Published:
Dec 20, 2018
On December 14, 2018,
a federal trial court judge ruled that the
entire Affordable Care Act (ACA) is unconstitutional. While the trial court’s
ruling is likely not the last word on the ACA’s constitutionality, this brief
considers the complex and far-reaching impact were the entire law ultimately
held to be invalid.
The case – brought by
a number of Republican state attorneys general (AGs) and other plaintiffs –
centers on the argument that the law’s individual mandate is unconstitutional
after Congress zeroed out the penalty associated with it in the tax bill in
late 2017. The plaintiffs argue that the rest of the ACA is not severable from
the mandate and should therefore be invalidated. The Trump administration
agrees that the mandate should be judged unconstitutional, but argues that only
the ACA’s pre-existing condition protections are inseparable from the mandate
and should be overturned, while the rest of the law should stand. A number of
Democratic state AGs are defending the ACA as interveners in the case, arguing
in part that Congress intended to keep the ACA in place when it set the
individual mandate penalty to zero while leaving the rest of the law intact.
The Trump administration has indicated that
it intends to continue enforcing the ACA pending an expected appeal of the
decision.
The number of
non-elderly Americans who are uninsured decreased by 19.1 million from
2010 to 2017 as the ACA went into effect. While the ACA’s changes to the
individual insurance market – including protections for people with
pre-existing conditions, creation of insurance marketplaces, and premium
subsidies for low and modest income people – have been the focus of much policy
debate and media coverage, the law made other sweeping changes throughout the
health care system that have an impact on nearly all Americans. These include:
the expansion of Medicaid eligibility for low-income adults; required coverage
of preventive services with no cost sharing in private insurance, Medicare, and
for those enrolled in the Medicaid expansion; phase-out of the “doughnut hole”
gap in Medicare drug coverage; reductions in the growth of Medicare payments to
health providers and insurers; new national initiatives to promote public
health, the quality of care, and delivery system reforms; and a variety of tax
increases to finance these changes. These provisions could all be overturned if
the judge’s decision is upheld.
More than eight years
after enactment, ACA changes to the nation’s health system have become embedded
and affect nearly everyone in some way. A court decision that invalidated the
ACA, therefore, would also affect nearly everyone in at least some way. It
would be a complex undertaking to try to disentangle it at this point. The
following table summarizes the major provisions of the ACA, illustrating the
breadth of its changes to the health care system and public attitudes towards
those changes.
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Table 1. Summary of Key
Coverage-Related Provisions of the ACA, With Estimates of Their Impact and
the Public’s Views
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Key Provision
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People Affected/Dollars
Involved
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Public Opinion
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Expanded Eligibility for
Health Coverage
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Medicaid Eligibility Expansion
– Medicaid
eligibility is expanded to include adults with income up to 138% FPL;
however, the Supreme Court ruling in 2012 essentially made Medicaid expansion
optional for states.
– The federal
government paid 100% of the cost of the expansion initially; this share
phases down to 93% in 2019 and 90% in 2020 and beyond
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– In FFY
2017, there were more than 17 million Medicaid
expansion enrollees in the 32 states and DC that had adopted the
expansion. Of those enrollees, 12.7 million were newly eligible due to
the ACA’s Medicaid expansion
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– 77% of
the public have a favorable view of provision giving states option to expand
Medicaid programs (91% of Dems, 77% of Inds, 55% of Reps) (Nov 2018)
–
59% of those living in non-expansion states would like to see their state
expand Medicaid (Nov 2018)
–
Most of those living in non-expansion states say that if their state
government chooses not to expand Medicaid, voters themselves should be able
to decide. (Nov 2018)
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Subsidies for Non-Group Health Insurance
–
Eligible individuals who buy coverage through the Marketplace receive
subsidies based on income: premium tax credits for those with income 100-400%
FPL; cost-sharing subsidies for those with income 100-250% FPL
–
States can also elect to run a subsidized Basic Health Plan for people
with income between 133%-200% FPL
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– As of
June 2018, 8.9 million marketplace
enrollees received premium tax credits and 5.4 million received
cost-sharing reductions
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– 81% of
the public (92% of Dems, 82% of Inds, 63% of Reps) have a favorable view of
providing financial help to low- and moderate-income Americans who buy their
own insurance (Nov 2018)
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Dependent Coverage to 26
–
All non-grandfathered private group and non-group health plans must extend
dependent coverage to adult children up to the age of 26
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–
About 2.3 million young
adults gained coverage as a result of this provision
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– 82% of
the public (90% of Dems, 82% of Inds, 66% of Reps) have a favorable view of
allowing young adults to stay on parents’ insurance plans until age 26 (Nov 2018)
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Health Insurance Marketplace
–
Establish new marketplaces where qualified health plans are offered to
individuals.
