Earlier this month, the Supreme Court heard arguments that health insurance premium subsidies for people who receive coverage from the federal government’s new insurance exchange are unconstitutional. Unless you follow health-care policy, you might be unclear why the Affordable Care Act (ACA), which Congress passed in 2010 and is responsible for wholesale changes in insurance coverage, remains the subject of legal tussling.
This is the second time the high court has considered legal challenges to the law, and its decision will have a huge effect: If the court overturns premium subsidies for plans offered on HealthCare.gov, some 8 million people (depending on who’s crunching the numbers) in 34 states could lose their health insurance.
Courtesy of Associated Press (AP), here’s why “Obamacare” seems to be a never-ending drama.
Although Obamacare is increasingly popular, and 10 million more adults now get health insurance than two years ago, conservatives (primarily Republicans) want to repeal the ACA, claiming that they will replace it with superior legislation. But the key is “repeal first, replace later,” which is less statesmanship and more political pandering to the forces that believe providing health care to more people, especially those who have pre-existing health conditions that made insurance either unaffordable or unavailable, is somehow un-American.
One big provision of the ACA is that insurance companies may not refuse to cover people because they’re sick. It also requires plans to cover certain preventive services free of charge, and allows children to be covered under their parents’ plan until they’re 26.
“A Supreme Court ruling invalidating the law's subsidies in most states,” AP explained, “would give Republicans their best opening yet [to repeal and replace Obamacare].” Of course, the Republicans talk less about the fact that "replacement" legislation also would cost taxpayers dollars and generate more federal regulations than they do about the law’s language they say excuses the feds from subsidies.
Not all Republicans support wholesale changes in the ACA; some Republican governors, for example, have accepted the law's Medicaid expansion for low-income people, but generally, Republicans in Congress remain staunchly against Obamacare.
The Obama Administration Messed Up
In promoting passage and popular support of the ACA, President Obama claimed that if you liked your health plan you would be able to keep it. After it passed, a wave of insurance plan cancellations blamed on the health law’s requirements proved that statement not to be true for everyone.
Then, when HealthCare.gov went live, it was balky, when it worked at all. Making it the useful tool it was supposed to be for signing up for insurance coverage took months.
Later, after widespread objections by small and medium-sized businesses, the administration said it would postpone implementing a major requirement for them, but did so on an obscure government blog just days before the Fourth of July. And an online insurance market geared to small businesses has disappointed users.
Earlier this year, HealthCare.gov sent the wrong tax information to about 800,000 people, giving more fuel for critics who wonder if this program does anything right.
Some of these issues might be expected with such a significant change in the provision of health insurance, but the routinely clumsy way problems weren’t handled was a PR nightmare.
Writing Versus Assembling Legislation
“The Affordable Care Act did not get the legislative equivalent of close editing by a House-Senate conference committee,” AP stated.
The patchwork approach to writing major legislation pretty much guaranteed that problems would be packed into the law’s 900 pages, which were compiled by different congressional committees working on different parts of the bill.
After the law was signed, for example, its vague wording about guaranteeing coverage to children with pre-existing health conditions had to be clarified through regulations after the insurance industry acquiesced to them.
“The path to passage may be at the root cause of the current dispute before the Supreme Court,” said AP, “which centers on whether the wording of the law allows federal subsidies in states that don't set up their own insurance markets.”
As Justice Antonin Scalia observed, “It was pushed through on expedited procedures and didn't have the kind of consideration by a conference committee ... that statutes usually do.”
Costs of Care
Last week, as The New York Times reported, the Congressional Budget Office (CBO) lowered its estimate of the cost of the ACA, saying that the cost of health insurance premiums wasn’t growing as much as anticipated. The CBO reduced its estimate of the 10-year cost of federal insurance subsidies by 20%, as well as its estimate of new Medicaid costs attributable to the new law.
That’s good news for Obamacare and for consumers, but health care is still expensive, as is insurance for it. Although premiums are heavily subsidized, AP pointed out, people who buy private coverage through the new insurance markets (that is, they aren’t covered through employer plans) still might struggle with costs.
Out-of-pocket expenses, including the annual deductible and required copayments, AP reported, can reach $6,600 for an individual and $13,200 for a family. If someone has a serious illness, a family earning $60,000 a year might have to spend more than 20% percent of that amount just on medical bills.
Average monthly premiums rose by 8% this year in states served by HealthCare.gov — that is, those without their own exchanges. After subsidies, the average monthly premium consumers pay directly increased $23 a month.
It’s Darn Complicated
Obamacare married two of the most complicated facts of life for consumers: health insurance and taxes.
“Even now, in the second year of coverage,” according to AP, “enrollment counselors say many consumers get overwhelmed trying to understand what plan is best for them. It can be hard to figure out which doctors are in what plans, and what is the patient's share of the cost for a particular medication.”
Yep. It’s like trying to become your own car mechanic if you don’t know a timing belt from a belt of scotch. Consumers, many of whom are used to employer-provided coverage that gives them few, if any options, or people who’ve gone uninsured either because they couldn’t afford insurance or chose to play the percentages that they wouldn’t need it, are being asked to educate themselves in sometimes difficult material.
That learning curve gets steeper thanks to the connection between the ACA and the tax system, which is used to deliver carrots and sticks. Premium subsidies are considered tax credits, and consumers who qualify for them must demonstrate to the IRS that they received the right amount per their income. People who are deemed over-subsidized will have to pay back the surplus, and those who weren’t subsidized enough will get tax refunds. People who remained uninsured will be fined in the form of deductions from their tax refunds, if they are determined to be able to afford coverage.
If these challenges to the smooth implementation of the Affordable Care Act seem overwhelming and impossible, if it seems like the legal and political wrangling can never end, consider the enormity of what’s being attempted — people who could never afford health insurance now can, even though it’s difficult to understand may be less than excellent, and costs for it should diminish as the pool of people with coverage increases.
That is never a bad thing.