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Obamacare upheld: What does it mean for AmSam?

The long awaited decision of the US Supreme court confirming the constitutionality of President Barack Obama’s health care bill, which went into affect in 2010, and its potential affect on American Samoa’s health care is an explosive issue, given that about 80% of the local medical center’s budget is federally funded.

According to LBJ Medical Center chief executive officer Mike Gerstenberger, the federal money includes Medicaid, Medicare and U.S. Department of Interior funding.

Yesterday, the Affordable Care Act, or “Obamacare” narrowly survived an election-year battle in the Supreme Court.

According to The Associated Press, “the 5-4 ruling now makes it certain that major health care changes will move ahead, touching virtually every American's life. And Democrats, who have learned to accept if not love the GOP label for the law, heartily praised the decision.”

Of interest to American Samoa is that the Supreme Court decision will allow the current level of funding for Medicaid  to continue in the territory. Gerstenberger told Samoa News yesterday that “if the total bill had been struck down, there is no way healthcare could have been sustained in the territory… we would have lost 14% of our funding…so it’s good news.”

Gerstenberger, when speaking at the fee hikes hearing for the hospital two weeks ago, pointed out that Washington is making cuts in federal funding across the board; therefore LBJ must come up with other sources of revenue. The hospital fee hikes are set to go into affect Monday, July 2.

Samoa News also asked the LBJ CEO how the mandate for insurance coverage for all— the cornerstone of Obamacare—affects the territory and hospital.

He replied, “I don’t think the territory is covered, because of the ‘free’ clause in the American Samoa statute, however that is a matter for constitutional lawyers to review.”

Keniseli Lafaele, a local healthcare advocate, who has written extensively in the Samoa News on the issue, told Samoa News yesterday that “the ‘free’ medical attention mandate we have, assumes all residents are covered, so in that sense of coverage, the individual mandate which is the center piece of Obamacare is “Johnny come lately” — as we already have coverage for every resident.”

However, he says, the question is: Do we really have free health care?

His answer is “no, because there's no such thing as free health care (there's subsidized care which is what we actually have), To prove this: when the subsidy isn't paid, Medicaid is lost, then LBJ doesn't have a choice but to raise "facility" fees up to the level of normal medical service fees like they attempted to do late last year (400%-500%) increases. Now is that free?”

Is American Samoa part of the mandated coverage? 

Lafaele says that “we have already benefited from Obamacare by way of increase in the Medicaid [cap that went into effect in FY 2012].  “In that respect, it’s hard to fathom being affected by one aspect of the law and not the rest of the law.”

He notes that for “those who are not covered under the [territory’s] ‘free’ mandate, in my layman's opinion, as a result of this law, they may now have to get coverage by 2014.”

Togiola, in a March 2012 press release, said he had informed “the U.S. Department of Health and Human Services (DHHS) that after a total evaluation of the current healthcare system in the Territory, the American Samoa Government has concluded that due to the unusual circumstances for the people of Tutuila and Manu’a, instituting a health insurance exchange is not fitting at this time.

“Following a thorough review of the existing healthcare infrastructure in American Samoa and our unique situation, it has been determined that it would not be suitable to establish a health insurance exchange at this time,” said the Governor.

“Over eighty percent (80%) of our population are Medicaid-eligible and we do not have a sufficient number of third party insurance providers to warrant creating a health insurance exchange for the purposes it was intended. Therefore, American Samoa will not implement the stated activities for the cooperative agreement of ACA exchanges. American Samoa will elect to apply its formula allocation appropriated through the Affordable Care Act statute for health insurance exchanges through a Medicaid expansion. This application of federal assistance will better serve the healthcare needs of our community.”

The AP reports that the exchanges are the new markets that “are supposed to be up and running on Jan. 1, 2014. People buying coverage individually, as well as small businesses, will be able to shop for private coverage from a range of competing insurers.”

The Medicaid expansion increases the funding from $105 million to $285.5 million from 2011 to 2019, according to a Congressman Faleomavaega press release. The territory’s Medicaid cap for FY 2012 is $28 million, and if Obamacare had been struck down by the Supreme Court yesterday, the territory’s cap would have gone back to $10.6 million.

Lafaele concluded, “the essence of the work — Coverage for All in American Samoa — is to amend the 'free’ law to reflect the subsidized nature of our health care, and call it ‘affordable’ health care, (think ACA); then place a public insurance plan — prepaid self insurance plan — to cover everyone and mandate it by law.

“Our work and recommendation fits in nicely with the recently Supreme Court upheld ACA. It was submitted to the Governor in 2007, which he claimed he never received. We worked with the House Health Committee on the bill, the bill was drafted but collecting dust at the health committee, it was never introduced to the main floor.”

Another aspect of the law, which may exclude American Samoa from mandated coverage is as conservative Chief Justice John Roberts explains in his opinion that while "the federal government does not have the power to order people to buy health insurance_… The federal government does have the power to impose a tax on those without health insurance.”

The American Samoa Tax Code does not mirror the U.S. Tax Code — it continues to use the Year 2000 code. Samoa News notes that collecting from those who do not pay the mandate would not be a part of the AS Tax Code.

The website, a federal government website operated by the U.S. Dept. of Health and Human Services says while, American Samoa does not yet operate a Consumer Assistance Program under the Affordable Care Act, the new consumer protections and benefits of the law still apply to American Samoa.


