Healthcare Reform

Hospitals Issue Warnings on ACA Repeal Ruling

December 18, 2018 8:25 am

All provisions of the ACA remain in effect pending the case’s appeal, advisers say.

Dec. 17—Hospital advocates raised a range of concerns about the expected impacts of striking down the Affordable Care Act (ACA) after a federal judge’s recent decision that the law was invalid.

On Dec. 14, a federal judge in the Northern District of Texas ruled in Texas, et al. v. United States, et al.  that the entire ACA was rendered unconstitutional after Congress in 2017 repealed the tax penalty enforcing the law’s individual mandate.  
“The court finds the individual mandate ‘is essential to’ and inseverable from ‘the other provisions of’ the ACA.” Judge Reed O’Connor wrote in his decision.

The decision will not be enforced until the appeals process is complete, and attorneys general from 16 states supporting the ACA have said they will appeal the ruling to the Fifth Circuit Court of Appeals.

Hospital advocates quickly responded with warnings about the impacts of ACA repeal.

 “The ruling puts health coverage at risk for tens of millions of Americans, including those with chronic and preexisting conditions, while also making it more difficult for hospitals and health systems to provide access to high-quality care,” Rick Pollack, president and CEO of the American Hospital Association (AHA), said in a written statement.

The AHA and other hospital advocates filed an amicus brief earlier in 2018 in the case, arguing, in part, against the position of the 20 states challenging the law that the mandate could not be separated from the rest of the law.

Chip Kahn, president and CEO of the Federation of American Hospitals, warned that the decision could affect ACA marketplace enrollments, since it came the day before the end of open enrollment for 2019 coverage. Those enrollments already lagged sign-ups from previous years, according to federal data. A total of 4.1 million people had selected coverage on the 39 federally operated marketplaces by Dec. 8. That was about half a million fewer than at the same point last year, according to an analysis by the liberal advocacy group Protect Our Care.

Shortly before the ruling, the Centers for Medicare & Medicaid Services (CMS) announced steps to allow people to obtain some coverage after the Dec. 15 deadline to sign up, including authorizing those who called and left their contact information to finish enrollment later.

The financial impact of the court decision was also a major concern of hospital advocates.

Bruce Siegel, MD, MPH, president and CEO of America’s Essential Hospitals, warned that the “crushing rise in the number of uninsured patients likely to follow this decision, absent a higher court’s reversal, would push these hospitals to the breaking point. Communities across the country are in jeopardy.”

For instance, total non-elderly healthcare spending would be $88.1 billion lower without the ACA, according to an Urban Institute study.

“These numbers may not even paint the full picture, as they assume that governments and private healthcare providers would be able to ‘return to pre-ACA rates of spending on uncompensated care,’ an assumption for which there is no guarantee,” the hospitals’ amicus brief stated.

Any reduction in ACA coverage levels, either through repeal, piecemeal legislative efforts, or legal challenges to its constitutionality, is detrimental for the U.S. not-for-profit healthcare sector, particularly in states that have expanded or are expanding Medicaid, according to Fitch Ratings.

“Should Friday’s legal decision be upheld, tens of millions of people would be directly affected,” wrote Fitch. “Those who currently receive health insurance under expanded Medicaid likely would become bad-debt or charity-care cases for provider organizations.”

If the decision stands, it would be a credit negative for not-for-profit providers, said Fitch Ratings.

“Ultimately, we believe the ACA will survive through the appeals process as it has survived other challenges in the Supreme Court,” the Fitch statement said. “However, renewed debate on the ACA will generate further uncertainty for healthcare providers and the general public alike.”

If the decision stands, states also could face financial impacts.

“Medicaid expansion could put over 30 states in the difficult position of deciding whether to continue funding a large health insurance program covering over 10 million people without the billions in federal funding the states were counting on,” Eric Kim, a director for Fitch, said in a written statement. “If Friday’s ruling opens up a wider legislative debate around federal healthcare policy, we could see red flags reignite for state and local governments because the funding rules for traditional Medicaid could once again be put into play.”

Outlook for the Case

Rob Henneke, general counsel of the Texas Public Policy Foundation, who was lead counsel for the plaintiffs, predicted that they also would win at the appellate level.

“His ruling is based very precisely upon the Supreme Court precedent that he is bound to follow and the existing language of the Affordable Care Act,” Henneke said in a call with reporters.

Henneke expected the case to be appealed to the Supreme Court near the end of 2019 or in 2020. But before the case is decided there, he expected ACA replacement measures to be enacted by state legislatures and Congress. Sensible replacement legislation, he said, could include provisions such as high-risk pools and an end to the comprehensive-benefits coverage that the ACA required of insurers.

“It’s time to get started now and not wait for the ultimate outcome of this case,” Henneke said.

Cheryl Hughes, principal in the law and policy advisory group of advisory firm Mercer, agreed the case could eventually reach the Supreme Court.

Congress also could respond, she said in a call with reporters, by enacting measures to strengthen ACA protections for those with preexisting conditions—as supported by Democrats—or by trying to advance a Republican ACA replacement bill.

In the Meantime

 As the case winds its way through the court, the ACA remains in full effect, Hughes said.

In the meantime, the Trump administration continues to advance administrative changes to the implementation of the ACA.

For instance, the administration announced in November that it would seek to use Section 1332 state innovation waivers to allow states to use federal premium-assistance funding for state-based coverage under the ACA. Additionally, states could use federal subsidies to fund coverage not allowed under the ACA’s comprehensive-coverage requirements, such as catastrophic-plan coverage.

The administration’s approach in 2019 is “really using these state waivers to tack very hard to the right,” Hughes said.

Another approach would allow states to direct federal subsidies into defined-contribution consumer-directed accounts, which consumers could use to pay premiums or other healthcare expenses. That approach could be paired with separate rules allowing expanded use of health reimbursement accounts.

CMS also is encouraging various risk-stabilization strategies for individual-insurance markets. For instance, such approaches could include a state-operated reinsurance program or a high-risk pool.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare


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