The Affordable Care Act

The landmark health care legislation faces ongoing challenges.

By Alpha Lillstrom Cheng, JD, MA

July 7, 2019

Major legislation that impacts most Americans often receives a lot of feedback—in the form of support as well as opposition.

The Affordable Care Act (ACA) has friends and foes. So did Medicare when the concept of government-supported health care was in its infancy.

History of government-supported health care

Since the turn of the twentieth century, policymakers and influencers have been discussing what role the government should play with regard to paying for and removing barriers to access health care for Americans. As early as 1915, reformers developed a model health insurance bill for state legislatures to consider. When that failed, others attempted to include a study of health insurance coverage in the 1935 Social Security bill. Fearing the controversy would jeopardize the enactment of the Social Security system, President Franklin Delano Roosevelt refrained from pushing the health insurance issue and ordered the line removed from the Social Security Act.¹

By the middle of the twentieth century, the aspirations for national health insurance had been pruned back to establishing government coverage for a single segment of the population—the elderly. Medicare’s architects built upon the Social Security model for its eligibility rules, financing, and administration. In 1964 the legislation fell short of passage in Congress. It wasn’t until after the 1964 presidential election, which ushered in a White House as well as both the House of Representatives and the Senate controlled by Democrats, that the bill garnered enough support for passage. In 1965, Medicare—the system of government-based health insurance and guaranteed coverage for those who are over the age of 65—and Medicaid—coverage for certain low-income persons—became law. In 1972 persons with disabilities and end stage renal disease were added to the list of those who qualify for health coverage under Medicare.

While the political circumstances were different, there were some similarities. In both cases, the idea for the policy received mixed reviews and was strongly opposed by some powerful interest groups who were vocal with concerns that the policy would expand into a broader national health insurance program for all Americans. In both circumstances, the president and both houses of Congress were controlled by Democrats seeking to respond to what they identified as a significant social ill that could be addressed by increasing access to health care coverage and reducing the costs borne by individuals paying for their care. By making Medicare a universal program open to all seniors, with eligibility for benefits earned through working, its advocates sought to avoid the stigma associated with welfare as well as the political weaknesses, including underfunding and tepid public support, often seen in government programs that serve only the poor.² The architects of the ACA were inspired by this model, but because the benefits afforded to the public were to be universally accessible (without the benefits having been earned through working), the parallels are incomplete.

ACA challenges in all three branches of government

The ACA has faced significant challenges and opposition both before and after the landmark legislation became law.

Legislative Activity

The legislation endured over a year of debate and repeated revisions by members of Congress. This was because of strong ideological differences between political parties and internal disagreements between Democrats over what the legislation should include and how far-reaching the policy should be. Due to the increasing engagement of the public in federal policy, both sides of the debate were echoed in public discourse and in the media. Final passage of the legislation was in March 2010, but that was simply a milestone along the path of legislative challenges and pushback. Those who felt strongly about the policy in the debate phase continued to voice their opinions; the issue has been an important—and often deciding—factor in federal elections since 2010. Despite many political promises and significant legislative activity, efforts to directly repeal and replace the ACA legislatively have failed.

This reality has led policymakers to seek other avenues through which to modify the parameters and requirements imposed by the ACA, the most significant of which was the inclusion of a provision in the 2017 Tax Cuts and Jobs Act,³ which reduced the fine associated with an individual not being covered by a qualified health insurance plan to zero. Upon being signed into law in December 2017, the tax reform package effectively repealed the “individual mandate.” This provision enabled lawmakers to attack the ACA from another angle—to exploit its Achilles heel. This strategic approach opened the door for new avenues through which to challenge the integrity of the law.

Executive Branch Efforts

After it became clear that the legislative branch was not going to strike down or substantially replace the ACA, President Trump’s administration then utilized its regulatory powers to make changes within the scope of their authority under the ACA. (Refer to the June, 2018 Impact article here.) In 2018, it restored the duration of short-term health insurance plans from three months to one year—this type of plan is not required to provide the ACA-required essential health benefit coverage, whereas standard private insurance plans with annual renewals are required to provide this baseline of coverage. Another example is the administration’s goal of expanding utilization of Association Health Plans (AHPs) by allowing disparate individuals to form an association for the sole purpose of purchasing a health plan. Similarly, these AHPs would not be required to cover essential health benefits. PPS weighed in on both the duration of health plans and AHP proposals in the form of public comment letters. The administration has succeeded in allowing short-term health plans to last up to a year, but its efforts to expand the utilization of AHPs have been rejected in court.

In the Courts

After pursuing both legislative and limited regulatory avenues, the third branch of government—the courts—are also being utilized by those who seek to strike down the ACA. In the case of the AHPs, in March 2019, a judge found major provisions of the Department of Labor’s (DOL’s) final rule on AHPs to be unlawful.⁴ The judge held that the rule’s definition of “employer” to include working owners and groups without a true commonality of interest was unreasonable and was “clearly an end-run around the ACA.”⁵ The DOL must now decide whether to rescind the rule altogether, revise it, or appeal the decision to the Court of Appeals for the D.C. Circuit.⁶ This legal battle will only impact the regulation around the expansion of AHPs, not the ACA itself.

The judicial challenge to the entire ACA law was launched by a coalition of 18 Republican attorneys general and governors. The coalition is arguing that when the United States Supreme Court evaluated the constitutionality of the ACA in 2012, the U.S. Supreme Court decided that the ability of the government to compel Americans to have health insurance coverage was granted by Congress’ constitutional authority to tax and spend, and that authority was exercised when the legislation included a fine (the “individual mandate”) that could be imposed by the Internal Revenue Service as a tax.

