There Is Life After the Affordable Care Act
MARCH 12, 2015
Now that the Supreme Court has heard oral arguments in the case of King v. Burwell, let’s look ahead at the potential post-Affordable Care Act (ACA) health care landscape and examine what a potential ACA replacement may look like should the Supreme Court rule against the Obama administration.
[A quick recap of the case: the plaintiffs in the suit are arguing that, based on a plain-text reading of the actual language of the law, the ACA only provides subsidies for insurance purchased through an exchange set up by an individual state, not for insurance purchased through an exchange set up by the federal government. Currently 34 states use the federal exchanges, with roughly 7.5 million consumers in those states receiving subsidies. If the plaintiffs prevail, those consumers would be in danger of losing those subsidies, and thus in many cases their insurance, unless their state opted to establish an exchange or an alternate solution is proposed at the federal level.]
Until very recently, the thought was that Republicans in Congress, lacking the numbers to override a potential presidential veto of any bill calling for total repeal of the ACA, would instead opt to go after several especially unpopular provisions of the law. Potential targets included eliminating the tax on medical devices and certain insurance policies, changing the definition of “full-time employee” from 30 hours per week to a realistic 40 hours, and doing away with so-called “risk corridors” in the health law that benefit mainly insurance companies. Risk corridors are a temporary provision of the ACA that calls for the federal government to compensate insurance companies that experience higher than expected costs. According to the WSJ, if an insurer’s actual claims are at least 3% greater than the claims projected when the insurer set its rates for the year, “the government must reimburse the insurer for half of the excess. If actual claims jump 8% beyond projected claims, the government covers 80% of the excess.” Simply put, we the taxpayers would protect the insurance companies from excessive losses.
However, with the possibility now that the Supreme Court may rule that subsidies provided to consumers who purchase their health insurance through an exchange set up by the federal government are illegal, lawmakers on both sides of the aisle have been scrambling to provide a solution for the millions of consumers who are worried they may no longer be able to afford their coverage.
Several prominent Republican lawmakers have put forth proposed solutions designed to assist consumers who live in states that opted not to establish their own exchange obtain health insurance.
Sen. Orrin Hatch, R-Utah, Sen. Richard Burr, R-NC, and Rep. Fred Upton, R-Mich recently sponsored the Patient Choice, Affordability, Responsibility, and Empowerment (CARE) Act that would, among other provisions, strike down both the individual and employer mandates of the ACA, establish an age-rating ratio of 5 to 1 (ie, older individuals would pay no more than 5 times what younger, low-risk consumers pay for their coverage), prevent insurance companies from placing lifetime benefit limits on policies, and require insurance plans to offer dependent coverage up to age 26 (though individual states could opt out of this).
Most importantly, according to an article published on this site, insurance subsidies would be provided “in the form of tax credits—rather than offsets to premium costs--but only for those making up to three times the Federal Poverty Level” (the ACA provides subsidies to consumers making up to 4 times the poverty level).
The CARE Act would also allow the sale and purchase of insurance across state lines, eliminating a major barrier to a more efficient market that could dramatically reduce the number of uninsured Americans by as much as 12 million.
In addition, the CARE Act would “modernize Medicaid” by “giving states more control over the program and allow enrollees to have the option of leaving Medicaid and getting a tax credit that could be used to purchase coverage.” Finally, the Republican proposal would also provide long-overdue tort reform by enacting new caps on non-economic damages, limiting attorney fees, and “encouraging states to set up special health courts to adjudicate malpractice cases, with an eye to reducing huge judgment payouts for victims and the attorneys representing them.”
According to an op-ed published in the Washington Post by Hatch, Lamar Alexander (R-Tenn.), and John Barrasso (R-Wyo.), the CARE Act isn’t the only option out there. Rather, it is one possibility that enacts common-sense reform while maximizing freedom, liberty, and personal choice in health care. They wrote that Republicans “have a plan to create a bridge” away from the ACA that would “provide financial assistance to help Americans keep the coverage they picked for a transitional period” because it would be “unfair to allow families to lose their coverage, particularly in the middle of the year.”
Millions of consumers have had their existing insurance plans cancelled under the ACA, forcing them to negotiate the deeply flawed HealthCare.gov website to seek out new insurance, which often resulted in drastic increases in their premiums and out-of-pocket costs. After all of this, the authors wrote, the American people “do not deserve further disruption from this law.”
Congressmen John Kline (R-Minn.), Paul Ryan (R-Wisc.), and Fred Upton (R-Mich) outlined a similar proposal in an op-ed published in the Wall Street Journal. They wrote that, because “ObamaCare made health insurance even more costly by requiring plans to include Washington-determined benefits and levels of coverage,” health insurance has become unaffordable for millions of Americans without receiving billions of dollars in federal subsidies. Because the law as written offers such subsidies only to people who purchased their insurance through one of the exchanges set up by a state, millions of Americans who bought their insurance through a federal exchange and have been receiving a subsidy could “lose it because of the administration’s illegal actions.” This would leave families across the country signed up for insurance they can no longer afford.
To mitigate this outcome and protect American families, the authors propose a sensible “off-ramp from ObamaCare—a legislative alternative that leads [us] away from an expensive health-care wreck and toward a patient-centered system.”
Their proposal rests on two key principles: making insurance more affordable by “ending Washington mandates and giving choice back to states, individuals, and families,” and supporting Americans in purchasing the coverage of their choosing.
This solution would make coverage more affordable by allowing participating states to opt out of the ACA’s insurance coverage mandates, as well as opt out of the individual and employer mandates. This would result in a wider array of available insurance plans and more choice for consumers. This proposal would also let small businesses band together to purchase group coverage, allow people to purchase insurance across state lines, and enact serious medical liability reform.
This “off-ramp” would replace the current federal tax subsidies with age-adjusted, refundable tax credits to be used for purchasing insurance.
The authors of the WSJ op-ed believe that “no family should pay for this administration’s overreach.” I couldn’t agree more. Any sensible replacement for the ACA will be a vast improvement on the current mess foisted on the American public by the Obama administration. And now the President and Democrats in Congress are asking the Supreme Court to do their work for them and fix a law that can’t be fixed.
As I wrote last year, with the CARE Act and other Republican proposals, the people of this country have clear alternatives to the ACA that offer “decentralized, less regulatory and more consumer-driven” approaches to health care reform that have the potential to cover millions of Americans with insurance at far less cost than the ACA. Here’s hoping the Supreme Court makes the right decision in the coming months so we can all get the health care system we deserve.