Healthcare Reform

After ACA court decision, ‘Nothing is changing’ immediately

December 23, 2019 3:12 pm
  • The healthcare industry will not see effects from the latest legal challenge to the ACA until the Supreme Court rules.
  • Insurance provisions of the law appear most vulnerable.
  • The Supreme Court likely will not decide the case until 2021.

Hospitals should see no near-term effects from this week’s appeals court decision on the federal healthcare overhaul, industry trackers say.

The Dec. 18 decision by the Fifth Circuit Court of Appeals in Texas v. Azar, concurring with a lower court that the Affordable Care Act’s (ACA’s) individual mandate is unconstitutional and remanding the case back to that court for further analysis, will have no immediate effect, according to a hospital credit rating agency and a legal scholar.

Regarding the major takeaway from the decision “for people, patients and consumers, it has to be that nothing is changing in the immediate future,” said Katie Keith, JD, an adjunct law professor at Georgetown University Law Center and an ACA advocate.

Rodney L. Whitlock, PhD, an adjunct faculty member at the George Washington University Milken Institute School of Public Health and a former Republican congressional staff member, agreed that practical effects from the case will await any eventual decision by the Supreme Court.

“No one should read anything else into this decision or any other decision until we are at the Supreme Court and you look at [Chief] Justice [John] Roberts and he is starting to give you signals that, ‘Uh oh, he might have changed his mind,’” about the ACA’s constitutionality, Whitlock said.

Those wait-and-see attitudes were echoed by Moody’s Investors Service.

“Yesterday’s ruling that the ACA’s individual mandate is unconstitutional has no immediate credit effect for states or hospitals, but a future ruling that finds the entire law unconstitutional would be credit negative for both,” Dan Steingart, vice president and senior credit officer at Moody’s, said in a written statement.

What to watch for next in the case

The circuit court directed the district court judge to analyze how the legal rejection of the individual mandate would affect the major provisions of the law, instead of viewing the entire law as unsustainable without the mandate.

Keith said Title I of the ACA will be most vulnerable to elimination if the mandate is ruled unconstitutional. Major provisions of that section include:

  • Allowing parents’ insurance to cover adult children up to age 26
  • Barring insurance companies from dropping coverage of sick enrollees or from using lifetime coverage caps
  • Barring coverage denial based on preexisting conditions
  • Mandating no-cost coverage of wellness and pregnancy exams
  • Mandating an 80% medical loss ratio

Medicaid expansion’s fate

Title II of the law authorized the Medicaid coverage expansion that has added 12.3 million enrollees to states’ Medicaid programs, according to data from the Medicaid and CHIP Payment and Access Commission.

And changes to Medicaid would have the largest impact on hospital finances, according to Moody’s.

“States that opted to expand Medicaid with a large federal subsidy would need to choose between eliminating public healthcare coverage for a significant percentage of state residents or preserving the coverage at state expense,” Steingart wrote. “Hospitals would face a material rise in the uninsured rate — largely through the rollback of Medicaid expansion — absent legislative action.”

If the Medicaid expansion were eventually eliminated, Keith doubts states would maintain it using their own funding. The ACA required the federal government to fund 90% of the cost of covering the new enrollees.

“I would really give a word of caution that states are not going to be able to dig themselves out of a hole, necessarily,” Keith said about whether states would fund expanded Medicaid coverage on their own.

The possibility of an accelerated Supreme Court review

The district court’s review and a subsequent appellate court examination of that decision could keep the case from reaching the Supreme Court until 2021, Keith said.

There is a narrow chance that the high court could review the case sooner. California Attorney General Xavier Becerra has requested that the Supreme Court review the case in its current judicial session.

However, a preemptive review of the case before the appeals process is completed would require not only the approval of four justices but also the agreement of Chief Justice Roberts to hold an accelerated hearing, which would produce a decision by the end of June 2020, according to Keith and Whitlock.

Keith said there “may not be enough urgency” for the Supreme Court to take up the case this term.



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