California’s Big Gamble on Health Care Reform

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While federal courts throughout the nation weigh in on the constitutionality of the government's Patient Protection and Affordable Care Act, California is quickly moving ahead with change.

Given the recent spate of court decisions, it remains to be seen whether the state may have to abandon its aggressive measures.

So far, four federal district courts have handed down decisions on the validity of the health care act. Two have upheld the health care law as constitutional. One has declared portions of the law unconstitutional, and just days ago a federal district judge in California declared the entire act unconstitutional.

At issue seems to be reliance on two different parts of the U.S. Constitution. Proponents argue that the act falls under the right of Congress to regulate interstate commerce, found in Article I, Section 8. Opponents rely upon the 10th Amendment, which guarantees the states the right to deal with issues not specifically mentioned in the Constitution.  

The differing interpretations will be sorted out by the U.S. Supreme Court, although in all probability not for another 18 months or so--just about the time that the 2012 presidential election campaign enters its most frenetic stage.

Meanwhile, what are the states to do?

At least two states, Florida and Wisconsin, have declared that they will ignore the law in the absence of any clarity.

Not so in California, which last November became the first state to conform with the new health care rules and emerged as a financial winner. In the waning days of the Schwarzenegger administration, California negotiated a huge deal with the federal government to receive $10 billion over the next five years in health care funds.

The money will be used to move 1.5 to 2 million Medi-Cal recipients into managed care programs, thereby reducing the state's burden considerably.

Nothing could be more welcome in a state struggling with a $25 billion budget deficit.

All this would now seem to be in jeopardy on two fronts. First, the Republican-led House of Representatives is threatening to defund previous health care financial commitments. Second, there is a real chance that the U.S. Supreme Court will toss out the act by a 5-4 margin along the same ideological lines that have framed other recent decisions.

Meanwhile, a $10 billion pot dedicated to Medi-Cal remains in the balance. If it tips the wrong way, California's budget issues will only get worse.    

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