For the past year, the future of health care coverage, specifically within the individual market, has been uncertain and left insurers and beneficiaries alike unsure of what coverage and pricing for such coverage will look like.
If there is one message to come out of the midterm elections, it is that health care and, specifically, protections for individuals with preexisting conditions is a high priority for Americans. This issue was a hot-button topic in many red states that cost some conservatives their seat on November 6th. Without protections for individuals with preexisting conditions, efforts to repeal these provisions within the Affordable Care Act could have serious implications for this significant population. Insurance denial rates could revert to a pre-ACA landscape prior to 2012 when individuals were denied on an average of 18% in the individual insurance market. It was a time when millions were without access to affordable insurance that could meet their health needs.
In the administration’s latest effort to roll back the ACA, the Department of Justice issued a brief on June 7th in the Federal District Court of Texas, challenging the constitutionality of the law. Should the administration succeed in its efforts, it would successfully deliver on the popular Republican promise of repealing the ACA.
The lawsuit, introduced in February by twenty states and two governors, aims to declare the ACA unconstitutional following the elimination of the individual mandate. By zeroing out the tax penalty for failure to purchase insurance, which was established in Congress’ tax reform bill last December, the suit argues that the integrity of the ACA effectively crumbles. Critics of the ACA have long contended that Congress does not have the authority to force individuals to purchase insurance, as was granted by the ACA, and they are using the elimination of the tax penalty as an opportunity to strike down the law in its entirety.
The Department of Justice’s Argument
The DOJ brief asserts two key arguments: first, the individual mandate is conclusively unconstitutional following the nullification of the penalty. The 2012 ruling made in NFIB v. Sebelius recognized that Congress had the authority to establish the individual mandate as essentially a tax. With this tax eliminated, and revenue no longer generated from this provision, the plaintiffs contend that the saving construction in NFIB v. Sebelius no longer stands.
Second, and most critically, DOJ argues that the first determination, concerning the individual mandate, leaves the rest of the key provisions to the ACA similarly unconstitutional. This argument rests on the doctrine of “severability,” which questions how the remainder of a law is implicated when one part of it is rendered unconstitutional. Moreover, this argument expands further and challenges the intent of Congress in abolishing the individual mandate and whether they meant to willfully strip the ACA altogether.
Consequences of the Case
This case holds significant consequences as it aims to overturn two key provisions to the ACA: guaranteed issue and community rating. Guaranteed issue requires insurers to sell insurance to any customer who wishes to purchase their product, regardless of age, sex, career, health history, or other characteristics. Community rating requires that individuals who purchase identical plans pay comparable prices, preventing insurers from charging higher prices for individuals who are already, or at risk of getting, sick. These two provisions were applied to protect those with preexisting conditions, as insurers were able to deny coverage or charge higher costs to these individuals in the past, looking to purchase insurance in the individual market. Between 2013 to 2015, an estimated 2.6 million individuals with preexisting conditions gained access to health insurance with the passage of preexisting conditions protections under the Affordable Care Act.
Reactions to the Case
These implications have stirred concern from numerous members of Congress and their constituents, as both parties have been adamant that protections for preexisting conditions will remain. Many members have weighed in, including Senate Majority Leader, Mitch McConnell (R-KY), who asserted in June, “Everybody I know in the Senate ? everybody ? is in favor of maintaining coverage for preexisting conditions. There’s no difference of opinion about that whatsoever.”
Other members have been frank in their beliefs regarding this case, too, including Senate HELP Committee Chairman, Lamar Alexander (R-TN), who stated in June, “There’s no way Congress is going to repeal protections for people with preexisting conditions who want to buy health insurance. The Justice Department argument in the Texas case is as far-fetched as I’ve ever heard.”
However, not all of the Republican members of Congress disagree with DOJ’s position, including Senator Ted Cruz (R-TX), “Those parts that the court explicitly upheld under the taxing power, the Department of Justice conceded. Under the court’s reasoning, [it] no longer had a constitutional basis. I think that is a reasonable position for the Justice Department to take.”
The case has drawn numerous other criticisms, including the release of an amicus curiae brief by a bipartisan group of five prominent law experts. These five experts, a diverse group, ardently refute the arguments released by DOJ. Moreover, a coalition of medical associations, spearheaded by the American Medical Association, also submitted a brief in opposition to the case.
The administration’s refusal to defend the existing federal law prompted three of the case’s associated line attorneys to remove themselves from the case. Shortly before DOJ’s brief release, Joel McElvain, Eric Beckenhauer, and Rebecca Kaplin, employees of DOJ, formally withdrew from the lawsuit. The following day, Joel McElvain, Assistant Branch Director within DOJ, resigned.
The case, which will be heard by President George W. Bush’s appointee, Reed O’Connor, holds numerous implications if the court rules in favor of the plaintiffs. Should Judge O’Connor rule the Affordable Care Act unconstitutional, it is likely that this would move up to the court of appeals and, very likely, into the Supreme Court. A reversal into a pre-ACA landscape, without introduction of provisions to facilitate access for those who have difficulty securing insurance, is alarming. According to a report released by the Congressional Budget Office (CBO) last November, the repeal of the individual mandate will result in four million individuals without insurance in 2019 and a total of 13 million by 2027. It is significant to note, however, that CBO is revising their process of establishing this measure, which may result in a lower estimate.
Furthermore, without protections for preexisting conditions, the markets will echo the environment prior to implementation of the ACA. Under such circumstances, millions were routinely denied access to insurance due to their health status. Moreover, in order to apply for insurance, individuals may have to fill out extensive medical history questionnaires to determine whether they qualify for plans.
For the past year, the future of health care coverage, specifically within the individual market, has been uncertain and left insurers and beneficiaries alike unsure of what coverage and pricing for such coverage will look like. Amid the last attempt to repeal and replace the Affordable Care Act, Congress has drawn more criticism for its inability to work across party lines to enact effective and feasible health care solutions. Despite disagreement across parties, support for protecting preexisting conditions was evident during the midterm elections, making this case one to track as it moves through the court.
Included below are statements and recommendations proposed by the Bipartisan Policy Center’s Future of Health Care expert panel, which includes both advocates and critics of the Affordable Care Act, on ways to improve health care and strengthen the individual insurance market.