A Wild Summer Ride for the ACA

It certainly has been a wild ride for the Affordable Care Act this summer. First, with the judiciary branch and the Supreme Court’s decision in the Hobby Lobby case which held that closely-held for-profit corporations could be exempted from HHS’s regulatory mandate requiring employers to cover certain contraceptives for their workers if an employer had religious objections. While the decision has been roundly criticized by women’s groups as a major setback for women’s health care and eroding the ACA’s goal of providing universal access it is not a mortal blow to the new law. Of considerably greater consequence is the decision of a divided panel of the DC Circuit Court of Appeals in Halbig v. Burwell striking down an IRS ruling that individuals who purchase health insurance through federally operated exchanges are eligible for tax subsidies. If that decision is allowed to stand millions of Americans would be unable to afford their insurance premiums and the individual mandate would be made toothless. As
noted by Senior Judge Harry Edwards in his dissent, “This case Is about Appellants’ not-so-veiled attempt to gut the Patient Protection and Affordable Care Act. At the time of the ACA’s enactment, it was well understood that without the subsidies the individual mandate was not viable as a mechanism for creating a stable insurance market.”

Hours after the Halbig decisIon was released the U.S. Circuit Court of Appeals for the Fourth Circuit issued a ruling upholding the federal exchange subsidies, and the administration is seeking a rehearing of Halbig before the full DC Circuit. Conventional wisdom is that the government’s petition will be granted with the addition of three new judges to the bench by President Obama but some observers note that
the DC Circuit rarely grants a rehearing. In any event, there are two other cases challenging the legality of the federal exchange subsidies working their way through the federal courts.

So regardless of what happens with Halbig there is a decent chance that the issue may yet make its way to the Supreme Court in the next year or two. And then we get to the July 30 vote of a bitterly divided House of Representatives to commence a lawsuit against the President for allegedly overstepping his executive authority relating to ACA enforcement. House GOP leaders argue that Obama has abused his power by delaying enforcement of the employer mandate without seeking the consent of Congress. Most observers believe that the
House lacks legal standing to pursue the case because lawmakers will not be able to show that they been individually harmed by the defendant. In any event, who knows how many months or years it is going to take for this case to be resolved, and in the meantime how many bucketloads of cash are Democratic and Republicans leaders going to be able to be able to raise from ginning up their bases
about Obamacare prior to the November midterms?

While the ACA headlines have concerned developments in the courts and Congress there is a quieter drama playing out in various state capitals and that has to do with the slow but steady progress toward bringing more states into the Medicaid expansion camp. The Supreme Court’s 2012 decision upholding the constitutionality of the new health law made it optional for states whether to participate in its Medicaid expansion provision. As of this writing 26 states and the District of Columbia have done so leaving 4.8 million individuals in the coverage gap, too poor to qualify for exchange subsidies but ineligible for Medicaid . The racial disparities are overwhelming with the lion’s share of the uncovered population African American and Hispanic. In at least three states, Indiana, Pennsylvania and Utah, debate is continuing on whether to buy into the expansion, and in Virginia Governor Terry McAauliffe is purportedly mulling his options on whether to defy his Republican led legislature and attempt to expand
Medicaid on his own.

In a May report, Credit Suisse makes the case that it will be increasingly difficult for states not to opt into
the provision. The financial and political pressures will be enormous given the fact that the federal
government assumes all of the costs for the expansion through 2016 gradually decreasing to 90 percent
by 2020 and thereafter. Sooner or later voters in these states will come to the realization that their
federal tax dollars are paying the freight for the Medicaid expansion whether their state elects to sign
up or not. And expect hospitals, major political players in state legislatures, to increasingly weigh in on
behalf of the expansion as they would reap major financial benefits with the shrinkage of the uninsured
population. Finally, Rick Gross of Decision Resources Group notes that the administration may be
strengthening its hand by allowing Republican led states to experiment with waiver-based initiatives to
shift the expansion population into private exchanges.

All in all it hardly has been a case of the summer doldrums following ACA developments. Let’s hold onto
our hats as we wait for what the fall will bring.

Morning Consult