–
Marketplaces certify that qualified health plans meet all ACA requirements,
provide subsidies to eligible individuals, operate a website to facilitate
application and comparison of health plans, provide a no-wrong-door
application process for individuals to determine their eligibility for
financial assistance, and provide in-person consumer assistance through
navigators
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– 10.3 million individuals had effectuated
coverage through the Marketplace as of the first half of 2018
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– 82% of
the public (91% of Dems, 78% of Inds, 71% of Reps) have a favorable view of
creating health insurance exchanges where people and small businesses can
shop for insurance (Nov 2018)
–
53% think the marketplaces are collapsing (March 2018)
–
51% say stabilizing the marketplaces should be a top priority for President
Trump and Congress (January 2018)
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Federal Minimum Standards for
Private Health Insurance
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Protections for Pre-existing Conditions
– All
non-grandfathered plans are prohibited from discriminating against
individuals based on their health status.
– Insurers in the
non-group, small group, and large group market must guarantee issue coverage
– Large group, small
group, and non-group health plans are prohibited from applying pre-existing
condition exclusions
– Insurers in the
non-group and small group market may not vary premiums based on health status
or gender or any other factor except:
– Premiums can vary
by age (up to 3:1), geography, and family size
–
Rescission of coverage is prohibited in the non-group, small group, and large
group market
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– 52
million people (27% of the nonelderly population) have a pre-existing
condition that would have been deniable in the pre-ACA individual market.
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–
Majorities say it is “very important” to them that the ACA provisions
prohibiting insurance companies from denying coverage (65%) or charging sick
people more (62%) remain law (Nov 2018)
–
70% overall (87% of Dems, 67% of Inds, 51% of Reps) would want their state to
establish protections for people with pre-existing health conditions if the
ACA’s protections are ruled unconstitutional. (Nov 2018)
–
58% of Americans say someone in their household has a pre-existing health
condition. (Nov 2018)
–
41% are “very worried” that they or a family member will lose coverage if the
Supreme Court overturns ACA’s pre-existing condition protections (August 2018)
–
52% are “very worried” that they or a family member will have to pay more for
coverage if the Supreme Court overturns ACA’s pre-existing condition
protections (Sept 2018)
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Preventive Services
– All
non-grandfathered group and non-group plans must cover preventive health
services without cost sharing.
–
Covered services include breast, colon, and cervical cancer screening,
pregnancy-related services including breastfeeding equipment rental,
contraception, well-child visits, adult and pediatric immunizations, and
routine HIV screening. In addition, it was recently recommended that
pre-exposure prophylaxis (PREP) to prevent HIV infection be included as well
and if finalized, would be offered at no-cost
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– 84% of
covered workers with employer-sponsored insurance (approximately 131 million
people) were enrolled plans that must provide free preventive services as of
2017.
– 13.1 million people were enrolled in individual
market plans required to provide free preventive services, as of 2017
–
17 million enrollees in Medicaid expansion states received coverage for
preventive services in 2017
–
Prior to the ACA, 1 in 5 women reported that they postponed or
went without preventive care due to cost.
–
The share of women of reproductive age with large employer coverage who had
out-of-pocket spending on oral contraceptive pills fell from 22.7% in 2012
to 2.7% in 2016.