However, as mentioned previously, with the enactment of the 2017 Tax Cuts and Jobs Act, the fine for not obtaining health insurance was reduced to zero. Therefore, the argument of the Republican attorneys general is that the tax has been functionally removed, resulting in a relinquishment of Congress’ taxing authority, and therefore the whole law must be struck down. In December 2018, a federal judge in a lower court in Texas agreed and filed a decision that declared the ACA to be unconstitutional. A coalition of attorneys general of 17 Democrat-governed states appealed the lower court decision.

In May 2019, the Department of Justice (DOJ) filed a legal brief with the conservative-leaning 5th Circuit Court of Appeals that supports the decision of the lower court. The administration’s position is that the lower-court decision should be upheld, and as a result, the entirety of the ACA should be struck down. The DOJ’s brief acknowledged that the administration had previously argued that parts of the law could remain in effect even if the individual mandate were struck down but the administration had come to believe it could no longer defend that position. It is important to note that the mere filing of the DOJ’s brief won’t change anything for the law or for those who have insurance through the ACA, it is simply weighing in on what it hopes the decision will be.

The counterargument by the Democrat-led states is that the amount of the fine is immaterial, and that the zero-dollar amount is not the equivalent of repealing the tax/fine and that the ACA still retains the authority to impose a fine. If the U.S. Supreme Court upholds the argument that the entire congressional authority hinges on whether or not there is a tax of more than zero-dollars imposed on those who are uninsured, then the entire law could be invalidated. If that were the case, Americans would lose preexisting condition protections, the ability of dependents to stay on their parents’ health insurance up to age 26, and other provisions of the ACA that have become popular on both sides of the aisle.

The 5th Circuit Court of Appeals is scheduled to hear the appeal in July 2019. Because of the high stakes and the political aspect of the law, the appeal process is likely to continue and end up before the U.S. Supreme Court. When that happens, it will be the third time that the court would rule on a constitutional question related to the ACA. As explained earlier, the court upheld the law in 2012 and rejected another challenge to it in 2015. A significant wild card impacting the ability to predict the outcome of a new Supreme Court challenge is that Justices Gorsuch and Kavanaugh have joined the bench since the issue was last evaluated—both of whom are expected to be more on the conservative end of the spectrum.

In the meantime

As the case makes its way through the judicial hurdles, I anticipate supporters of the ACA will pursue both federal and state-based legislative avenues to shore up or safeguard some parts of the law—particularly those that are very popular such as coverage for essential health benefits, ensuring that consumers are able to be insured even if they have a preexisting condition, and that their insurance can’t be rescinded based on identifying a preexisting condition. These issues are some of the health coverage principles identified in the PPS Legislative and Advocacy Priorities for the 116th Congress.

While it is expected that the Democrat-controlled House of Representatives will be actively supporting legislation to tweak and strengthen the ACA, similar efforts in the Senate will be less likely to succeed. However, some moderate Republican senators have expressed concern that a full rejection of the ACA would take away protections they have publicly supported, such as coverage for preexisting conditions and the ban on rescission. These senators are also acknowledging the political risks and are expressing concern that House seats were lost in 2018 because of strong support for these provisions and voter concerns that Republicans weren’t interested in ensuring those protections.

Impact on upcoming elections

As with all hot-button political issues, both parties are looking into how to best utilize this conflict for political and fundraising gain. They are also aware of how a ruling would impact the 2020 elections. CNN’s exit polling from the 2018 elections showed that voters viewed health care as the most important issue facing the country and 69 percent of voters said that health care in the United States needs “major changes.” Critically, the majority of voters said that Democrats would better protect preexisting conditions over Republicans, and their votes (and the outcomes of House races) reflected that.

While the Supreme Court is not required to hear all cases submitted to it for appeal, it is likely that it will hear this challenge to the ACA. The timing of the appeals process could possibly tee up the case to be heard during the Supreme Court’s fall 2019–summer 2020 term. The most controversial case decisions are usually released during the last few days of the term. Should this scenario play out, the Supreme Court could finally decide the fate of the ACA and render its decision in late June 2020—mere months before the presidential election. Any Supreme Court action on the matter—even if it denied to hear the case—is certain to impact the political conversations, priorities, and rhetoric for all candidates for federal office.

Conclusion

As policymakers and regulators continue to grapple with the impact of the Affordable Care Act, and attempt to make changes to how the law impacts providers and consumers, there will be opportunities for advocacy. PPS will weigh in on these issues and keep its members informed about how they may be part of the conversation.

References:

¹www.asaging.org/blog/political-history-. Accessed May 2019.

² www.asaging.org/blog/political-history-. Accessed May 2019.

³ Public Law 115-97, 131 Stat. 2054

⁴https://affordablecareactlitigation.files.wordpress.com/2019/03/5940153-0-12659.pdf. Accessed May 2019.

⁵https://affordablecareactlitigation.files.wordpress.com/2019/03/5940153-0-12659.pdf. Accessed May 2019.

⁶www.healthaffairs.org/do/10.1377/hblog20190329.393236/full. Accessed May 2019.

Alpha Lillstrom Cheng, JD, MA, is a registered federal lobbyist and a principal in the firm Lillstrom Cheng Connolly, which has been retained by PPS. An attorney by training, she provides guidance to companies, nonprofit organizations, and political campaigns. For six years, she served as Senior Policy Advisor and Counsel for Health, Judiciary, and Education issues for Senator Jon Tester (Montana) advising and contributing to the development of the Affordable Care Act, as well as working on issues of election law, privacy, government transparency and accountability.

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