Since it’s signing into law in March 2010, the Affordable Care Act (ACA) has passed through multiple hurdles and overcome numerous challenges, but many say stormy seas remain ahead. Despite this, there’s no doubt it has significantly reduced the number of uninsured Americans. An estimated 11.7 million people received health insurance via marketplaces during the 2015 open enrollment, based on federal data. An April 2015 Gallup Poll showed the uninsured rate of U.S. adults fell to 11.9% in Q1, a big improvement from 18% in 2013 before coverage via state and federal exchanges started. Medicaid enrollment increased by 10.8 million since October 2013 and uninsured rates dropped lower in states that expanded Medicaid.
Yet, HHS secretary Sylvia Burwell recently said it’s getting more difficult to sign up the remaining uninsured, who tend to be young, without funds for insurance, and unaware they can qualify for subsidies. Larry Levitt, a law expert with the Kaiser Family Foundation, told the Associated Press, “If enrollment plateaus, we may see a growing discussion of whether the law is fulfilling expectations in covering the uninsured and whether subsidies for low-and-middle-income people are sufficient to make coverage truly affordable.” And with the 2016 open enrollment just starting Nov. 1, the Obama administration announced in October it expects only a slight overall increase in enrollment.
Furthermore, many experts raise concerns about upcoming challenges to elements of the law, potentially higher costs for stakeholders, and a potential GOP majority in Congress that may throw the law out. Here’s a look at this year’s challenges and what to expect in 2016.
A big win in the Supreme Court
This year saw a big boost for the ACA in a Supreme Court decision this June when it ruled 6 to 3 in King v Burwell subsidies should be allowed in states with their own exchanges as well as those that use the federal marketplace. The case focused on an Internal Revenue Service (IRS) rule that states subsidies are offered in exchanges established by the state. A previous ruling, Halbig v Burwell, decided federal subsidies are illegal because they were not specifically mentioned in the law. The Supreme Court agreed to hear a challenge to King v Burwell. There are 34 states that do not have their own exchanges and operate on the federal HealthCare.gov.
Close to 7.5 million people use federal exchanges. According to the Kaiser Family Foundation, subsidies average $268 monthly per person and cover 72% of the premium. If the court had decided to eliminate them, those receiving them would have had average increases in out-of-pocket expenses of 256%. Chief Justice John G. Roberts said in the majority ruling for the King v Burwell ruling, “Congress passed the Affordable Care Act to improve health insurance markets, not destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.” According to a previous article in Healthcare Dive, the decision prevents future administrations from reinterpreting the Act to eliminate subsidies.
A Supreme Court blog said, “By siding with the Obama administration, the Court effectively maintains the status quo, with the subsidies continuing to flow to low- and moderate-income Americans and more generally, to all three key provisions of the ACA remaining intact. Opponents of the ACA will have to re-focus their efforts to repeal the Act on retaining Republican control of Congress and retaking the White House from Democrats in 2016.”
GOP still fighting to repeal law
Republicans have persevered in their attempts to repeal Obamacare, with introducing more than 50 bills to repeal all or part of the law.
Later this month, the Senate plans to vote whether to repeal several ACA mandates and defund Planned Parenthood, according to The Hill. The "reconciliation" bill would repeal the individual mandate, the controversial Cadillac tax, the employer mandate, the medical device tax and the Independent Payment Advisory Board (IPAB) as well as stop federal funding for Planned Parenthood for a year. John Cornyn (R-TX), the Senate Majority Whip, told reporters the Senate would hold a “vote-a-rama” on the huge budget bill possibly the week before Thanksgiving.
Three senators, Ted Cruz (R-TX), Mark Rubio (R-Fla) and Mike Lee (R-Utah), said they would oppose the bill because it does not fully repeal the ACA. However, some moderate Republicans have raised concerns with the moratorium on Planned Parenthood funding. The bill, being passed via budget reconciliation, must be examined by Parlimentarian Elizabeth MacDonough, to ensure each provision relates to the budget. Some of MacDonough's concerns prompted the GOP to drop one part of the repeal -- a cost-cutting Medicare panel -- from its bill. Reconciliation bills can pass the Senate with a simple majority vote. However, President Obama has said he would veto the bill if it ever reaches his desk.
Questioning the law’s origins
A recent suit, Sissel v HHS, filed by the Pacific Legal Foundation for Matt Sissel, a small business owner, alleges the ACA is unconstitutional since it raises revenue via taxes. Such bills, the suit alleges, must originate in the House, not the Senate, as stated in the Constitution’s Origination Clause. A federal appeals court stated the law’s primary purpose is to expand healthcare coverage, not raise taxes, but when the full appeals court deliberated, it decided the law did qualify as revenue-producing.
