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ACA Update

ACA Update

by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.

The ACA Is the Law of the Land for the Foreseeable Future

  • As you know, a considerable amount of ink was spilled talking about the most recent lawsuit challenging the constitutionality of the “individual mandate” penalty tax, and ultimately, the constitutionality of the entire ACA. I also wrote fairly extensively on the subject, although I was loathe to do it every time. Why? Because unlike many of the ACA supporters who felt that this particular court challenge served as an existential threat to the ACA, I felt that this case was a nothing-burger (that is, I – along with other legal experts – did NOT think that the Plaintiffs in this case would prevail based on their legal arguments, and I felt that people on both sides were making waaayyyyy too much out of this issue).
    • Analysis: The funny thing here is that I think the word “nothing-burger” sums up the most recent ruling from the Supreme Court. Why? Because the Court chose NOT to answer the legal question of whether the “individual mandate” penalty tax was constitutional or not. This also meant that the Court did NOT opine on the constitutionality of the ACA itself. As a result, we will NEVER know how a majority of the Supreme Court Justices really feel about these legal questions, and how they would ultimately rule. Soooooo, for all of the time we spent speculating how the 9 Supreme Court Justices were going to rule in this case, NONE of our speculating was EVER relevant (I too spent time speculating; see my past update below). Also, for all of the back-and-forth on whether the sad passing of Justice Ginsburg would spell the end to the ACA, the time people spent hating on each other was unnecessary. As I think you have surmised, I never liked this case because of the rhetoric that it produced (on both sides), and I am thankful that this ruling is now behind us all (regardless of the result). AND, I am also glad that none of us have to further scrutinize how and why each Supreme Court Justice ruled in this case. In my opinion, that scrutiny would have produced yet another round of hating on each other. The bottom-line is this: This legal challenge is now in the history books, so for right or wrong, the ACA is the law of the land for the foreseeable future.


Anything More to Say?

  • Although the Court side-stepped answering the legal questions on the constitutionality of (1) the “individual mandate” penalty tax and (2) the entire ACA, the significance of this ruling cannot be over-stated (yes, I know that I am contradicting my “nothing-burger” comment above, but I am talking in different contexts here).
    • Analysis: The reason why I call this ruling “significant” is because this ruling stands as precedent that ANY future legal challenge to the constitutionality of the ACA has very little – IF ANY – chance of ever moving forward in a court of law. As a result, efforts to repeal – or mortally wound – the ACA through the judicial system are essentially OVER. Any future efforts to repeal the ACA can ONLY be achieved through an act of Congress. And, with the current political environment – that is, with President Biden in the White House through 2024 and the Democrats controlling Congress at least until the end of 2022 – there is a NEGATIVE 110% chance that any adverse legislation will ever be enacted any time soon. Also, even if the politics do shift in 2024, a strong argument can be made that the “political will” to fully repeal and replace the ACA has now been significantly diminished, and thus, any repeal and replace efforts are less likely to be undertaken. So objectively speaking, I do think it is fair to say that the ACA is the law of the land for the foreseeable future.


The “Repeal and Replace” Era Is Over; The “ACA Expansion” Era Begins

  • On account of the current political environment (i.e., a Biden Presidency and Democratic majorities in the House and Senate), efforts have been – and will continue to be – undertaken to improve and strengthen the ACA (i.e., the era of “ACA expansion” has begun).
    • Analysis: As you know, the Biden Administration and Congressional Democrats have already temporarily (1) increased the ACA’s premium subsidies and (2) eliminated the ACA’s income eligibility limitation. In time, we will know whether these enhancements will be made permanent – or extended for up to 10 years – through a “reconciliation” bill that the Biden Administration and Congressional Democrats will try to enact in the 4th Quarter of 2021. More to this latter point:  As I have been explaining for a while now, Congressional Democrats WILL be trying to enact a “reconciliation” bill in the 4th Quarter of this year.  One question that has been difficult to pin down is what will be included in this “reconciliation” bill? As you know, there have been some twists and turns when it comes to trying to answer this question, but the latest news is that the Biden Administration and the Congressional Democrats are angling to take the “kitchen sink” approach that I articulated in prior updates, where this forthcoming “reconciliation” bill will likely include:
  1. Transportation Infrastructure (roads; bridges; public transportation; and broad-band; etc.):
  2. Human Infrastructure (2 years of free college and free pre-school; a Federal paid leave program; an increased child tax credit; and making permanent the enhanced premium subsidies, etc.): and
  3. Health Care Reforms (like expanding Medicare through lowering the Medicare eligibility age or adding a Medicare “Buy-In” Program; drug pricing reforms; and Medicaid changes (but note, probably NO “public option”)).

