The Affordable Care Act: What's Left and What’s Lost

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After nearly a decade, despite taking a beating through litigation, repeal efforts and executive branch hostility, the Patient Protection and Affordable Care Act remains the law of the land and has left an indelible mark on America’s health insurance and health care delivery systems.

Known more commonly as the Affordable Care Act, ACA, or “Obamacare,” former President Barack Obama’s signature legislation sought to reshape the structure of health care financing while also making health coverage, in the form of Medicaid or private individual health insurance, more accessible. Although early stages of the law took effect in 2010, most Americans first felt the ACA’s impact with the rollout of Medicaid Expansion and the state and federal health insurance marketplaces in 2014. In that year alone, nearly 9 million uninsured Americans gained health care coverage. Wisconsin—owing to then-Gov. Scott Walker and his presidential ambitions—refused Medicaid Expansion for BadgerCare Plus, but more on that later.

The ACA used a comprehensive approach to health reform. On the consumer front, the law helped level the playing field and introduce some transparency to select insurance products. Consumer protections—such as the ban against denying coverage for preexisting conditions, the requirement that all individual health plans cover a mandatory set of Essential Health Benefits and free preventive health services and exams—helped standardize expectations among competing plans and issuers.

The law helped introduce online comparison shopping with health insurance marketplaces. These innovations helped consumers make informed choices while giving insurance companies new incentives to offer competitive pricing and benefits packages. Income-based Advance Premium Tax Credits and Cost Sharing Reductions made it more affordable for many consumers to purchase and use health insurance, while a tax penalty (the Individual Shared Responsibility Penalty or “individual mandate”) helped encourage enrollment across age and income brackets in order to build and maintain a robust and diverse risk pool.

Deeper in the weeds, the ACA also took aim at an unwieldy relic of American health policy: the fee-for-service payment model. Whereas the traditional fee-for-service model incentivizes quantity in health care service delivery regardless of the necessity or appropriateness of any particular service, the ACA encouraged a shift toward quality-focused service delivery with an emphasis on care coordination through bundled payment models, Accountable Care Organizations and patient-centered medical homes.

The ACA brought payment reforms, some of which were already tried and tested across the public health sector, including Wisconsin’s BadgerCare program, where private insurance companies receive fixed per-member-per-month fee rates to manage delivery of Medicaid program services. In short, many of the ACA’s payment reform efforts laid the groundwork to innovate in developing ways to control health care costs. Amid a growing trend of mergers between insurance issuers and health care providers, cost-effective care delivery remains a challenge and one that still raises many concerns.

Battered by Republican Attacks

Having now survived more than 70 attempts at repeal or replacement, the Affordable Care Act remains alive as it approaches its 10th year of existence, but it stands as a battered remnant of the original legislation.

The ACA came under attack almost as soon as it became law. One of the first votes of the 2011 congressional session came on a bill titled “Repealing the Job-Killing Health Care Law Act.” From then on, the ACA has endured as the favorite punching bag for a Republican majority legislature and a bitter health care plutocracy angry about the prospect of lost profits once easily secured through pre-existing exclusions and other age-old strategies of fear and greed. Regardless, and somewhat improbably, the ACA has managed to stand against all challengers, although it has suffered crippling blows to some of its most important provisions.

The first big hit came in 2012 with the U.S. Supreme Court’s decision in National Federation of Independent Business v. Sebelius. In one sense, the court strengthened the ACA by upholding the Individual Shared Responsibility Penalty as a constitutional exercise of congressional taxation authority, but it also struck down a provision that required states to expand Medicaid eligibility as a condition for receiving federal Medicaid funding.

With Medicaid Expansion now optional, 19 states, including Wisconsin, initially chose to refuse expansion. Many of those states retained very restrictive income limits on Medicaid eligibility, leaving large numbers of people too poor to qualify for tax credits through the health insurance marketplace but not poor enough to qualify for Medicaid. Several of the initial holdout states did eventually decide to adopt Medicaid Expansion in one form or another, bringing the current number of expansion states to 37, at least on paper.

Wisconsin, in what has been called an act of gubernatorial and now legislative malpractice, remains an outlier in the expansion debate, having elected to offer Medicaid eligibility to adults with income below 100% of the federal poverty level while refusing to pursue the full expansion that would qualify for enhanced federal matching funds. Wisconsin still stands on the sideline, watching federal funds for Medicaid for BadgerCare Plus dollars flow to other states. That total now exceeds $1 billion lost to state taxpayers.

Other lawsuits challenged everything from mandatory contraceptive benefits to the legality of the IRS paying premium tax credits. But the ACA’s next big hit came from Congress rather than the courts. Late in 2017, a provision of the Tax Cuts and Jobs Act reduced the tax penalty for going without insurance to zero dollars, effectively negating the Individual Shared Responsibility Penalty. At the time, the Congressional Budget Office estimated that negating the tax penalty would increase the number of uninsured Americans by 4 million in 2019.

Rising Numbers of Uninsured Americans

Predictably, the latest census figures show that the number of Americans without health insurance increased by nearly 2 million in 2018—the first increase in uninsured rates since the Great Recession. That increase may have been spurred in part by the elimination of the Individual Shared Responsibility Penalty. Even though the penalty was technically still in place for the 2018 tax year, after an executive order from the Trump administration, the IRS signaled that it would not enforce the penalty for 2018 returns. It seems more likely, though, that the uptick in the uninsured rate is the cumulative result of a multipronged effort by the current administration to subject the ACA to a death by a thousand cuts.

Donald Trump came into office under the banner of ACA repeal and wasted no time jumping into efforts to undermine the law. On his first day in office, the president issued an executive order encouraging federal agencies to ignore any provision of the ACA that would “impose a fiscal...or regulatory burden” on individuals or state governments. That order would be followed by a rule allowing higher out-of-pocket costs in ACA insurance plans, a deliberate failure to fund subsidies for low-income insurance purchasers, a government funded anti-ACA media campaign, a cut in funding for enrollment assistance and outreach organizations, a shorter time period for enrolling in ACA plans and a gutting of the ACA’s marketplace for small business health plans. In the end, a fierce legislative effort to repeal the ACA was thwarted by a momentous “thumbs down” vote by Republican U.S. Sen. John McCain, and the ACA survived.

Undeterred by failed efforts at legislative repeal, the Trump administration has actively promoted less robust “alternatives” to ACA health plans, such as association plans and short-term health plans. If those cheaper-but-skimpier insurance options, known as “junk plans,” succeed in drawing healthier consumers out of the ACA marketplaces, insurance companies may follow close behind. 

In the end, Trump may not need to wait and see whether his policies lead to a slow demise for the ACA. In the latest round of litigation, Texas v. United States, Trump’s Department of Justice has not only refused to defend the law, but has actually joined sides with the plaintiffs, contending, once again, that the individual mandate is unconstitutional. As the argument goes, the mandate (the mandate that now carries no penalty) is essential to the entire functional scheme of the ACA. Therefore, if the mandate is unconstitutional, the entire law must be invalidated. A federal court of appeals heard oral arguments on the case in July. Ultimately, the issue will likely be reviewed once again by the U.S. Supreme Court.  If the court rules in favor of the plaintiffs, it may end up being Texas, not Trump, that puts the final nail in the ACA’s coffin.

For more information, visit healthwatchwisconsin.org.