I have written several articles explaining some of the key elements of the Affordable Care Act (ACA), more commonly known as Obamacare. Much has happened in the last year with respect to the ACA. This article summarizes several key developments.
Another Supreme Court Decision
Many pundits thought the U.S. Supreme Court would hold that the ACA is an unconstitutional exercise of Congress’ power under the Commerce Clause. Instead – by a 5-4 vote – the Court held in 2012 that the ACA is constitutional because it is a valid exercise of Congress’ power under the Taxing Clause of the Constitution.
In 2014 the Supreme Court agreed to hear a second case involving the ACA – this time a challenge to the way the Obama Administration is applying the ACA. This case involved an interpretation of some ambiguous language in the ACA dealing with tax credits. The ACA requires virtually everyone in America to have health insurance. Persons who do not receive health coverage through their employers may purchase health insurance on government-run health exchanges.
The ACA gives each state the first opportunity to set up and run an exchange for its residents. Only 13 states have chosen to do so. In the remaining states, the federal government sets up and runs the exchange (as it does in Tennessee).
Many persons who purchase insurance through an exchange run by a state government are eligible for a tax credit. The amount of the tax credit depends upon the person’s income level. However, the language of the ACA is ambiguous as to whether persons who purchase insurance through an exchange run by the federal government (as in Tennessee) are eligible for those same tax credits. Many describe the ambiguity as a “drafting error” on the part of Congress.
In rules adopted by the Internal Revenue Service, the Obama Administration has chosen to provide the same tax credits to eligible persons, regardless of whether the state or federal government runs the exchange. The issue is important because health insurance is expensive and the tax credits make it more affordable for those who buy their insurance through an exchange.
The Administration’s rules on tax credits were challenged in cases filed in several states. When the Supreme Court decided the issue in June 2015 in a case styled King v. Burwell, the Court held that the Obama Administration had interpreted the ACA correctly. The Court said that “the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.” The Court concluded: “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, [the Court] must interpret the Act in a way that is consistent with the former, and avoids the latter.”
The decision in this case was written by Chief Justice John Roberts, as was the earlier decision. The vote of the Court was 6-3 in favor of this interpretation of the ACA. One of the dissenting judges, Justice Antonin Scalia, said cynically that the law should be called SCOTUSCARE rather than Obamacare. SCOTUS is an acronym for Supreme Court of the United States.
In 2013-2014, the federal government’s health insurance exchange was a disaster. In 2014-2015, it seems to be working well. For the year 2015, 11.2 million Americans purchased health insurance through the state and federal exchanges set up under the ACA. Of this number, 4.1 million are newly covered, and 7.1 million transitioned to exchange plans from another source of coverage.
The new Secretary of Health and Human Services, Sylvia Mathews Burwell, seems to be steering the ACA ship a lot more steadily than her predecessor.
Will the ACA Be Repealed?
Since January 2015, Congress has had a Republican majority in the House and the Senate. But until January 2017, Barrack Obama will be the President, and he would surely veto any legislation repealing or substantially changing the ACA.
Will Congress pass any legislation making changes to the ACA that the President might sign? Maybe. Under current law, all employers of 50 or more “full-time” employees must provide health insurance. This threshold could be raised to 100 or more employees, especially since insurance is readily available through the exchanges. Congress might also change the definition of “full-time” employee. Under current law, a “full-time” employee is a person who works at least 30 hours a week. This could be raised to 40 hours.
Finally, one of the taxes used to fund the ACA is a tax on medical devices. This is a widely hated tax, especially in states that are home to companies that manufacture these devices (such as Tennessee). This tax could be repealed.
All eyes are focused on the Presidential election which will take place in 2016. Will we have a President Donald Trump or President Jeb Bush? Or a President Hillary Clinton? The ultimate fate of the ACA will depend largely on what choice the American people make next year.