What the Latest Court Ruling on the ACA Means for Your Health Insurance
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A Texas judge who declared the Affordable Care Act unconstitutional in early December says it can remain in place while legal challenges play out.
Late Sunday, Judge Reed O’Connor issued a stay regarding his decision in a lawsuit brought by a group of Republican state attorneys general that declared the ACA invalid. The news brings more certainty to the individual health insurance markets. And it allays fears, at least for the near-term, about any immediate upheaval that a suspension of the ACA could have had on health insurance for many Americans.
While O’Connor thinks the ACA is no longer valid because the penalty requiring that people have health insurance was eliminated Jan. 1, he acknowledged that if his order went into immediate effect, “many everyday Americans would face great uncertainty during pendency of the appeal.”
His ruling shook the health insurance markets because it came on Dec. 14, just one day before the sign-up period for ACA health insurance was ending in most states. About a half dozen states have extended ACA open enrollment, some through the end of January.
The Republican attorneys general who brought the lawsuit argued that because the ACA's "individual mandate"—which requires most people to have health insurance or pay a fine—is no longer in effect, the entire healthcare law tied to it should be thrown out.
A suspension of the law would have a major impact because the ACA law, which went into effect in 2010, made significant changes in how health insurance works in the U.S. “It would affect virtually every American regardless of what type of health insurance they have,” says Tim Jost, a health policy expert and emeritus professor at the Washington and Lee University School of Law. “Millions of people would lose significant protections if this case is upheld.”
In addition to creating marketplaces where Americans can buy individual health insurance and get income-based subsidies to reduce premiums, the ACA also allows states to expand Medicaid coverage to a larger group of people with support from federal funds. Some 36 states and Washington, D.C. have expanded Medicaid, including four states for the first time starting next year.
The ACA also requires insurers to guarantee health insurance coverage to all people regardless of their health status, and they can't charge people more based on gender or a preexisting health condition. It limits how much more older people can be charged for coverage compared with younger people. It banned annual and lifetime caps on how much your insurance will cover. It allows children to stay on their parents’ health insurance until age 26. And it mandated that a host of preventive-care services be provided free.
Lesser-known parts of the law include requiring restaurants to put calorie counts on menus and mandating background checks on all nursing home staff.
The Threat of Lingering Uncertainty
The eventual outcome of this legal challenge is far from clear. The merits of the argument to strike down the whole ACA have been questioned by both conservative and liberal legal experts, who say that when Congress acted to remove the penalty, it didn't want to get rid of the rest of the ACA. The lawsuit has been criticized by many in the healthcare industry, including medical professionals and health insurers.
And though the Justice Department said last June that it supported parts of the lawsuit, it didn’t agree that the whole healthcare law should be thrown out.
Jost says he expects O’Connor’s ruling will eventually be reversed either in the 5th Circuit Court of Appeals, where the case goes next, or in the U.S. Supreme Court, if it makes it there.
While the legal challenges play out, the lawsuit is still a threat and could affect individual health insurance markets if people are confused about whether the law is in place or think it will go away. A final resolution could come in the latter half of 2019, but Jost says the court case will more likely drag into 2020 or 2021.
That might dampen ACA enrollment for 2020, leaving a smaller pool of people buying comprehensive health insurance. That would make individual health coverage even more expensive than it is currently and could spur people to seek out cheaper but skimpier coverage with few consumer protections, such as short-term health insurance.
“It could have a very serious effect," Jost says, "even if it has no real legal effect at this point."
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