What is going to happen to the Affordable Care Act?

Up for arguments
Up for arguments
Image: Reuters/Aaron P. Bernstein
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There’s a new Supreme Court justice, election day is less than a week away, and the Affordable Care Act’s constitutionality is set to be argued before the high court in two weeks. If you’re wondering about what this all means for the future of Obamacare, you’re not alone.

What happens to Obamacare if the Supreme Court decides against the ACA? What happens if Joe Biden wins the election? Or if Donald Trump remains in office? American healthcare coverage could be significantly altered in the next few months, with possibilities ranging from nothing changing at all to more than 20 million people losing coverage.

Here is a breakdown of what could happen:

The SCOTUS case

On Nov. 10, the Supreme Court will hear arguments on two cases addressing the same issue: Texas vs California and California vs Texas. These cases pertain to an important part of the Affordable Care Act (ACA): the individual mandate, or the requirement that all Americans have  healthcare coverage, a measure designed to encourage healthy people to enter the coverage pool, lowering costs for everyone. This isn’t the first time the individual mandate has been challenged in front of the Supreme Court, which already upheld its constitutionality in 2012.

Back then, the ACA’s individual mandate was challenged on the premise that the government had no right to make people purchase something they didn’t want. The court decided that demanding they buy health insurance, or else pay a penalty, was akin to a tax, which the government has ample freedom to impose.

But if the court has already decided on the mandate, why is it being challenged again? It’s essentially a matter of principle. In 2017, the same Republican-led congress that unsuccessfully tried to repeal and replace Obamacare, effectively abolished the individual mandate by lowering the penalty for failing to get healthcare to $0.

That prompted a group of states, led by Texas, to once again challenge the law: If the penalty amounts to nothing, they argue, then it isn’t a tax. And if it isn’t a tax, then it’s not constitutional.

There’s more. Since the individual mandate was presented as a fundamental part of the ACA, argues Texas, then its unconstitutionality would make the whole law unconstitutional. An appeals court decided at the end of 2019 that a mandate with no monetary penalty is not constitutional, but didn’t pronounce itself on the whole law, which will be assessed by the Supreme Court.

The court probably won’t rule immediately. On average, the Supreme Court takes nearly three months to share a decision. Robert Field, a professor of health management and policy at Drexel University’s School of Law says it’s very possible the case won’t be decided until the spring, or perhaps even as late as June.

Possible outcomes for a Supreme Court decision

The court could essentially decide one of four ways. One option is it might dismiss the case altogether—after all here is no concrete injury deriving from a tax of $0, says Seth Chandler, a professor of law at the University of Houston. “You cannot win a law suit when you haven’t been hurt—you are literally arguing over nothing,” he says.

“Usually the court does not entertain lawsuits where the injury is imaginary, or the injury is just that your feelings are hurt.” says Chandler.  “They want to see a concrete injury, and there are many people—including me—who do not think there is a concrete injury.”

Chandler believes Justice Barrett could agree to dismiss the suit. “I actually think she was thinking about this case when she said [in her confirmation hearing] that the law concerns itself with concrete injuries that affect real people,” he says.

The court might also decide that even with a value of $0 the individual mandate is constitutional.

Alternatively, the court might find that Texas is right—a tax can’t be $0, so the current individual mandate can’t be upheld as constitutional. In that case, the court has to decide whether the individual mandate can be severed from the rest of the law, or not.

It seems unlikely that the court will find the Affordable Care Act cannot exist without the individual mandate—because it effectively already does, since the penalty is $0. “I understand why people are concerned about the Affordable Care Act” being overturned, says Chandler. “It’s like an asteroid hitting the earth. Could it happen? Yes. Is it real likely? I don’t think so.”

What happens if the Supreme Court strikes down Obamacare?

Let’s consider what can happen after the various possible outcomes:

The Supreme Court dismisses the lawsuit, or finds that the $0 mandate is still constitutional.

In this case, nothing changes. The ACA continues to go on as it has, with a $0 mandate, and takes home another victory on the Supreme Court floor. This doesn’t mean the law can’t be challenged further, or that if Trump were reelected that he couldn’t try to lead other attempts to modify or repeal Obamacare, although that seems unlikely. “A Republican Congress might want to get rid of more of the act [but] I’m not sure why it would because without the mandate the laws is very popular right now,” says Field.

The Supreme Court strikes down the individual mandate, but not the rest of the law.

Under this scenario, the ACA would go from imposing a penalty of $0 on individuals who aren’t getting healthcare coverage to not imposing any penalty—the difference exists only in a matter of principle. “It would be of interest to some law professors, but really nobody else would care,” says Chandler. If Biden were president and he wanted to address this issue of the law, then it would be very easy to fix it by setting the penalty to a value higher than $0, so that it can again be considered a tax.

The Supreme Court strikes down the whole law with the individual mandate. 

This is the least likely, and most complex, possibility. In fact, the complications arising from striking down the ACA—such as millions of Americans losing health insurance—might be so great that it’s another reason to believe the Supreme Court will stay clear of that, especially without giving lawmakers time to fix the law in some way. “For the court to immediately repeal [Obamacare] would cause such chaos in the entire country that it’s hard to imagine that would want to be responsible for that,” says Field.

But, if that were to happen, here’s how it would work. In its decision to strike down the law, the Supreme Court would likely not give detailed directions as to what should be done to address the coverage gaps it would leave. But it would probably give at least a deadline, deciding for instance that the ACA is no longer valid after a month, or three.

Essentially, the landscape of healthcare coverage in the US would return to what it was prior to 2014, when Obamacare went into full effect. Policies bought through the marketplace would probably still be binding until their expiration date, but might not be available for renewal after that, or have much higher premiums. Individuals who are getting subsidies to pay for healthcare coverage would also lose those.

If Biden were president, especially with a Democratic congress, he could lead legislative efforts to address the issues highlighted in the Supreme Court decision, and quickly replace the law with a similar one, albeit corrected.

Naturally, Trump could do the same, but it would run counter to his—and his party’s—years-long fight to get rid of the ACA. This would also be an opportunity for Republicans to implement an alternative plan, although there has never been a concrete plan to do so, despite Trump’s claims that the plan is “all ready.”

What about pre-existing conditions and other essential coverage?

Trump is insisting that he is going to protect coverage of pre-existing conditions, but at present the only legal protection individuals have against being denied coverage because of pre-existing conditions is in Obamacare.

Things are a little different for employees whose healthcare is provided by their employer, because the law says that after three years of consecutive employment and coverage they cannot be denied coverage due to pre-existing conditions, even if they move to another company. However, that only applies if there is no gap of coverage of 63 days or longer, so those who are laid off and don’t have employer-sponsored healthcare for over two months may lose this privilege.

According to the Centers for Medicare & Medicaid Services, as many as half of all Americans might have some kind of pre-existing conditions.

Further, without Obamacare, the mandate for employers to provide healthcare is gone, too, so whether employees, particularly of smaller businesses, will continue to be covered will depend on state laws.

There is more: The ACA also establishes certain requirements for all insurance plans, including preventive care without copayment, free screening for women’s health, and no yearly or lifetime caps. These would be gone, as would be, for instance, the requirements that policy terms are clearly laid out and easy to compare. The expansions of Medicaid would also be at risk.

This means an estimated 21 million people might end up without health insurance if the law was struck down. It wouldn’t happen immediately after the decision, but it would be very hard for a government wanting to replace the ACA with a completely different reform to pass it before policy holders lose their coverage.