Number 3 above is significant because I recently queried whether the Biden Administration and Congressional Democrats will choose to keep the Health Care Reforms (except, making permanent or extending the enhanced premium subsidies) out of the forthcoming “reconciliation” bill, and instead, campaign on “health care” in the upcoming 2022 mid-term elections. The latest news, however, seems to indicate that this will NOT be the case (i.e., at least at this point, it looks like the Biden Administration and Congressional Democrats want to “go for it” on Health Care Reforms). BUT, as the “sausage making process” grinds forward on Capitol Hill, I would NOT be surprised if these Health Care Reforms (except, making permanent or extending the enhanced premium subsidies) ultimately fall out of the forthcoming “reconciliation” bill. Either way, the bottom-line is this: We lived through a period of time where it was reasonable to question the “staying power” of the ACA (over, for example, the past 10 years). NOW, we will start living through a period where it is reasonable to ask whether – and to what extent – will the ACA be improved and strengthened. In other words, the “repeal and replace” era OVER, and the NEW sign of the times is “ACA expansion,” however short- or long-lived this new era may prove to be.


Health Care Policy Update

“Medicare Expansion”?  Lowering the Medicare Eligibility Age VERSUS a Medicare “Buy-In” Program 

  • The latest news also tells us that Congressional Democrats want to lower the age for becoming eligible for Medicare (down to 55 or 60), and also to add coverage for things like dental and vision care. At least for now, it looks like Congressional Democrats are going to try to include this proposal in the forthcoming “reconciliation” bill that will be acted upon in the 4th Quarter of this year.
    • Analysis: I believe that the proposal to lower the Medicare eligibility age will continue to dominate the headlines, but – at-the-end-of-the-day – I could very well see Senate Democrats coalescing around a Medicare “Buy-In” Program, similar to what President Biden campaigned on in the November 2020 election. Before we start speculating on whether either type of “Medicare expansion” may become law, I think it is important to take a step back and understand what lowering the Medicare eligibility age VERSUS a Medicare “Buy-In” Program really means. For example, when you are talking about lowering the Medicare eligibility age, I believe this would be a mandatory change that would say that any American citizen who turns the age of, for example, 55 or 60 (whatever the eligibility age may be), this person would be entitled to Medicare. This is how the current Medicare program works for those who turn age 65. Why is this important? Because based on this understanding, the number of Americans who would be enrolled in Medicare is going to be high because of the mandatory nature of the program. In other words, there is going to be a lot of “take-up” of Medicare coverage if you lower the eligibility age. When it comes to a Medicare “Buy-In” Program, however, I view this as a voluntary program where Americans would be allowed to affirmatively opt into the Program by paying, for example, premiums for their Medicare coverage. Why is this important? Because a strong argument can be made that – due to the voluntary nature of a Medicare “Buy-In” Program – the “take-up” of the Medicare coverage would be much lower than if the Medicare eligibility age was lowered. Another important issue here is reimbursement rates. That is, if you are simply lowering the Medicare eligibility age, you are simply expanding the existing traditional Medicare program, which reimburses medical providers at “standard” Medicare rates, which as we all know are lower rates than private insurance. Couple this with the fact that a lot of Americans would now be covered under Medicare, and you are talking about a BIG reduction in the reimbursement rates that providers would receive. Under a Medicare “Buy-In” Program, however, reimbursement rates could very well be based on a multiple – or percentage – of the “standard” Medicare rates (e.g., 120%, 150%, or 180% of Medicare). Even though fewer Americans would likely choose to voluntarily enroll in a Medicare “Buy-In” Program, providers would likely receive a higher reimbursement rate relative to the rates paid if the Medicare eligibility age was lowered. In my opinion, these issues – among many others – MUST be a part of any analysis of how “Medicare expansion” is going to impact health care coverage and health care spending.


