One of the primary goals of the Patient Protection and Affordable Care Act, or Obamacare, is to make insurance available to as many consumers are possible. Now, as the law gears up toward full implementation in 2014, states are grappling with how to balance near-universal care with protecting their pocketbooks.

Close to 50 million people lacked health insurance before the law’s passage, with tens of millions more who had insurance that was inadequate to cover their needs. The ACA aimed at extending insurance to more than 33 million more people through a mixture of Medicare expansion, tax credits to help pay for private insurance and a series of reforms that force insurers to accept most applicants.

Out of Emergency Rooms
The biggest decision facing states that will affect the uninsured is on Medicaid. When the Supreme Court ruled last summer that the health overhaul was in fact constitutional, they added the caveat that the federal government could not force states to accept the Medicaid expansion, which would make the low-income public insurance available to anyone making up to 133 percent of the federal poverty line, or $15,400 a year.

The proposal looks like a boon for states: Uncle Sam is picking up 100 percent of the tab for the first three years, with guarantees to pay for at least 90 percent into the future. However, a number of Republican-led states have indicated they will not accept the expansion, ostensibly because they are worried about future costs becoming unbearable. So far 13 states have opted out, mostly in the South, while 21 plus Washington, D.C., have committed to be included in the expansion.

Left out of the argument is the fact that people who don’t have insurance are still subsidized by the government for their health care through uncompensated emergency room visits. Because hospitals are required to stabilize anyone who walks in with an emergency, taxpayers reimburse hospitals to the tune of billions per year through state and federal funds for the people they treat who can’t pay for it themselves.

Getting patients out of the ER and into primary care physicians’ offices saves time and money, frees up hospital resources and helps prevent dire emergencies before they occur. However, it does require an upfront investment of taxpayer funds that many states are reluctant to accept.

The Affordable Care Act also calls on states to offer a streamlined private insurance market, with certain rules that insurers have to follow and subsidies available from the federal government for low and middle income families that have to purchase their own health insurance.

“Before ACA, a private insurer could turn down any applicant for any reason other than a distinction specifically prohibited by law,” says Jennifer Bard, a law professor and director of the Health Law Program at the Texas Tech University School of Law. “ACA has severely limited insurance companies’ ability to do this.”

True universal coverage may nevertheless prove elusive. While some governors are actively blocking Medicaid expansion on one hand, officials writing the insurance rules are still struggling to find a balance between offering fair coverage vs. charging people with greater health risks more money.

It was recently revealed that insurers will be able to charge smokers as much as 50 percent more than non-smokers for their premiums, which reflects the health risks posed by cigarettes but could have the effect of pricing older smokers out of the insurance market entirely.

“ACA does not require states to impose these penalties. But it is likely that most states will because, again, in reality older smokers do have more health costs,” Bard says. “So insurance companies will argue that they are unable to provide coverage to anyone if they cannot charge more for customers who will cost them more.”

How the costs will actually bear out is yet to be seen, as we stumble our way to extending health insurance to all.

“All regulation of insurance companies is essentially a game of chicken,” the attorney notes. “The companies claim that a restriction or requirement will make it too expensive for them to offer insurance and that they will go out of business or leave the state. The state, on the other hand, is betting that while profit margins may be lower, the company cannot afford to forgo selling insurance to its citizens.”