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– 79% of
the public (88% of Dems, 78% of Inds, 68% of Reps) have a favorable view of
eliminating out-of-pocket costs for many preventive services (Nov 2018)
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Essential Health Benefits
–
All ACA compliant health plans in the individual and small group market must
cover 10 categories of essential health benefits (EHB), including
hospitalization, outpatient medical care, maternity care, mental health and
substance abuse treatment, prescription drugs, habilitative and
rehabilitative services, and pediatric dental and vision services
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– In 2013,
before the ACA EHB requirements took effect, 75% of
nongroup health plans did not cover maternity care, 45% did not cover
substance use disorder treatment, and 38% did not cover mental health
services
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– 66% of
the public (81% of Dems, 65% of Inds, 52% of Reps) say they want the federal
government to continue to require health insurance companies to cover a
certain set of benefits (June 2017)
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Annual and Lifetime Limits
–
All group and non-group plans (including non-grandfathered) are prohibited
from placing lifetime or annual limits on the dollar value of coverage for
essential health benefits
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– Prior to
the ACA, in 2009, 59% of
covered workers’ employer-sponsored health plans had a lifetime limit
– 156 million people (57% of the U.S. non-elderly
population) had employer coverage, as of 2017.
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Cap on Out-of-Pocket Cost Sharing
– All
nongrandfathered private health plans must limit cost sharing for essential
health benefits covered in network
–
The annual maximum for 2019 is $7,900 for an individual; $15,800 for family
coverage
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– Prior to
the ACA, in 2009, 19% of
covered workers had no limit on out-of-pocket expenses. Among those with
out-of-pocket maximums, not all expenses counted toward the limit. For
example, in 2009, among workers in PPOs with an out-of-pocket maximum, 85%
were in plans that did not count prescription drug spending when determining
if an enrollee had reached the out-of-pocket limit.
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Minimum Medical Loss Ratios
– Require all
non-grandfathered private plans to pay a minimum share of premium dollars on
clinical services and quality
–
Insurers must provide rebates to consumers for the amount of the premium
spent on clinical services and quality that is less than 85% for plans in the
large group market and 80% for plans in the individual and small group
markets.
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– In
total, $4 billion in
medical loss ratio rebates have been issued across the individual, small group, and large
group markets, from 2012 to 2018 (based on insurer financial results from the
2011-2017 plan years).
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– 62% of
the public (68% of Dems, 64% of Inds, 54% of Reps) say they favor requiring
insurance companies that spend too little money on health care services and
too much on administrative costs and profits to give their customers a
rebate (March 2014)
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Consumer Information and Transparency
–
All non-grandfathered health plans must provide a brief, standardized summary
of coverage written in plain language
–
All non-grandfathered health plans must periodically report transparency data
on their operations (e.g., number of claims submitted and denied)
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– 79% of
the public have a favorable view, including 91% of Dems, 78% of Inds, 68% of
Reps (August 2012)
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Other Provisions Affecting
Employers/Group Health Plans
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Large employer mandate
–
Requires employers with at least 50 full time workers to provide health
benefits or pay a tax penalty
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– Favored
by a majority across parties: 69% overall have a favorable view, including
88% of Dems, 61% of Inds, 56% of Reps (November 2018)
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Waiting Periods
–
Employers that impose waiting periods on eligibility for health benefits
(e.g., for new hires) must limit such periods to no more than 90 days
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– Prior to
the ACA, in 2009, 29% of
covered workers faced a waiting period of 3 months or more
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Consumer assistance
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State Consumer Assistance Programs
– Authorize federal
grants for state Consumer Assistance Programs (CAPs) to advocate for people
with private coverage.
–
Notice of claims denials by non-grandfathered private plans must include
information about state CAPs that will help consumers file appeals
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-CAPs were
established in most states in 2010, though no appropriations for CAPs have
since been enacted. Today 36 CAPs are
in operation
–
A report on the first year of CAP operations found
the programs helped 22,814 individuals successfully challenge their health
plan decisions and obtained more than $18 million on behalf of consumers.
