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Government & Grants: Implications of the Supreme Court Ruling on Affordable Care Act (ACA) Programs

Jun 5

Written by: Grants Office, LLC
Tuesday, June 5, 2012  RssIcon

By Chris LaPage

June 2012

The link between grant programs and the legislative and executive branches of government is relatively clear.  Many grant programs are written directly into federal legislation that is passed by members of Congress and signed by the President.  Even if specific grant programs are not created through the legislation, funds may be provided to an executive branch agency with explicit authorization to address a particular purpose area, often times resulting in the creation of grant programs.   Thus, when the TEA Party made strides in 2010 elections and Republicans took control of the House of Representatives, everyone wondered what the impact over the next decade on grant programs funded through the Affordable Care Act (also known as ACA or Health Care Reform Legislation).  In fact, at the time I personally predicted in an article for this publication that future grant programming would remain relatively untouched considering Democratic control of both the Senate and Presidency as well as the fact that grant programming represented some of the least polarizing components of the health care reform law.  Of course, that very conclusion was completely based on the politics of future legislation in a divided legislative branch and Democratic Presidency.  True to form, not much has changed through legislation in regards to the appropriations made through the ACA with one notable exception. Approximately $5 billion (out of a total $15 billion) was eliminated from the ACA Prevention and Public Health Fund as part of a bi-partisan compromise on extending the payroll tax cut earlier this year. 

What most grantseekers fail monitor and analyze is the potential impact of judicial court decisions on legislation, laws and grant programming.  When it comes to potential court decisions, it does not get any bigger than the United States Supreme Court.  When the Supreme Court issues a ruling, it essentially becomes the law of the land until subsequent legislation is passed and signed into law.  The future of the Affordable Care Act is on the line as we await a consolidated decision from the Supreme Court on two cases: Florida, et al. v.  Department of Health and Human Services and National Federation of Independent Business v. Sebelius.   The Supreme Court is expected to issue a ruling in June 2012.  These cases can be boiled down to three essential issues that are now before the court:  1) The legality of the individual mandate clause, 2) Severability, and 3) The legality of conditioning a state's receipt of federal Medicaid funding on whether they expand program eligibility and benefits.   

The aforementioned third issue as to whether it violates principles of federalism for the federal government to coerce states into expanding Medicaid coverage by withholding funding will have no relative impact on grant programming.  The federal share of Medicaid funding is provided directly through states and is not distributed through a grant mechanism.  Truth be told, the most prominent issue before the court, which relates to the legality of the individual mandate clause does not directly impact potential grant programming either.  The individual mandate clause will require individual citizens to maintain minimum health care insurance coverage or face potential penalties.  Opponents of the Health Care Reform Law claim that legislating such a requirement is not among the enumerated powers of Congress in Article I of the Constitution.  If the court upholds this claim , the individual mandate portion of the law will be considered unconstitutional and will not go into effect as planned.  Of course, Congress could always address the Court's concerns with subsequent legislation to amend the law in a way that makes it constitutional, but such a scenario is unlikely considering the opposition to the ACA in the Republican-controlled House of Representatives. 

Since the individual mandate clause deals with minimum insurance coverage and civil penalties, many folks may still be unclear where the potential impact on grant programming occurs.  In terms of the grants landscape, the future of ACA grant programs will come down to the Supreme Court decision on severability.  While a ruling has not been issued, considering the make-up of the current Supreme Court and the questions that were asked during the court proceedings by the Justices, many experts feel the individual mandate will be stricken down as unconstitutional.  If the Supreme Court strikes down the individual mandate requirement that was part of the ACA, they must also decide whether that particular component was so integrated into the fabric of the overarching legislation that the entire law would be invalidated.  In other words, they must decide whether the rest of the provisions in the ACA are non-severable from the unconstitutional individual mandate.  It is in these remaining provisions where tens of billions of dollars in grant funds have been appropriated over the next decade through the ACA. 

Even though a decision on these cases has not yet been made (at the time this article was written), the looming Supreme Court decision already seems to be having an effect on the timing and marketing of ACA grant programs. For instance, it is no coincidence that the United States Department of Health and Human Services (HHS) has moved up the timetable on several grant programs that were not expected to be released until the beginning of FY 2013 (October 1, 2012).  In light of the uncertainty over the Supreme Court decision on the ACA, the executive branch has apparently made it a priority to obligate as much ACA funding as possible ahead of the decision.  Even if the Supreme Court strikes down the entire ACA, they cannot go back in time and recall dollars that have already been spent.  This is perhaps why we have seen the recent release of $75 million for the School-Based Health Center Capital Program (SBHCC).  The grant solicitation, originally expected in Fall 2012, is aimed at assisting school-based health centers with capital construction, renovation and equipment acquisition projects.  HHS is anticipating 150 award with individual applicants able to request up to $500,000 in funding.  Even when they are not necessarily moving up the timetable on certain ACA programs, they are ratcheting up the marketing and public relations machinery upon program release these days.  For instance, HHS recently released $70 million in funding for Community Transformation Grants (CTG) targeted at small communities (up to 500,000 population).  You need not look farther than the program title to see the marketing arm of HHS in full swing: "Community Transformation Grants - Small Communities Program Financed Solely by 2012 Prevention and Public Health Funds."  These funds are meant for projects that take a community-wide approach to addressing chronic diseases such as diabetes, congestive heart failure, asthma and others through healthy changes in weight, nutrition, physical activity, tobacco use, and overall emotional well-being and mental health.  HHS wants to be sure that everyone is aware that funding for these important initiatives would not be available if not for the Affordable Care Act.  Furthermore, while previous funding under the CTG banner typically flowed to state and local public health departments, eligibility for the Small Communities Program is relatively wide open with non-profit and community-based organizations able to lead applications to the program.  Perhaps the new flexibility in eligibility criteria represent another example of HHS's attempt to commit and distribute as much of the ACA funding as quickly as possible. 

So it is true that with one broad sweeping verdict, the Supreme Court could render the individual mandate clause as non-severable and effectively erase billions in grant dollars appropriated over the next decade through the ACA.  As we have seen, the mere existence of the decision before the Supreme Court is altering the grants landscape, effecting both when and how ACA grant programs are being rolled out.  In examining the legal arguments and analyzing the questions asked by the Supreme Court Justices during oral arguments, most legal scholars and pundits believe the individual mandate clause is in jeopardy.  However, that analysis also indicates that the Justices appeared unconvinced by the plaintiffs' arguments around severability.  In other words, the type and tone of questions asked by the Justice's seemed to indicate they could eliminate the individual mandate clause while keeping the remaining portions of the law mostly intact.  If the legal experts are right and the ACA remains intact minus the individual mandate clause, there will be very little additional impact on the grant programs funded through the Affordable Care Act over the next decade.  Of course, this is all conjecture until a final decision has been made and announced by the Supreme Court.  In many ways, it is a vicious and never-ending cycle.  After all, where exactly are we once we get a decision from the Supreme Court?  Assuming the bulk of ACA remains law, we can move on to worrying about other things like how ACA grant programs will be impacted by upcoming bills submitted in Congress, executive orders issued by future Presidents,  new laws that are passed, and subsequent court cases that are initiated.  In many ways, the moral of the story is that you must keep tabs on all branches of the federal government (legislative, executive and judicial) if you want to stay ahead of the curve when it comes to projecting and preparing for future grant programming and funding levels.

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