Positive aspects of the bill, the AP points out:

1) More than eight in 10 Americans already have health insurance. But for most of the 50 million who are uninsured, the ruling offers the promise of guaranteed coverage at affordable prices. Lower-income and many middle-class families will be eligible for subsidies to help pay premiums starting in 2014.

2) There's also an added safety net for all Americans, insured and uninsured. Starting in 2014, insurance companies will not be able to deny coverage for medical treatment, nor can they charge more to people with health problems. Those protections, now standard in most big employer plans, will be available to all, including people who get laid off, or leave a corporate job to launch their own small business.

3) Seniors also benefit from the law through better Medicare coverage for those with high prescription costs, and no copayments for preventive care.

However, the AP notes that hospitals, nursing homes, and many other service providers may struggle once the Medicare cuts used to finance the law really start to bite; and that illegal immigrants are not entitled to the new insurance coverage under the law, and will remain one of the biggest groups uninsured.

(Samoa News points out that Lafaele in his reply to Samoa News questions on Obamacare yesterday notes the current fee schedule about to go into affect has “shifted the general increase into in-patient care charges and shafted the non-residents ($700 something per night). This seems to be in in line also with Obamacare.)

According to the AP, the court found problems with the law's expansion of Medicaid, but even there it said the expansion could proceed as long as the federal government does not threaten to withhold states' entire Medicaid allotment if they don't take part.

The Medicaid expansion would cover an estimated 17 million people who earn too much to qualify for assistance but not enough to afford insurance. The federal and state governments share the cost, and Washington regularly imposes conditions on the states in exchange for money.

Roberts said Congress' ability to impose those conditions has its limits. "In this case, the financial `inducement' Congress has chosen is much more than `relatively mild encouragement' — it is a gun to the head," he said.

The law says the Health and Human Services Department can withhold a state's entire Medicaid allotment if the state doesn't comply with the health care law's Medicaid provisions.

Even while ruling out that level of coercion, however, Roberts said nothing prevents the federal government from offering money to accomplish the expansion and withholding that money from states that don't meet certain conditions.

"What Congress is not free to do is to penalize states that choose not to participate in that new program by taking away their existing Medicaid funding," he said.


1912: Former President Theodore Roosevelt champions national health insurance as he unsuccessfully tries to ride his progressive Bull Moose Party back to the White House.

1929: Baylor Hospital in Texas originates group health insurance. Dallas teachers pay 50 cents a month to cover up to 21 days of hospital care per year.

1935: President Franklin D. Roosevelt favors creating national health insurance amid the Great Depression but decides to push for Social Security first.

1942: Roosevelt establishes wage and price controls during World War II. Businesses can't attract workers with higher pay so they compete through added benefits, including health insurance, which grows into a workplace perk.

1945: President Harry Truman calls on Congress to create a national insurance program for those who pay voluntary fees. The American Medical Association denounces the idea as "socialized medicine" and it goes nowhere.

1960: John F. Kennedy makes health care a major campaign issue but as president can't get a plan for the elderly through Congress.

1965: President Lyndon B. Johnson's legendary arm-twisting and a Congress dominated by his fellow Democrats lead to creation of two landmark government health programs: Medicare for the elderly and Medicaid for the poor.

1974: President Richard Nixon wants to require employers to cover their workers and create federal subsidies to help everyone else buy private insurance. The Watergate scandal intervenes.

1976: President Jimmy Carter pushes a mandatory national health plan, but economic recession helps push it aside.

1986: President Ronald Reagan signs COBRA, a requirement that employers let former workers stay on the company health plan for 18 months after leaving a job, with workers bearing the cost.

1988: Congress expands Medicare by adding a prescription drug benefit and catastrophic care coverage. It doesn't last long. Barraged by protests from older Americans upset about paying a tax to finance the additional coverage, Congress repeals the law the next year.

1993: President Bill Clinton puts first lady Hillary Rodham Clinton in charge of developing what becomes a 1,300-page plan for universal coverage. It requires businesses to cover their workers and mandates that everyone have health insurance. The plan meets Republican opposition, divides Democrats and comes under a firestorm of lobbying from businesses and the health care industry. It dies in the Senate.

1997: Clinton signs bipartisan legislation creating a state-federal program to provide coverage for millions of children in families of modest means whose incomes are too high to qualify for Medicaid.

2003: President George W. Bush persuades Congress to add prescription drug coverage to Medicare in a major expansion of the program for older people.

2008: Hillary Rodham Clinton promotes a sweeping health care plan in her bid for the Democratic presidential nomination. She loses to Obama, who has a less comprehensive plan.

2009: Obama and the Democratic-controlled Congress spend an intense year ironing out legislation to require most companies to cover their workers; mandate that everyone have coverage or pay a fine; require insurance companies to accept all comers, regardless of any pre-existing conditions; and assist people who can't afford insurance.

2010: With no Republican support, Congress passes the measure, designed to extend health care coverage to more than 30 million uninsured people. Republican opponents scorned the law as "Obamacare."

2012: On a campaign tour in the Midwest, Obama himself embraces the term "Obamacare" and says the law shows "I do care."

Patty Page contributed to this report.