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Other Medicaid Provisions
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Simplification of Enrollment Processes
–
States are required to simplify Medicaid and CHIP enrollment processes and
coordinate enrollment with state health insurance exchanges.
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– Prior to
the ACA in 2013, 27 states had an asset test and 6 required face-to-face
interviews for parents; only 36 states had an online Medicaid application and
17 states allowed individuals to apply by phone. By 2018, nearly
every state had an online and telephone Medicaid application, and all states
had eliminated asset tests and face-to-face interviews.
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Long-term Care Services and Supports
–
Expands financial eligibility for 1915 (i) home and community-based services
(HCBS, creating a new eligibility pathway to allow people not otherwise
eligible to access full Medicaid benefits, allows states to target services
to specific populations, and expands the services covered.
–
Creates a new Medicaid state plan option to cover attendant care services and
supports with 6% enhanced FMAP.
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– 18 states elected
the option to expand eligibility for 1915(i) HCBS services as of 2016. Almost
62,000 individuals received services and over $237 million was spent on these
services.
–
As of 2016, 8 states elected the option to cover attendant
care services. Over 353,000 individuals received services and $8.2
billion was spent on these services.
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Behavioral Health Parity
–
Mental health and substance use disorder services must be included in
Medicaid Alternative Benefit Packages (ABPs) provided to Medicaid expansion
adults and other adults, and the services must be covered at parity with
other medical benefits.
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– 17
million Medicaid expansion enrollees receive services through an ABP.
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Medicaid Eligibility for Former Foster Care Youth up to Age 26
–
Requires states to provide Medicaid to young adults ages 21 through
26 who were formerly in foster care.
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Medicaid Drug Rebate Percentage
–
Increase Medicaid drug rebate percentage for most brand name drugs to 23.1%
and increase Medicaid rebate for non-innovator multiple source drugs to 13%.
Extend drug rebate program to Medicaid MCOs
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– CBO estimated
federal savings of $38 billion over 10 years from the Medicaid prescription
drug provisions in the ACA, including increases in the drug rebate percentage
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Medicare Provisions
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Part D Coverage Gap1
Gradually
close the Medicare Part D coverage gap (“doughnut hole”):
–
Phase down the beneficiary coinsurance rate for brand and generic drugs In
the Medicare Part D coverage gap from 100% to 25% by 2020
–
Require drug manufacturers to provide a 50% discount on the price of
brand-name and biologic drugs in the coverage gap
–
Reduce the growth rate in the catastrophic coverage threshold amount between
2014 and 2019 to provide additional protection to enrollees with high drug
costs
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– 43
million people were enrolled in Medicare Part D in 2018
–
In 2016, more than 5 million Part Denrollees without low-income
subsidies (LIS) had spending in the coverage gap and received manufacturer
discounts averaging $1,090 on brand-name drugs. Reinstating the coverage gap
would increase costs incurred by by Part D enrollees who have relatively high
drug spending.
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–
81% of the public (79% of seniors) has a favorable view that “the law
gradually closes the Medicare prescription drug ‘doughnut hole’ or ‘coverage
gap’ so people on Medicare will no longer be required to pay the full cost of
their medications when they reach the gap” (Nov 2018)
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Preventive services
–
Eliminate cost-sharing for Medicare covered preventive services.
Authorize coverage of annual comprehensive risk assessment for Medicare
beneficiaries.
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– 60
million people have access to free preventive services; of these, Medicaid
pays Medicare cost-sharing for 10 million full dual
eligibles.
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Cost sharing in Medicare Advantage (MA)
–
Prohibit MA plans from imposing higher cost-sharing requirements than
traditional Medicare for chemotherapy, renal dialysis, skilled nursing care,
and other services deemed appropriate by the Secretary of HHS. This
prohibition was extended to most Medicare-covered services.
