Rare Signal from Justices – ACA May Survive

The Affordable Care Act (ACA) was back in the spotlight this week as the US Supreme Court heard oral arguments in the latest challenge to the law. The questions before the Court were: Is the ACA’s zero-dollar penalty individual mandate constitutional? If it is unconstitutional, is the mandate so essential to other parts of the law that those must also be struck down?

The oral arguments emphasized the hurdles Texas and the other Republican-led states needed to overcome to establish “standing” – some harm that would justify participating in the case. During the arguments on the merits of the case, we heard something rather rare – Justices Roberts and Kavanaugh signaled that they might favor invalidating the individual mandate without killing the rest of the law. That signal dominated the headlines, with several news organizations, including The Washington Post predicting the law will survive.

Obviously, we don’t know what the other seven Justices are thinking, so I’m not going to make any predictions. But if the three justices appointed by Democratic Presidents—Justices Breyer, Kagan and Sotomayor—agree with Justices Roberts and Kavanaugh, that would be the five votes needed for the ACA to survive.

Here are some of the potential outcomes that the Justices could reach:

  • Dismiss case or uphold constitutionality of mandate. The status quo is maintained – we have the individual mandate with no penalty.
  • Individual mandate is unconstitutional, but all other provisions stay. Under this option, there would be no federal individual mandate and no consequential changes to the status quo. Justices Roberts and Kavanaugh seemed to agree with this outcome. Although federal law wouldn’t change much with the removal of the individual mandate, we might see more states adopt individual mandates.
  • Individual mandate is unconstitutional and related rules struck. This is the more thorny option, where there is no individual mandate and some – but not all – parts of the ACA fall. This limited severability outcome could include any subset of ACA provisions, but the ones most discussed are for insurers to guarantee issue of coverage, community rating and the prohibition on pre-existing condition exclusions. If the court severed just those provisions, the rest of the ACA would remain, including the employer mandate and related reporting provisions. Congress might intervene to reinstate the pre-existing condition exclusion, guaranteed issue and other related items, and states would still have the option to require these provisions for insured plans.
  • Entire ACA is struck down. The most drastic outcome would be striking down the entire law. This would, of course, put the individual insurance market in chaos, and end the Medicaid expansion, Medicare reforms like closing the doughnut hole, and the promotion of biosimilars, to name a few. Although employers might be happy to get rid of the employer mandate and reporting, they will face difficult decisions if the ACA is struck down. All of the popular provisions such as preventive care with no cost-sharing and coverage of dependents to aged 26 would go. The new transparency rules would also go, since the new regulations look to the ACA exclusively as the authority. Of course, we’d expect Congress to react. However, it would be difficult for a divided Congress to enact all of the original ACA provisions, although they might restore some.

We’ve heard projections that a decision will be released anywhere from early 2021 to June 2021. At this point, that’s anyone’s guess. In the meantime, the ACA lives on.

Kaye Pestaina
by Kaye Pestaina

Principal, Mercer’s Law & Policy Group

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