Published:
Mar 26, 2019
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 now
agrees that the entire law should be judged unconstitutional, but previously
argued 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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– 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)
– 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)
– 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 2018.
– 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
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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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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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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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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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