The battle over the fate of the Affordable Care Act (ACA) has been raging for years — in reality, the law has been challenged at every turn since its inception.
After the individual mandate, or penalty for failure to purchase health insurance, was reduced to $0 by the 2017 tax reform legislation, the chance that the ACA may be found unconstitutional in whole or part is greater than ever. The death of liberal justice Ruth Bader Ginsburg further increases the odds that the law could be overturned.
The Supreme Court heard oral arguments in the latest ACA challenge, California v. Texas, on Nov. 10, meaning that many clients will be forced to choose whether to renew their coverage before they have a real answer. As the court prepares to hand down its final ruling that will dictate the fate of the health care law, clients should be advised about what might happen next.
Can the ACA Be Saved?
There are a few viable paths that the Supreme Court could use to save the ACA. First, the justices could simply find that the plaintiffs lack standing to sue. In order for the lawsuit to stand, the plaintiffs must show some type of individual harm that would be remedied by a ruling in their favor.
Because the individual mandate was essentially eliminated in 2017, the court could find that the plaintiffs wouldn’t be harmed if the law was allowed to remain in place. In other words, they might find that there is no actual harm for the court to correct.
It’s also possible that the justices could rule in favor of severing the unconstitutional elements of the ACA from the entire law. They could decide that the individual mandate is unconstitutional, but that the remainder of the law should be left intact.
Supreme Court justices often look to congressional intent when deciding whether a law is constitutional. In this case, a Republican-controlled Congress passed a comprehensive tax reform package in 2017 that merely reduced the individual mandate to $0. Congress did not take action to strike down other portions of the ACA. The court might use this to infer that Congress intended that the rest of the ACA should be allowed to stand without the penalty for failure to purchase qualifying health coverage.
Post-ACA Health Care Options
What happens if the ACA is struck down? Democratic presidential candidates have been promising to implement a “Medicare for All”-type solution for years. However, the costs of implementing such a single-payer system could be prohibitive in themselves. President-elect Joe Biden’s administration might focus on coming up with a new version of the ACA that focuses more heavily on providing a public health insurance option that works for more Americans.
Short-Term Realities if the ACA Is Struck Down
Even if the ACA is struck down entirely, individuals with health insurance should be able to continue paying their health insurance premiums to keep their current insurance without change until their coverage expires and they have to renew their policies.
However, federal health insurance subsidies could expire quickly after the ACA is struck down. Congress does have the power to extend those subsidies. Most policies offer a grace period of between one and three months, so Congress may have time to act before clients lose their current coverage.
Clients with preexisting conditions could also suffer if the insurance company decides to raise premiums or deny coverage absent the ACA or state-level protections.
Clients with expiring health insurance coverage should be advised to renew that coverage even if the Court opinion has not yet been handed down. This could provide a way for clients with pre-existing conditions to keep their current health coverage at least until a new option is on the table.
With a conservative majority on the court, it’s difficult to tell how the justices will eventually rule. While it seems unlikely that they would rule that the far-reaching law is entirely unconstitutional, it’s certainly possible that the health care system as we’ve come to know it is about to change dramatically.
— Related on ThinkAdvisor: