The Affordable Care Act’s Two Futures

In the wake of the Supreme Court’s recent ruling in King v. Burwell and the high court’s earlier ruling upholding the constitutionality of the Affordable Care Act, many health policy experts said the law is more firmly “entrenched” than ever and will be around for years to come.

Meanwhile, the recent 50th anniversary of the nation’s other large health programs — Medicaid and Medicaid — got us thinking about the future of the ACA. In those five decades, Medicaid and Medicare have gone through massive changes. So what changes will the ACA experience? Conversely, what must happen for the ACA to be repealed entirely?

Put on your guessing hats and let’s examine what the future holds for the health reform law.

Looking Ahead

The first step to predicting the future of the ACA is to acknowledge that it’s nearly impossible to predict the future of the ACA. In fact, some of the experts California Healthline invited to discuss possibilities for the law declined to do so, citing the complexity of the law and the continuing partisan debate over its existence.

That said, several experts were game to look into the future.

Tim Jost, a law professor at Washington & Lee University and an ACA expert, shared one near certainty: The ACA has set one precedent that is likely to continue to exist into the future. He said, “[T]he idea that people should have access to health care even if they can’t afford it is here to stay.”

However, Jost said some things are bound to change. He called the current insurance situation a “bizarre nonsystem,” in which “higher-income people get generous tax subsidies for employment-related coverage and low income people get tax credits but some middle income people get nothing.” He added that it is “unsustainable” and that the nation instead needs “a system where everyone gets the level of help they need for coverage and cost sharing but not more.”

Henry Aaron, a senior fellow at the Brookings Institution, writing earlier this year, predicted two major future outcomes for the ACA.

The first is dependent on whether the current slowdown in health care spending growth continues. If it does not, there would be additional pressure “on the federal budget,” forcing Congress to intervene. Lawmakers’ actions could go one of two ways, Aaron predicts:

  • “Listen to conservatives,” who have “long sought to increase the financial exposure” of people who purchase coverage or when they get care; or
  • “He[e]d the call of progressives, who have long favored a shift to a single-payer system.”

Second, Aaron predicts that the ACA could contribute to the end of work-based health coverage. According to Aaron, the “Cadillac tax” on high-cost health plans — if it even continues to exist — could convince employers to abandon offering coverage if the cost of insurance continues to rise and more plans are eligible for the tax. Further, Aaron notes that the ACA authorizes the small-business exchanges to allow even large employees to join. Aaron concludes that the end of employment-based health coverage could be attractive as the “U.S. workforce becomes increasingly mobile.”

Perhaps the greatest potential for change within the ACA is tucked into its Section 1332. That’s where the State Innovation Waivers program exists, which beginning on Jan. 1, 2017, would allow states to apply for federal waivers from “basically every major coverage component” of the ACA, according to Health Affairs. Of course, there are limits; the state has to prove that their plan offers the same level of “affordability” and covers a number of individuals “comparable” to the ACA, without increasing the federal deficit. In return, the state would receive the entire amount of subsidy funding that would have gone to its residents. According to Health Affairs, the size of that payment could range from between hundreds of millions to billions of dollars, depending on the size of the state.

According to Health Affairs, “interest in Section 1332 waivers continues to heat up.” At least six states have either passed legislation or are considering creating task forces to examine the possibility of applying for Section 1332 waivers, including:

  • California, where the Senate passed a bill that would permit the state to apply for a waiver to allow undocumented immigrants to purchase coverage through the state’s exchange;
  • Minnesota, which passed legislation instructing the state’s Task Force on Health Care Financing to consider how the state can take advantage of the waivers; and
  • Rhode Island, where the Legislature adopted a budget that included instructions for the state to pursue a waiver.

Goodbye to All That

Despite all this discussion about the ACA’s future path, there’s still no guarantee it will be around forever.

However, another caveat: Just like it’s hard to predict the future of the ACA, it also is hard to predict its downfall. Further, it might be even harder for opponents of the law to achieve their goal. Writing in The American Prospect, Yale University Political Science Professor Jacob Hacker notes that the largest obstruction to repealing the law is cost, because current congressional rules require that any legislative items that increase the deficit must be fully funded. The most recent Congressional Budget Office estimate found that repealing the ACA would add more than $350 billion to the deficit.

Nonetheless, once more unto the breach, dear friends, once more.

How might the ACA go away?

It’s not likely to be through the courts. With the Supreme Court upholding major facets of the law twice, it’s unlikely the ACA will face any further “existential” threats, Ilya Shapiro, senior fellow in constitutional studies at the Cato Institute, told Medscape. “We’ll see lots of other cases, both big and small, but they probably won’t aim at the heart of Obamacare’s constitutionality or operation,” he said.

In speaking with a number of experts, it seems as if the most likely way the ACA could end is through consumer dissatisfaction.

According to Tom Miller, a resident fellow at the American Enterprise Institute who studies health care policy, there are several “built-in implosions” in the ACA. The first is the end of the risk corridors program — under which the federal government subsidizes health insurers to offset the costs of enrolling higher-than-expected numbers of sick people through the exchanges. Miller says the program “disguised … the mismatch between what the law requires to be put into coverage and who actually pays for it and what it looks like it costs.” He predicts that without the cushion of risk corridor payments, premiums will increase significantly and “if it costs that much, people won’t take that coverage and we won’t have enough in the taxpayers’ subsidies to make up the difference.”

Further, as insurers continue their attempt to provide plans with attractive premiums, options for controlling prices become limited. Two strategies they use are increasing cost-sharing and by limiting provider networks. Either way, the total cost to the consumer still grows.

What happens, Miller says, is that the system is “trying to pedal faster while the costs go up and you can’t find enough of other people’s money to pay for it.” As consumers’ costs increase, they might increasingly decide that the coverage is not worth it. If more and more consumers do that — at least 7.5 million people already have made that decision — the exchanges risk entering a death spiral.

Meanwhile, the same Section 1332 waivers that could provide states flexibility to experiment under the ACA also could be used to begin the end of the ACA. Some opponents of the ACA have noted that the same wide latitude the courts have given to the Obama administration in interpreting the law — we’re looking at you, King v. Burwell — could continue into the next administration. If the next president is a Republican, there might be more approvals for waivers that stray far afield from what the original authors of the ACA intended.

Around the Nation

Here’s a look at other stories making the news on the road to reform.

Healthier, happier. A new study published in the Journal of the American Medical Association finds that U.S. residents are in better health and receiving improved health care in the two years since the ACA’s exchanges launched.

The State Experience. While the news is good for some state-based exchanges — witness Covered California’s 4% average premium increase — other states’ exchanges aren’t faring as well. For example, in Connecticut, exchange enrollment has declined from 110,095 at the end of March to 96,966 now.

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Road to Reform The Health Law