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– 20
million people enrolled in Medicare Advantage plans in 2018
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Restructure Medicare Advantage payments
–
Reduce federal payments to Medicare Advantage plans, to bring payments closer
to the average costs of Medicare beneficiaries.
–
Provide quality-based bonus payments to Medicare Advantage plans
–
Require Medicare Advantage plans to maintain a medical loss ratio of at least
85 percent; the administration extended this requirement to all Part D plans.
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– CBO estimated repeal
of the ACA Medicare Advantage payment changes would increase Medicare
spending by about $350 billion over 10 years (2016-2025).
–
Higher Medicare spending would increase Medicare premiums and deductibles for
beneficiaries and accelerate the insolvency of the Medicare Hospital
Insurance Trust Fund.
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Other provider payments
–
Reduce the rate at which Medicare payment levels to hospitals, skilled
nursing facilities, hospice and home health providers, and other health care
providers are updated annually.
–
Reduce Medicare Disproportionate Share Hospital (DSH) payments that help to
compensate hospitals for providing care to low-income and uninsured patients.
–
Allow providers organized as Accountable Care Organizations (ACOs) that meet
quality thresholds to share in cost savings they achieve for the Medicare
Program.
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– CBO estimated repeal of the ACA provider payment
reductions would increase Medicare spending by another approximately $350
billion over 10 years (2016-2025).
–
Eliminating the Medicare Shared Savings Program ACOs could affect
around 10.5 million Medicare beneficiaries who were
attributed to a MSSP ACO, as of 2018
–
Higher Medicare spending would increase Medicare premiums and deductibles for
beneficiaries and accelerate the insolvency of the Medicare Hospital
Insurance Trust Fund.
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Medicare income-related premiums2
Freeze threshold for
income-related Medicare Part B premiums for 2011 through 2019.
Establish new income-related premium for Part D, with the same
thresholds as the Part B income-related premium.
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– As
originally enacted in the ACA, CBO estimated $35.7 billion in savings from
these provisions over 10 years
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Additional Provisions
Beyond
coverage-related provisions, the ACA made numerous other changes in federal law
to safeguard individual civil rights, authorize new programs and agency
activities, and finance new federal costs under the law. The Court ruling
finding the ACA unconstitutional could also result in an end to these
provisions. They include:
Nondiscrimination
The ACA prohibits
discrimination against individuals on the basis of race, color, national
origin, sex, age, or disability in certain health programs or activities, under
Section 1557, which builds on long-standing and familiar Federal civil rights
laws. Regulations implementing Section 1557 issued by the Obama Administration
further defined these protections to include gender identity and pregnancy
status. However, a federal court issued a nationwide injunction prohibiting
enforcement of the gender identity and pregnancy protections and new
regulations are pending. Separate ACA regulations governing marketplaces and
qualified health plans, essential health benefits, and the individual and group
market also provide nondiscrimination protections, including based on sexual
orientation and gender identity, and are not directly affected by the 1557
ruling.
Enforcement by
the Office of Civil Rights at the US Department of HHS is ongoing. In addition,
individuals can file a civil lawsuit to challenge a nondiscrimination violation
under Section 1557.
FDA Approval of Biosimilars
The ACA authorized the
U.S. Food and Drug Administration (FDA) to approve generic version of biologics
(biosimilars) and grant biologics manufacturers 12 years of exclusive use
before generics can be developed. As of December 2018, the FDA has approved 16
biosimilar products used in the treatment of cancer, rheumatoid arthritis, and
other health conditions.
Innovation Center
The law also
established an Innovation Center within the Center for Medicare and Medicaid
Services (CMS) to test, evaluate and expand different payment structures and
methods to save costs while maintaining or improving quality of care. Payment
and delivery system models supported
by the Innovation Center focus on Medicare, Medicaid, and the Children’s Health
Insurance Program (CHIP), for example, include care delivery for children and pregnant women affected
by the opioid crisis, and models to reduce prescription drug costs.
