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Monday, 24 September 2018 15:05

The Fate of ACA Depends on a Texas Courtroom

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The partisan battle over the Affordable Care Act (ACA) heated up once again during the first week of September, when Judge Reed O’Connor in Fort Worth, Texas heard arguments from Republican attorneys general stating that the ACA is unconstitutional.  Although it may take a few weeks or even months for the judge to render his decision, the healthcare industry continues to speculate about the potential implications for the market, individuals, and employer group plans.  The crux of the issue is around the individual mandate and the preexisting condition protections that the ACA introduced.

The Republicans’ argument:

  • In February of this year, 20 Republican Attorneys General and/or States sued the federal government saying that since the Supreme Court upheld the individual mandate provision of the ACA as a legitimate use of their taxing power in 2012, eliminating that tax penalty for not having insurance in theory would make the entire ACA unconstitutional.

  • Trump’s Tax Cuts and Jobs Act last year did in fact eliminate the individual mandate (starting in 2019), and the Republicans believe that when the penalty i.e. “tax” was removed, the entire ACA bill should have been rendered unconstitutional.

  • The Texas v. U.S. lawsuit asks the judge for a preliminary injunction, which would halt the provisions of the ACA that are in dispute (including protection for pre-existing conditions) and would prohibit the federal government from acting under the authority of the ACA.

  • Interestingly, the defendant in the case is technically our Republican president, Donald Trump.  However his administration announced this June that it would not defend the ACA in court.

  • Republicans stated that if they cannot get the ACA repealed, they would accept the elimination of preexisting condition protections.  

The Democrats’ argument:

  • The Democratic Attorneys General, who stepped in when the Federal Government declined to defend the suit, continue to defend the ACA and argued that eliminating the individual tax penalty should not result in the abolishment of the entire law.

  • The Justice Department has said that without the individual mandate, insurance carriers should no longer be forced to sell policies to people with preexisting conditions without being able to charge them more, but it’s safe to say that most Democratic senators disagree with this opinion.

    • Because they know preexisting condition protection is a popular provision of the ACA, several Republican senators also introduced legislation last month that would require insurers to issue policies to those with pre-existing conditions, but Democratic critics were quick to argue that the bill doesn’t offer the same protections the ACA does as insurers wouldn’t have to actually provide coverage for those conditions.

What could happen next:

  • While no one is sure when Judge O’Connell will announce his decision, granting the preliminary injunction could create chaos in the health insurance system.  The ACA made major changes to the individual and group insurance markets, as well as payment rate changes for providers accepting Medicare and Medicaid.  No one knows what might happen to the healthcare system if the rug is pulled out from under the ACA, but it certainly has the provider community and the insurance carriers nervous. So much time and money has already been invested in the ACA, and to have it abolished all of a sudden might be a hard pill to swallow.

  • If the judge doesn’t grant the injunction or doesn’t rule in favor of the GOP, it’s business as usual for the ACA (except that the individual penalty will still go away for 2019).

  • The judge’s decision could also be appealed, possibly all the way to the Supreme Court.

Potential implications for employer health plans if the ACA were deemed unconstitutional:

  • No employer mandate or penalties for not offering coverage to workers.

  • No employer reporting requirements regarding coverage.

  • Group plans would no longer be subject to actuarial value rules (metal level plans), essential health benefit rules (free preventive care, annual limits on out-of-pocket maximums), or affordability rules.

  • No future “Cadillac Tax.”

  • Although unlikely, pre-existing condition limitations could creep back into individual insurance plans. Group insurance plans are also protected from pre-ex limitations by the 1996 provisions of HIPPA, but we could go back to the days of new employees having to provide proof of prior coverage.

To read more and see a timeline tracking the key developments in the past year regarding the ACA, visit this link

Read 259 times Last modified on Tuesday, 25 September 2018 15:40
Tonya Kimrey

Tonya is our Senior Account Manager and brings eleven years of prior insurance company expertise to Fall River, having worked at Anthem Blue Cross and Great-West Healthcare (now part of CIGNA). Tonya holds a Bachelor of Science in Psychology from Texas A&M University. Originally from Minnesota, she loves the Colorado outdoors and enjoys family time with her young daughter.