The Affordable Care Act at age five: a look back and a look ahead

Somewhere near their first birthdays, children learn to walk. At three years of age, they might start pedaling a tricycle, and at age five, they are poised to enter kindergarten. March 23, 2015, marks the fifth anniversary of the enactment of President Obama’s signature health reform law, the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Has the ACA, at five years of age, made the same amount of progress as a child?

Critics argue that the ACA has failed, but proponents say that it is moving closer to achieving its goal of quality, affordable health care for all Americans. As a law that seeks to expand health insurance coverage for Americans, improve the functioning of health insurance markets, and control the efficiency and quality of health care, the ACA has “had a major positive impact, and one that will continue to bring efficiencies over time,” said Keith Fontenot, the managing director of government relations and public policy at Hooper, Lundy & Bookman, P.C.

Regardless of whether it has met its milestones, it is clear that the ACA has already made an impact. It has had significant effects on the uninsured rate, the affordability of coverage via the provision of subsidies, the use of preventive services, and the actions of large employers and insurers. Many ACA provisions have gone into effect over the last five years; however, due to design or delay, a number of significant reforms have yet to be implemented or fully realized.

This White Paper looks at the ACA’s impact on Medicare and Medicaid issues and its impact on the private insurance market. It also looks at major ACA changes facing health care providers and employers in the coming months.

Read further, “The Affordable Care Act at age five: a look back and a look ahead.”

Notre Dame contraception battle revived

More than one year after the Seventh Circuit Court of Appeals denied the University of Notre Dame’s plea for relief from the Patient Protection and Affordable Care Act’s (ACA’s) (P.L. 111-148) contraception mandate exemption requirements, the U.S. Supreme Court ordered the appellate court to revisit the issue. The High Court granted Notre Dame’s petition for writ of certiorari, vacating the Seventh Circuit’s order and remanding the case in light of the Supreme Court’s decisions in Burwell v. Hobby Lobby Stores, Inc. (Hobby Lobby) and Wheaton College v. Burwell (Wheaton College). Notre Dame’s contentions focused on the allegedly substantial burdens imposed on it by the requirement that it complete EBSA Form 700.

Notre Dame

Despite its status as a Catholic university, Notre Dame does not meet the ACA’s definition of a religious employer. In order to be exempt from the ACA’s requirement to provide FDA-approved contraceptive coverage to its employees and students, the university was required to execute EBSA Form 700, certifying that it was a nonprofit entity holding itself out as a religious organization and that it opposed the provision of contraceptive services. Upon execution, Notre Dame’s insurers would become responsible for providing contraception coverage. However, Notre Dame argued to the Seventh Circuit that the requirement imposed a substantial burden on its exercise of religion because completion of the form would serve as a trigger to provide contraceptive coverage, in contravention of its religious beliefs. The appellate court disagreed, referring to the form as a warning, rather than a trigger, and stating, “It enables nothing.” The court denied the case (see Notre Dame signs EBSA Form 700-Certification, not substantially burdened, Health Reform WK-EDGE, February 26, 2014).

Supreme Court litigation

Three months later, the U.S. Supreme Court issued its landmark ruling in Hobby Lobby, holding that the mandate could not be applied to for-profit closely-held corporations with religious objections to the mandate because the regulations violated the Religious Freedom Restoration Act (RFRA) (42 U.S.C. §§2000bb et seq.). Although it declined to rule on whether the provision of contraception was a compelling government interest, the Supreme Court determined that the mandate was not the least-restrictive means of furthering that interest. One week later, the Court granted an injunction to Wheaton College, a Christian liberal arts college, enjoining the government from requiring Wheaton to execute EBSA Form 700, which Wheaton believed, would “make it morally complicit in the wrongful destruction of human life.” In doing so, the Court noted the existence of a circuit split as to whether to enjoin the requirement that religious nonprofit organizations use EBSA Form 700 (see Supreme Court: religious college doesn’t have to file contraception mandate opt-out form, Health Reform WK-EDGE, July 9, 2014).