The suit says the law originated in the Senate when it changed an unrelated House bill that was passed to assist veterans to buy homes. Nicholas Bagley, a health law expert at the University of Michigan told the Washington Times, “There’s disagreement on the appeals court about the rationale, but until there’s disagreement on the right outcome, the Supreme Court has no reason to take the case.”
States says ACA tax “unconstitutional”
Texas is leading a lawsuit, filed last month, along with Kansas and Louisiana, against an alleged “unconstitutional Obamacare tax,” as reported in Healthcare Dive. Texas says it pays $120 million a year to cover the Health Insurance Providers Fee, implemented to cover costs of the ACA. Ken Paxton, Texas Attorney General, said the state reimburses insurers serving its privatized Medicaid program, at a $120 million price tag. Since the fee is passed on to the states, they argue since payment is required to receive federal Medicaid funds, it is coercion.
“This threat to cut Medicaid funding to Texans unless the state continues to pay hundreds of millions in taxes to Washington amounts to the very ‘gun to the head’ the Supreme Court warned about in earlier rulings on Obamacare,” Paxton said in a statement. The states are asking for the fee to be ruled unconstitutional and to be reimbursed for money paid to the government in previous years.
Stacey Pogue, a policy analyst for the Center for Public Policy Priorities, said in a statement, “Texas leaders have challenged this particular tax because it was contained in the ACA,” according to the Texas Tribune. She also said state Medicaid premiums “always incorporate the cost of doing business (including any taxes or fees) and we don’t normally hear any grumbling about it.”
Will the ACA keep costs down?
Some question whether the ACA is driving healthcare costs down. According to The Economist, the share of Gross Domestic Product (GDP) devoted to healthcare in 2013 equaled that of 2009. “American is experiencing its slowest growth in health spending in five decades,” the article claimed. Although some credit goes to the recession, the ACA may indeed have helped curb costs. Provisions of the law, such as incentives for cutting costs and penalties for poor care and high hospital readmissions, have been paying off. There were 150,000 fewer readmissions among Medicare patients between January 2012 and December 2013 – an 8% decline.
A looming mandate of the ACA is the pending “Cadillac Tax,” set to go into effect in 2018. This excise tax on employer high-cost health plans is forcing companies to reassess their healthcare benefits and many are already adjusting. A recent survey by PricewaterhouseCoopers found in 2015, 25% of U.S. employers offer only high-deducible health plans to employees, double the number from 2012.
Many are concerned with potentially increasing healthcare costs, employers will be forced to shift the burden of the tax to employees. The American Health Policy Institute estimates between 2018 and 2024, the tax could cost 12 million employees an average of $1,050 in higher payroll and income taxes if employers increase their wages as they reduce costs of health benefits. If there is no increase in their pay, employees could have a $6,150 reduction in health benefits. The Congressional Budget Office (CBO) estimates the tax will yield $5 billion in 2018, with a total of $120 billion from 2018 to 2024. It also estimates about $30 billion of the $120 billion will come from employers, third party administrators, and issuers. The remaining 75% will come from increased income and payroll tax revenue from higher wages employers are predicted to pay to offset reduced health benefits.
What will 2016 bring?
Next year will see some big cost increases for uninsured individuals (the penalty goes up to $695 or 2.5% of modified adjusted gross income), employers (businesses with 50 or more full-time employees need to provide 95% coverage of total allowed medical costs, while those with fewer than 49 full-time employees remain exempt from penalties, which range between $2,000 to $3,000 per full-time employee) and insurers.
The federal government released data in June on premium increases insurers in 45 states and Washington D.C. are requesting for 2016 and according to the Washington Examiner, many increases exceed 20%, with some topping more than 50%. After examining 37 states and Washington D.C. that released data on individual plans on the exchange, insurers requested rate increases of double digits for 121 policies in 2015 – for next year, that increased to 231 policies. There are also currently 26 policies with requested rate increases of more than 40% and 12 with more than 50%, whereas last year there were none.
It remains to be seen how the ACA will fare next year as many challenges remain and undoubtedly new ones will continue to emerge. But, President Obama said after the Supreme Court ruled in favor of federal subsidies back in June, “The Affordable Care Act is here to stay. This law is working. And it’s going to keep doing just that.” Time will tell.