Prevention and Public Health Fund
The ACA established
the Prevention and Public Health Fund with a permanent annual appropriation to
support activities related to prevention, wellness and public health
activities. The law appropriated $7 billion annually through 2015 and $2
billion for each fiscal year thereafter, although Congress has since voted
several times to redirect a
portion of funds from the Prevention and Public Health Fund for other purposes.
Fund resources support federal,
state, and local programs to fight obesity, curb tobacco use, prevent the onset
of chronic conditions such as diabetes and heart disease, promote immunization,
detect and respond to infectious diseases and other public health threats, and
other initiatives.
Nonprofit Hospitals
The ACA set new requirements for
non-profit hospitals in order to retain their tax exempt status. These include
a requirement to conduct a community needs assessment every 3 years and adopt a
strategy to meet identified needs. Hospitals also must adopt and widely
publicize financial assistance policies on the availability of free or
discounted care and how to apply. In addition, hospitals must limit charges to
patients who qualify for financial assistance to the amount generally billed to
insured patients, and must make reasonable attempts to determine eligibility
for financial assistance before undertaking extraordinary collection actions.
Breastfeeding breaks & separate rooms
Employers with 50 or
more employees must now provide adequate break time for breastfeeding women and
a private space that is not a bathroom for nursing and pumping.
Menu labeling
Restaurants and retail
food establishments with 20 or more locations and owners of 20 or more vending
machines must include nutrition information, including calories, for their
standard menu items.
Revenue Provisions
Many of the revenue
provisions enacted under the ACA remain in effect but presumably would end if
the law were found unconstitutional. For example, the ACA included a tax
on pharmaceutical manufacturers
and importers (generating annual fees of $2.8 billion in 2019 and thereafter)
and a tax on health insurers(generating
annual fees of $14.3 billion in 2018, indexed annually by the rate of premium
growth, but subject to a moratorium in 2019). The law also imposed a new medical device excise
tax of 2.3%, which Congress has voted several times to delay. Financing
provisions also included a 10% tax on indoor tanning services,
and limits on the deductibility of compensation of insurance company executives (limited
to $500,000 per individual per year). Under the ACA, the Medicare payroll tax was
increased for high income earners (over $200,000 by individuals, $250,000 for
married couples filing jointly), and a new 3.8% tax on net investment income applied
for higher income taxpayers. Finally, the ACA imposed the so-called Cadillac taxon
high-value employer-sponsored health plans, which Congress has also voted to
delay, most recently, until 2022.
Endnotes
1.
Some of the coverage
gap provisions were subsequently modified by the Bipartisan Budget Act of 2018.
The BBA closes the Part D coverage gap in 2019 instead of 2020 by accelerating
a reduction in beneficiary coinsurance from 30 percent to 25 percent in 2019;
also increases the discount provided by manufacturers of brand-name drugs in
the coverage gap from 50 percent to 70 percent, beginning in 2019. In 2019 and
later years, Part D plans will cover the remaining 5 percent of costs in the
coverage gap, which is a reduction in their share of costs (down from 25
percent).
2. Some of the Medicare income-related premium
provisions have been modified by subsequent laws. The Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA) made changes to Medicare’s income-related
premiums by requiring beneficiaries with incomes above $133,500 ($267,000 for
married couples) to pay a larger share of Part B and Part D program costs than
under the original MMA and ACA provisions. Under MACRA, beginning in 2018,
beneficiaries with incomes above $133,500 and up to $160,000 ($267,000-$320,000
for married couples) were required to pay 65 percent of Part B and Part D
program costs, up from 50 percent prior to 2018, while beneficiaries with
incomes above $160,000 and up to $214,000 ($320,000-$428,000 for married
couples) were required to pay 80 percent of Part B and Part D program costs, up
from 65 percent. The most recent change to Medicare’s income-related premiums
was incorporated in the Bipartisan Budget Act of 2018 (BBA). This change will
affect beneficiaries with incomes above $500,000 ($750,000 for married couples)
by requiring them to pay 85 percent of program costs beginning in 2019, up from
80 percent prior to 2019.
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