Certiorari and remand

In light of the Hobby Lobby and Wheaton College decisions, Notre Dame filed a petition for certiorari with the Supreme Court, asking it to vacate the Seventh Circuit decision and remand it for consideration. Notre Dame argued that the Hobby Lobby decision focused on the “‘consequences’ of noncompliance,” while the Seventh Circuit decision, “focused on the actions that Notre Dame was compelled to take.” Furthermore, according to Notre Dame, the Hobby Lobby decision left it to plaintiffs to determine whether an act was sufficiently connected to conduct as to make it immoral. It renewed its argument that the mandate substantially burdened Notre Dame’s exercise of religion, yet neither served a compelling government interest nor was the least restrictive means of doing so.

The Supreme Court granted the petition, vacating the Seventh Circuit’s decision and remanding the case to the appellate court. Mark Rienzi, Senior Counsel at the Becket Fund for Religious Liberty, which filed an amicus brief in the case, referred to the grant as, “a strong signal that the Supreme Court will ultimately reject the government’s narrow view of religious liberty.”

Highlight on Texas: Even Exchange Concerns are Bigger

A recent nationwide Gallup survey reported that Texas’ uninsured rate dropped more than 2 percent between 2013 and 2014, as more people were provided health coverage under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). But the state still had the highest uninsured rate nationwide. Nationally, the overall uninsured rate fell by 3.5 percent in 2014. Despite its uninsured rate drop, Texas is the only state in which more than 20 percent of its population is without health coverage. The high percentage is partly a consequence of the state’s reluctance to expand Medicaid or establish a state-operated marketplace.

The ACA provides for the establishment of Health Insurance Exchanges through which individuals can purchase health insurance. It also authorizes federal tax credits to low- and middle-income Americans to help offset the cost of the health coverage. By not setting up a state-operated marketplace, Texas relies upon exchanges run by the federal government. In the last open enrollment cycle that ended on February 15, 2015, more than 1 million Texans signed up for coverage on the federal Exchange. This places Texas second overall in the total number of enrollees among the 37 states on the federal marketplace.

Without a state-operated marketplace and a large number of enrollees in the federal Exchange, however, the Texans that did sign up for health insurance may be severely impacted by the eventual decision in King v. Burwell. In that case, individual residents of Virginia argued that the phrase “established by the State” in an implementing provision of the ACA made clear that health insurance subsidies were only available to enrollees living in the 16 states that set up their own exchanges. The individuals argued that the IRS erred in offering tax credits to individuals who lived in states that have federally run exchanges. As noted, Texas is one such state.

With oral argument scheduled for early March, health insurers in Texas are keeping a watchful eye on the Supreme Court’s eventual determination. If the high court finds that the subsidies were unlawful, then their elimination could affect the overall health insurance market. In Texas, 86 percent of the residents who purchased insurance on the federal Exchange received a tax subsidy that reduced their premiums by an average of 72 percent. Some industry groups have suggested that the elimination of subsidies would result in young and healthy enrollees leaving the Exchange and choosing to pay the ACA penalty rather than higher insurance prices. The loss of these younger, healthier individuals would mean that insurance rolls would have more individuals requiring medical care than not. As a consequence, insurers losing out on a larger pool of enrollees to fund health insurance plan payments could raise premiums for all of those insured, not just those who enrolled under the ACA, because of this exposure to higher risk enrollees.

In 2012 former Texas Governor Rick Perry had written a sharply worded letter to the HHS, refusing federal money to create a state-operated marketplace as a “brazen intrusion” on the state’s sovereignty. Then, just as now in Texas, political support from anti-ACA legislators, along with constituent outcry about federal government involvement, bolstered Perry’s stance. With the looming consequences of King v. Burwell, however, the current Texas administration has been quiet about opposition to a state-operated exchange.

Do the Plaintiffs in King v. Burwell Have Standing Issues?