How Will “Medicare Expansion” Impact “Other Health Coverage”?

  • Speaking of analysis, Avalere Health issued a report analyzing how lowering the Medicare eligibility age would impact “other health coverage” (in this report, Avalere analyzed a Medicare program where the eligibility age is lowered to 60 and eligible Americans would enroll in Medicare and forego their existing forms of health coverage).
    • Analysis: In short – at least according Avalere – lowering the Medicare eligibility age would result in some serious “crowd out” (“crowd out” meaning that the people who would shift to Medicare coverage would ALREADY have some form of health coverage, such as an employer-sponsored health plan, a government plan like TRICARE, VA, or Indian Health Services, and also coverage under Medicaid or an “individual” market plan). The biggest “crowd out” would occur in the area of employer-sponsored health coverage, where Avalere estimated that close to 15 million people with an employer plan would shift to the new Medicare program. Avalere also estimated that around 4 million people currently enrolled in an “individual” market plan would shift over to this Medicare program, in addition to close to 3 million people from Medicaid, and 700,000 from TRICARE, VA coverage, and Indian Health Services. Interestingly, out of the 24.5 million people that Avalere estimated would be covered by this expanded Medicare program, ONLY 2 million of them would have been previously uninsured.


The Enhanced Premium Subsidies VERSUS “Medicare Expansion”

  • Under the current Medicare program, Medicare-eligible beneficiaries pay a premium for Part B coverage. Also, because Medicare does NOT currently have any out-of-pocket limits, beneficiaries often times buy a Medigap policy to protect them from out-of-pocket exposure, which comes at a price. Other Medicare beneficiaries choose to purchase a Medicare Advantage (MA) plan, also at a cost.
    • Analysis: According to Avalere’s report – when you factor in the enhanced premium subsidies – a 60 year old with income between 133% and 400% of the Federal Poverty Level (FPL) and enrolled (or eligible to enroll) in a subsidized “individual” market plan would be getting a BETTER deal if they enrolled (or remained enrolled) in that subsidized “individual” market plan. In other words, 60 year olds earning between 133% and 400% of FPL would actually PAY LESS (in most cases) for their subsidized “individual” market plan (due to the enhanced premium subsidies being available to them) relative to what they would pay if they are required to enroll in the expanded Medicare program and they also purchased supplemental coverage like a Medigap policy or an MA plan. This means that if these 60 year-olds are required to move over to Medicare, they would be DISADVANTAGED because they would end up paying MORE for their health coverage (assuming they want out-of-pocket protections and other supplemental coverage through a Medigap or MA plan).  Opponents of lowering the Medicare eligibility age would likely say that Congress is “taking away benefits” for this group of people. BUT, if enrolling in a Medicare program is voluntary – like a Medicare “Buy-In” Program – those 60 years old with income between 133% and 400% of FPL could continue to benefit from the enhanced premium subsidies by opting AGAINST enrolling in the Medicare program. Here, Democratic policymakers could NOT be charged with “taking away benefits” from people. Democratic policymakers would also likely say that lowering the Medicare eligibility age will help middle-income Americans (because Avalere’s report indicated that 60 year-olds with income ABOVE 400% of FPL would PAY LESS under the expanded Medicare program, even with the availability of the enhanced premium subsidies). This just goes to show that the policy priority of making permanent – or at least extending – the enhanced premium subsidies will have a BIG impact on other Democratic policy priorities like lowering the Medicare eligibility age. AND – at least to me – the extent to which this interaction is taken into account by Democratic policymakers will determine whether Congressional Democrats pursue lowering the Medicare eligibility age (i.e., a mandatory program) VERSUS pursuing a Medicare “Buy-In” Program (i.e., a voluntary program). The bottom-line is this: If the enhanced premium subsidies are NOT made permanent or extended for multiple years, then lowering the Medicare eligibility age would likely make sense for Democratic policymakers. HOWEVER, if the enhanced premium subsidies are indeed made permanent or extended for up to 10 years, I think that the “value” proposition of the policy priority of lowering the Medicare eligibility age takes a pretty BIG hit.