What today’s Supreme Court ruling on ACA means for consumers, insurers and states
The Supreme Court upheld the Affordable Care Act today in a 7-2 ruling. The court dismissed a challenge to the law, noting that the states and individuals who were trying to overturn the ACA did not have standing.
This is the third time the ACA has survived challenges in the Supreme Court. In 2012, the ruling was 5-4, and in 2015, the ruling was 6-3. These cases have all had varying arguments and merits, but it’s noteworthy that although the court has become more conservative over the last decade, the justices have increasingly favored the ACA.
In this year’s case, some legal analysts had speculated that the court might overturn the ACA’s individual mandate but allow it to be severed from the rest of the ACA. That approach would have upheld the ACA as well, but the court simply dismissed the whole case. (This thread from Nicholas Bagley is a great summary, if you’re interested in the specifics.) So nothing has changed: The ACA remains intact, and the general consensus is that it’s here to stay.
Is this decision the end of legal challenges to the ACA?
That doesn’t mean the Affordable Care Act won’t continue to face legal challenges — a case that’s currently under consideration in Texas takes aim at the ACA’s requirement that health plans fully cover the cost of certain preventive care. But that case does not seek to overturn the ACA itself, and it appears unlikely that the Supreme Court would take up any other case that might aim to do so.
What does this decision mean for consumers?
There was a collective sigh of relief this morning among people who are enrolled in Medicaid under the ACA’s expanded eligibility guidelines, as well as those who purchase their own individual/family health insurance and rely on the ACA’s premium tax credits, cost-sharing reductions, guaranteed-issue rules and coverage for pre-existing conditions, and essential health benefits.
According to a recent analysis by Charles Gaba, more than 10% of all Americans are covered under Medicaid expansion, ACA-compliant individual/family health plans, and Basic Health Programs, all of which stem directly from the ACA.
As we’ve explained during prior legal and legislative challenges to the ACA, the law provides a vast array of additional consumer protections that extend to most Americans in one way or another. But the people who are most likely to feel a sense of relief today are those enrolled in coverage that either wouldn’t exist or wouldn’t be accessible to them without the ACA. The anxiety about losing health coverage is no longer hanging over these Americans.
Premium subsidies will continue to be available, and the subsidy enhancements provided by the American Rescue Plan will continue to be in effect throughout 2022 – and possibly longer, if Congress acts to extend them.
If you’ve been on the fence about enrolling in individual/family coverage during the special enrollment period that’s currently ongoing in nearly every state, you can now enroll with confidence. And the same is true about signing up for 2022 coverage when open enrollment starts in November.
And although today’s ruling was on a lawsuit that hinged around the individual mandate and penalty, nothing has changed about the ACA’s requirement that most people maintain health insurance: There continues to be no federal penalty for not having health insurance, as has been the case since 2019. (If you’re in California, Massachusetts, New Jersey, Rhode Island, or the District of Columbia, there’s still a penalty for going without health insurance.)
What does the decision mean for health insurers?
Insurers that offer individual/family health insurance have been displaying increasing confidence in the ACA for the last few years. After fleeing the marketplaces/exchanges in 2017 and 2018, insurers started to join or rejoin the marketplaces in 2019. That trend continued in 2020 and 2021, and we’re already seeing more insurer participation in the initial 2022 rate proposals that have been submitted by insurers in several states.
The case that the Supreme Court dismissed today was initially filed in early 2018, so the legal threat to the ACA has been in the background throughout those three years of increasing insurer participation in the ACA-compliant insurance market.
Although insurance companies — and the actuaries who set premiums — tend to be quite averse to uncertainty, the individual market has proven to be profitable for insurers in recent years (after being unprofitable in the early years of ACA implementation). Insurers’ increasing willingness to offer plans in the marketplace is testament to that, despite the uncertainty that the lawsuit created over the last few years. Now that there’s no longer a pending legal threat to the ACA, we might see even more insurers opting to join the marketplaces or expand their existing coverage areas.
What does the decision mean for states?
Although many states have enacted laws designed to protect consumers in case the ACA had been overturned, there’s no getting around the fact that they rely heavily on federal funding that’s provided under the ACA. Without that funding, most states would not have been able to maintain the ACA’s Medicaid expansion or affordability provisions for self-purchased health insurance.
There’s no longer a threat to the funding, which might make states more likely to push forward with additional consumer protections tied to the ACA. Among the most obvious is Medicaid expansion in the 13 states that have not yet accepted federal funding to expand Medicaid eligibility under the ACA.
The American Rescue Plan provides two years of additional federal funding to states that newly expand Medicaid. So far, Oklahoma is the only state making use of that provision, and the state had already planned to expand Medicaid this year as a result of a ballot measure that Oklahoma voters passed last year.
To be fair, the other 13 states have rejected Medicaid expansion year after year, including during the 2020 and 2021 legislative sessions that took place during a global pandemic. Without a change to the makeup of their legislatures, most are likely to continue to do so. But now that the Supreme Court has upheld the ACA yet again, states that newly expand Medicaid can do so without a lingering worry that the federal funding might be eliminated.
It’s also possible that more states might consider reinsurance programs that make use of the ACA’s 1332 waiver provisions. But that would also depend on whether the American Rescue Plan’s subsidy enhancements are extended beyond 2022. Reinsurance programs make coverage more affordable for people who don’t receive premium subsidies. Before the ARP eliminated the “subsidy cliff” for 2021 and 2022, the lack of affordability for households earning a little more than 400% of the poverty level was a very real problem.
But that’s not currently an issue, as those households qualify for subsidies if the benchmark plan would otherwise cost them more than 8.5% of their income. If Congress extends that provision, reinsurance programs would help very few enrollees (and they can also harm subsidized enrollees in some areas, since they reduce the size of premium subsidies). State legislatures will need to keep an eye on how this plays out at the federal level, but without an extension of the ARP’s subsidy structure, we can expect to see more states pursuing 1332 waivers for reinsurance programs in the next few years.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
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