upheld.
It was a very divided court, so I don't think it was so cut and dry.
I don't think it was cut and dry at all. I think the basic constitutionality of a basic national plan to provide people with healthcare coverage was upheld. Then you get the things like the Medicaid provision where the court says Medicaid is constitutional as its been done but you can't require the states to do it all one way.
Lets go back to that Medicaid issue because I'm assuming that could be key here, because that's really how low-income people are going to get health insurance because of this ruling, which is rather nuanced about how states are going to participate. What happens, can states just opt out?
The way Medicaid works right now is that there is a basic package of federal benefits and any state that wants to participate in Medicaid has to offer those benefits, and the federal government pays roughly fifty percent of the cost. What the Affordable Care Act said was those benefits have to be broader and the eligibility has to be broader or you [the states] lose all your Medicaid funding. What the majority of the court on this issue appears to have said is that you can't coerce states that way by saying you'll lose you current Medicaid participation if you don't agree with the expansion. It's going to be just as it was: those states that want to adopt broader coverage and broader eligibility may do so; others can stay with the more limited coverage.
And then their existing Medicaid money would not be touched.
Without having had the time, of course, to read the entire decision, that's what it appears to say.
But the expansion was going to give coverage to, what, an existing 16 million people.
And that is key. The expansion of coverage to people below four hundred percent of federal poverty limits is the part that is jeopardy here if states choose not to cover their citizens. A state like Massachusetts, which takes advantage of the maximum possible coverage now, will probably choose to do that. A state like Mississippi, which does not take advantage of the maximum possible coverage, will probably continue to do that. That will bring the argument and politics to the state level in every state across the country.
Below is our interview with David Cordani, CEO of the country's fourth largest insurer, Cigna.
David, how will this ruling impact your company?
No change in our course. Our strategy was to engage consumers and physicians to improve health and so the ruling actually has no impact on our strategy.
Bloomberg News reported that a group of insurers including Cigna, your company, gave $86 million dollars to the U.S. Chamber of Commerce to oppose the Affordable Care Act back in 2009, so your company was against this law, fought to have it defeated.
Actually, we've been actively engaged on both sides of the aisle in Washington to affect what he consider sustainable healthcare reform, which has to expand access, improve clinical quality, and improve affordability. The law has expanded access which is great, but the law needs to take further steps to improve affordability and the best way to improve affordability is to improve health quality and that's what we're focused on.
What happens without cost controls? How does that affect you?
Our job number one is to get the best possible value for our clients, which is an employer, and our customers, who are individuals, and in part the best way to do that is to point towards preventative care and then ensuring that when care is consumed you get the best quality care for individuals. That's what we're focused on, and that's key to creating a sustainable program because we all recognize, whether its the federal government, the state government, an employer or an individual, we confront an environment of lack of sustainability given the costs that we confront.
This program aired on June 28, 2012. The audio for this program is not available.