Affordable Care Act

Constitutionality of the Affordable Care Act (ACA) is currently being debated before the Supreme Court. Passed during the Obama Administration, this health reform package has provided coverage for those with pre-existing conditions, enabled states to dramatically expand Medicaid access and individuals to purchase subsidized private health insurance policies through state and federally administered health insurance marketplaces. For this post I wanted to take a closer look at the ACA, associated impact on insurance coverage access, efforts by the Trump Administration and (primarily) Republican-led states to weaken and/or overturn the law and how it might be expanded in a Biden presidency.

How did we get here?

The United States is unique among industrialized nations in not ensuring healthcare coverage to every citizen. Our reliance on a patchwork of public/private health insurance programs resulted in spiraling numbers of uninsured through the mid-2000s. Over 46 million (14% of total U.S. population) were uninsured when the Affordable Care Act was signed into law in 2010. This included many with serious underlying health conditions and financially vulnerable but with incomes just over the threshold to qualify for Medicaid. The burden of paying for medical treatment out-of-pocket fueled a steep rise in bankruptcy filings throughout the 2000s, with medical bankruptcies accounting for over 60% of all filings starting in 2007.

The Affordable Care Act contains several components intended to dramatically increase access to health insurance coverage and lower out-of-pocket expenses. These include:

• Medicaid expansion: the federal government covers 90% of total costs incurred by individual states that choose to expand Medicaid eligibility to those making up to 138 percent of the federal poverty level. 39 states have opted for Medicaid expansion.

• Health insurance exchanges: individuals who do not receive health insurance coverage through their employer or do not qualify for Medicaid can purchase private insurance plans on a state or federally administered marketplace, and based on their income, receive a subsidy for a portion or all of the monthly premium. 15 states currently operate their own health exchange with the federal government handling administration for the other 35.

Others:

• Small Business Health Options Program (SHOP): enables small businesses with up to 50 employees to build a customized insurance offering for their employees, purchase in a competitive marketplace and potentially receive significant federal tax credits.

• Ability for young adults to stay on parent’s insurance until age 26: prior to the ACA most health plans would remove young adults from their parent’s insurance plan upon turning 18. Young adults were the most likely to be uninsured due to being in school, working part-time jobs and/or changing jobs frequently.

What has been the impact of the ACA?

Access

Overall, the ACA has significantly reduced the number of uninsured in the United States – falling from 46.7 million (2010) to 27 million (2019). Medicaid expansion has extended insurance coverage to an additional 14.2 million with large increases in expansion states and more modest gains elsewhere. An average of 11.5 million have purchased subsidized health insurance through a state marketplace since 2015.

Cost

The impact of the ACA on cost varies based on coverage source (i.e. state exchange or employer-sponsored). Individuals and families with employer-sponsored coverage on average are contributing two percent more of their annual income than in 2008 and premiums, deductibles and out-of-pocket costs have generally increased every year since 1999. Premiums for small businesses participating in the SHOP marketplace have grown around 5% per year, although this increase is significantly less than in the years prior the ACA. The gross cost (before subsidy) of ACA marketplace plans decreased between 2019 and 2020 after generally increasing since 2014 - the first year of ACA implementation. Of course, most marketplace enrollees qualify for a subsidy, and the net (after subsidy) premium cost also decreased between 2019 and 2020. The major takeaway on cost, is those most in need of premium assistance (i.e. low-income individuals and families), are paying much less out-of-pocket for health insurance coverage than before health reform.

How has the Trump Administration (and GOP allies) attempted to undermine and overturn the ACA?

The ACA has been under constant attack since 2016. The administration and its Republican allies in Congress have sought to weaken (if not fully repeal) the law through policy, legislative and legal means:

• Policy: eliminated subsidies for insurers who offered plans in state exchanges, significantly reduced navigator assistance and outreach/marketing funding for health insurance exchanges and allowed short-term health insurance plans that did not provide ‘essential benefits’ to reenter marketplace.

• Legislative: eliminated individual mandate/penalty for no insurance. This removed financial incentive for many healthy, young adults to be insured and supported legal challenges to the ACA.

• Legal: there have been over 2,000 legal challenges to the ACA since 2010. These have resulted in Medicaid expansion remaining optional for individual states (leaving an estimated 2 million without access to health insurance), allowed employers with a religious objection to not cover contraception and directly challenged the constitutionality of the law. The Supreme Court has twice ruled the law is constitutional and in response to a current challenge by 18 states and the Trump Administration which argues that removal of the individual mandate/penalty invalidates the entire law, seems poised to decide again in its favor.

These actions have contributed to an increase of 2 million in the total number of uninsured since 2016. 20 million more would be added if the current legal challenge is successful and ACA is overturned by the Supreme Court.

How would a Biden Administration expand on the ACA?

President-elect Biden has proposed two broad strategies for building on the Affordable Care Act:

• Lowering the Medicare eligibility age from 65 to 60: this could potentially increase enrollment by 23.

• Public option: creates an affordable federally administered health plan offered on state health exchanges and allows those with employer-sponsored insurance who may be eligible for a subsidy to opt out and select a lower-cost, potentially more comprehensive insurance plan on a state health exchange.

The likelihood of either strategy being adopted is heavily dependent on whether the Democrats take control of the Senate. Two run-off Senate races in Georgia will likely chart the near term direction of healthcare reform in the United States.