March 11, 2020 | Benefits Management | Posted by Bob Greene, Senior HR Industry Analyst at Ascentis
The ACA Blows Out Ten Candles This Year
In a few short weeks, the Affordable Care Act will turn ten years old. It was signed into law on March 23, 2010, and represented the largest piece of single legislation in our history regulating health insurance across the United States. The Patient Protection and Affordable Care Act, or ACA (AKA, ObamaCare) was perceived by its proponents to include a balanced set of mandates for three constituencies: health insurers, employers, and individual healthcare consumers (taxpayers.) These mandates were seen by the law’s backers as: (a) essential to stem the tide of rising healthcare costs, (b) the economic burden reality of uninsured patients (constantly receiving unreimbursed care), (c) a near-total ignorance of wellness and disease prevention principles builtway to account for gaps into existing health insurance policies and (d) record personal bankruptcies due to healthcare bills for far too many Americans. Congressional and Senate majorities on the other hand, for years after the law’s passage, found fault with many of its provisions and attempted more than 50 times to repeal it. Despite this, the law continued to stand.
Public sentiment around the ACA has been a fascinating study in contrasts. The Kaiser Family Foundation (kff.org) has been surveying and studying Americans’ views of the ACA since its inception, and a great chart of that sentiment can be found here. From relative approval ratings of 41% favorable/44% unfavorable in May, 2010, the current view is 55% favorable/37% unfavorable in February, 2020. That’s a net positive movement in public opinion of 21 points.
Reviewing the change in “consumer sentiment” from the perspective of metrics would indicate its success. The number and percent of uninsured (nonelderly) Americans had dropped from a high of 46.5 million (17.8%) in 2010, to a low of 26.7 million (10.0%) in 2016 – a 44% decrease. It’s worth noting that the uninsured rate increased by 0.2% from 2016 to 2017 and 0.2% from 2017 to 2018. Although too early to predict at this writing, the total repeal of the individual health insurance mandate effective January 1, 2019 likely caused a much larger jump in uninsured individuals from 2018 to 2019.
The ACA Has Changed
While the law has been in existence for ten years now, it has certainly adjusted during that time. Instead of changes being made from an repeal, they have taken form by Executive Order and administrative fiat. Indeed, the current Administration announced two key Executive Orders in anticipation of repeal of the law: EO13765 (“Executive Order Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal” –the intent of that Order is apparent in its title), which was signed January 20, 2017, and EO13813 (“Executive Order Promoting Healthcare Choice and Competition”), which was signed October 12, 2017.
As a result of this Executive branch action, and repeals being discarded, competitive alternatives to ACA-compliant health plans have been introduced. These have included the expansion of Short-Term Limited Duration Insurance (STLDI) and Association Health Plans (AHP). STLDIs, prior to this Administration’s executive actions, could not exceed 90 days in duration; they now can cover up to 364 days per policy issuance, with renewability up to 36 months total. STLDIs can now circumvent ACA consumer protections in many ways: (a) they allow pre-existing conditions exclusions, (b) they need not meet minimum essential coverage standards (of the ACA’s 10 “Essential Health Benefits”), and (c) they can bring back annual and lifetime reimbursement limits.
Indeed, a recent study of currently available STLDIs by Kaiser Family Foundation (kff.org), found that: (a) only 29% of plans covered outpatient prescription drugs, (b) 38% of plans covered mental health or substance abuse, and (c) 0% of plans – covered maternity benefits. Some plans limited the number of doctor visits for which the insured was eligible, and some increased the out-of-pocket maximum (the “stop-loss” maximum for insured persons) to three to five times the 2020 ACA-allowable limit of $8,200 per year for single coverage.
Association Health Plans (AHPs) have a storied and controversial history. The current Administration issued a final rule in 2018 which would have greatly expanded AHPs and the flexibility small employers would have had to form them and buy health insurance. (For a good explanation of the recent history of AHPs, see this Mercer article.)
Legal Challenges to the ACA Continue
There have been a series of challenges to the ACA over the last ten years. It was found constitutional at least three times by the US Supreme Court. The most fundamental of these challenges, a case entitled NFIB v. Sebelius (567 US 519), decided in June, 2012, found that the ACA’s individual mandate was a valid exercise of Congress’ power under the Taxing and Spending Clause. An additional case decided in 2015, King v. Burwell (576 US ___) confirmed the constitutionality of the law.
Then in 2017, the President signed into law the Tax Cuts and Jobs Act, which repealed the ACA Individual Mandate effective January 1, 2019. On that basis, 20 state Attorneys General sued, arguing that since the Supremes had upheld the law under the Taxing Clause, and now that there was no individual tax associated with it, the ACA must therefore fall. Over the ensuing two years, various states and elements of the federal government have switched sides in a frenzy of political posturing, while both a federal district court, and then the 5th Circuit Court of Appeals have sided with the states seeking to strike down the ACA. On March 2, 2020, the US Supreme Court signaled it would review the case (granted certiorari), but turned down a request for expedited review, meaning a decision most likely will be delayed until June, 2021.
What’s An Employer To Do?
It’s simply impossible for employers to predict the outcome of so many variables related to the future of the ACA. From the results of the November 2020 election to a potential decision by the Supreme Court in Texas v. Unites States, which most likely won’t come until June 2021, as well as lower court rulings on Association Health Plan expansion and various other suits, the series of moving parts is, at best, dangerous to well-planned healthcare design.
Still, employers can and must always be asking themselves: what is our organization’s healthcare policy? What kind of health insurance do we want and need to offer our employees? This can and should be based on the same guiding principles of benefits and compensation as they have always been:
(a) what would we ideally offer if price were no object?
(b) what MUST we offer to remain competitive for the best talent?
(c) what plan, financing, and wellness innovations can we incorporate into our benefits programs to cost-shift to employees in an acceptable way?, and
(d) how can we better educate our employees to be smart consumers of health insurance, which will inure to both our employees’, and our organization’s, benefit?
Check out our webinar: The Affordable Care Act Turns 10 Years Old: Where to From Here? on March 23, 2020.
For those interested in a more comprehensive look at the ACA on its tenth birthday, published on March 3, 2020: The Trillion Dollar Revolution: How the Affordable Care Act Transformed Politics, Law, and Health Care in America, by Ezekiel Emanuel and Abbe R. Gluck, available in both paperback and e-book.
Bob Greene currently serves as Senior HR Industry Analyst at Ascentis. Bob’s 40 years in the human capital management industry have been spent in practitioner, consultant and vendor/partner roles. As practitioner, he managed payroll for a 5,000-person bank in New Jersey. As consultant, he spent 8 years advising customers in HRMS, and payroll and benefits system design as well as acquisition strategies. Bob also built a strategic HCM advisory practice for Xcelicor (later acquired by Deloitte Consulting.)