Much has been argued, discussed, analyzed, and predicted in regard to the potential outcomes in the upcoming Supreme Court matter King v. Burwell (4th Cir., July 22, 2014). Yet, as the date of the Court’s hearing approaches, new information has emerged that is relevant to the very foundation of matter, in a procedural sense. In particular, certain facts have come to light that could undermine the standing of the multiple individual plaintiffs in King. Determining whether the plaintiffs have proper standing in King is no small matter as the potential implications of a plaintiff-friendly decision in King could have disastrous consequences in terms of the future of the implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148).

King in a nutshell

The plaintiffs in King—David King, Douglas Hurst, Brenda Levy, Rose Luck—are challenging the IRS’ interpretation of sections 1321 and 1311 of the ACA. In particular, the plaintiffs claimed that IRS, through the implementation of the Internal Revenue Code Section 36B, inappropriately applied premium tax credit subsidies, which were available to state-run Health Insurance Exchanges under section 1311 of the ACA, to federally-facilitated Exchanges, which are allowed to be administered by the federal government pursuant to section 1321 of the Act. In other words, King, Hurst, Levy, and Luck claim that IRC Section 36B oversteps the authority granted in the ACA, which only allows for subsidies for those enrolled through state Exchanges, and allows individuals who enrolled through the federal Marketplace to be eligible for those subsidies as well. The Fourth Circuit rejected that argument and deferred to the IRS’ interpretation of the ACA through section 36B.

What is especially interesting about the King matter is that the High Court decided to hear this matter at all and why it did so. On the same day the King matter was decided by the Fourth Circuit, the D.C. Circuit Court of Appeals decided, via a three-judge panel, virtually the same issue and came out with the opposite opinion—that is, that the ACA did not explicitly provide that subsidies would be available to those enrolling in federally-facilitated Marketplaces and that the IRS interpretation as such was improper (Halbig v. Burwell, D.C. Cir. July 22, 2014). Despite the fact that the D.C. Circuit was set to re-hear Halbig en banc, the Supreme Court stepped in and decided to treat King and Halbig as a circuit split, causing the D.C. Circuit to hold the Halbig hearing in abeyance as it awaited the ruling by SCOTUS.

What is even more pressing, when considering how we got to this point with regard to this issue, is the potential fallout of a reversal of the Fourth Circuit opinion. Many experts have opined on what would become of the individual mandate and the availability of coverage (and of subsidized coverage) through the Exchanges if some states continued to opt out of creating Exchanges and if the High Court said that subsidies would not be available for those enrolled in the federal Marketplace. In particular, some experts are bracing for the worst in this scenario and predicting that if such circumstances were to come to fruition, the entire structure of the ACA could be threatened.

Standing issues in King?

The week of February 9, 2015, less than a month away from the scheduled arguments before the Court, brought about a new King controversy. This time the upheaval was focused on the four individual plaintiffs themselves and potential issues in standing in the matter. Specifically, sources reported that one of the plaintiffs, Luck, used a Virginia (a state that has opted to forgo creating a state-based Exchange and rely on the federally-facilitated Marketplace) motel address to describe her residency and to receive subsidy payments. It was reported that Luck no longer resides at the motel, which has a 28-day stay maximum. Additionally, according to the same reports, the standing of plaintiff King was also questioned as facts emerged that suggest he likely qualifies for other sources of benefits outside the Exchange coverage, namely veterans’ benefits. In that same light, Hurst, another Plaintiff, is also reported to be a veteran and may be qualified for such coverage. Finally, it was also alleged that plaintiff Levy’s income may have been previously misstated and that her true income would be too low to make her subject to the individual mandate under the ACA.

In order for the Supreme Court to find a lack of standing in the matter, all of these allegations against each of the four plaintiffs would have to be true, as each of the plaintiffs would have to lack standing for a basis of dismissal to exist. While the validity of these allegations have yet to be fleshed out, in the scenario that they can all be confirmed, King, which has the potential to dismantle a large source of subsidies (all of those directed to those enrolled in federally-facilitated Exchanges in 37 states) and potentially the underpinnings of the entire health reform initiative, could be dismissed on a procedural issue.