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Whose Health Insurance is at Risk If SCOTUS Overturns the ACA?

In a confirmation process that ended just eight days before the 2020 election, the Senate voted to confirm judge Amy Coney Barrett to serve on the Supreme Court. She will fill the vacancy left by the late Justice Ruth Bader Ginsburg. Among one of Barrett’s first cases is California v. Texas, a case that calls into question the constitutionality of the Affordable Care Act (ACA) and puts millions of Americans at risk of losing access to affordable health insurance options.

Oral arguments for the case are scheduled to begin on November 10, one week after the election. The case, which was brought by a group of red states and has been supported by the Trump administration, questions whether the ACA may still stand without the individual mandate penalty, which was set to zero in 2019 after Congress passed the Tax Cuts and Jobs Act in 2017.

Many experts believe the legal argument in the case is weak, but the Court’s new 6-3 conservative majority makes the future of the ACA less certain.

The Court’s decision is expected to rely heavily on the question of “severability,” the notion that if part of a law is determined unconstitutional, some or all of the remaining statute may stand based on congressional intent. If the individual mandate penalty is found to be unconstitutional, the court must determine how much of the ACA may remain in place. The severability doctrine has strong legal precedence and has played a key role in many Supreme Court decisions, including two cases heard earlier this year, suggesting the decision will not be all or nothing and at least some of the ACA will be saved.

The Supreme Court may decide the fate of the country’s most comprehensive health reform bill in recent history amid the COVID-19 pandemic, which has already caused millions of Americans to lose their jobs and employer-sponsored health insurance. If the Supreme Court overturns the entire ACA, millions who do not have access to employer-sponsored insurance may be left without options for affordable coverage unless policymakers act. While we have seen health care coverage proposals from the Biden campaign and the Trump administration, including a recent executive order to continue protections for individuals with pre-existing conditions, there continues to be little bipartisan consensus on a path forward without the ACA.

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Who could lose their current health insurance coverage?

Middle-income individuals: 12 million

The ACA’s Marketplaces extended access to health insurance to millions of middle-income Americans, creating coverage options for those without employer-sponsored insurance who do not qualify for either Medicare or Medicaid. Individuals with incomes between 100-400% of the Federal Poverty Level ($1,063 – $4,253 per month for an individual in 2020) are eligible for premium tax credits, which are based on a sliding scale to help make these plans more affordable. However, Marketplace plans remain unaffordable for many whose incomes are above the threshold for subsidized coverage – a major criticism of the ACA. In January 2020, overall Marketplace enrollment across the country was 11.4 million, and 9.6 million received subsidized coverage.

The Marketplaces have played a key role in many states’ COVID-19 response. All states that run their own Marketplace created COVID-related special enrollment periods. When California opened enrollment for its Marketplace plans from March 20 to August 31 of this year, nearly 290,000 Californians enrolled in insurance plans – a 115% increase from the same time period in 2019. Although the federal government did not create a COVID-related special enrollment period, an estimated 500,000 individuals enrolled in Marketplace plans between March and June this year after experiencing a qualifying event such as job loss.

Low-income individuals: 14 million

The ACA allows states to expand Medicaid, enrolling low-income individuals making up to 138% of the Federal Poverty Level ($1,467 per month) into the program. States that opt in receive enhanced federal funding to cover this population. Before the ACA, Medicaid enrollment was limited to children and parents with extremely low incomes; nondisabled adults without dependents were generally not eligible for Medicaid coverage. As of June 2019, Medicaid expansion provided coverage to 14 million individuals. Since then, Missouri and Oklahoma have opted to expand their Medicaid programs as well. Additionally, the pandemic has caused Medicaid enrollment across the traditional and expansion populations to increase by 4 million between February and July of this year.

Individuals with pre-existing conditions: More than 100 million

Before the ACA it was common practice for insurance companies to use “medical underwriting,” or use an individual’s medical history to make coverage decisions and set premiums. Insurers could deny the coverage of treatment for an individual’s pre-existing condition or refuse coverage completely. The ACA made medical underwriting illegal; ACA-compliant plans are not allowed to change premium prices or deny coverage based on an individual’s medical history.

Estimates vary, but over 100 million Americans are thought to have pre-existing conditions that could impact coverage decisions. In addition, because long-term effects of COVID-19 are still largely unknown, it may be considered a pre-existing condition in the future, which could put coverage at risk for the 8 million Americans infected to date.

Individuals ages 19-25: More than 2 million

The ACA allows adult children to remain on their parent’s health insurance plan until age 26, regardless of whether they live at home, are married, qualify as a dependent for tax purposes, or are offered employer-sponsored insurance. This provision expanded coverage to more than 2 million young adults.

American Indians and Native Alaskans

The ACA also reenacted, amended, and permanently reauthorized the Indian Health Care Improvement Act, which gives legal authority to provide health care to the 2.5 million individuals covered by the Indian Health Service (IHS). Importantly, this law allows the IHS to receive direct payments from Medicare, Medicaid, and other third-party payers. The ACA amended the original Indian Health Care Improvement Act by authorizing programs to target health needs specific to American Indians and expanding IHS workforce training programs. Although those who receive care from the IHS would still have health coverage without the ACA, the changes made to improve access to care for this population would no longer be permanent.

Coverage options outside of the ACA

If the ACA is overturned, some coverage options will still exist for individuals who do not have access to employer-sponsored insurance. They will still have the option to enroll in insurance plans on the individual market, but without the subsidies and patient protections created by the ACA. Although some of these protections have been codified at the state level, most states’ plans would be able to underwrite enrollees and would not be required to offer comprehensive benefit packages.

Alternatively, individuals may choose to enroll in short-term limited-duration insurance plans that the Trump administration expanded. However, these plans may deny coverage based on pre-existing conditions, are more likely to have high deductibles, and may not provide comprehensive coverage, including coverage of a future COVID-19 vaccine.

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) created an option for individuals who lose their jobs to temporarily maintain coverage through their employer-sponsored insurance plan. However, these plans are often cost-prohibitive, as individuals who opt in to COBRA coverage are responsible for the entire health insurance premium in addition to administrative charges. In 2019, the average monthly COBRA premium was over $600 for an individual.

Final Thoughts

Much is at stake in the upcoming battle over the ACA in the Supreme Court. COVID-19 has exposed the fragility of America’s health insurance system, where coverage is largely tied to employment. As the pandemic and economic downturn continue, it will remain important to ensure individuals without employer-sponsored insurance have access to affordable coverage options. If the ACA is overturned, Congress and the administration will need to act quickly so coverage losses are minimized, and individuals are still able to access the care they need.