The Affordable Care Act faces legal challenges that could derail it, and major changes to the legislation are likely and warranted, says Dr. James Stephens, the Distinguished Fellow in Healthcare Leadership at Georgia Southern University’s Jiann-Ping Hsu College of Public Health.
But Stephens, an associate professor who directs the college’s Master of Healthcare Administration program, told the Statesboro Rotary Club that elements of the ACA should be preserved. He used the initials but not the program’s popular nickname, Obamacare.
“The question facing the citizens of this country and its government is what parts of the ACA can be made to work and what parts must be changed,” Stephens said Monday. “It’s right to provide health care coverage to the uninsured, and we would not be a caring and compassionate country if we take the coverage away from the 8 million people who have it now and do not provide an option to those who need it.”
The 8 million he referred to are previously uninsured people who have signed up for insurance through the federal health care exchange or state exchanges set up by a minority of the states.
The country also has too much invested in the program — “probably a trillion dollars” — to just drop it, Stephens suggested.
But with something more than 8 million people signed up, rather than the 40 million the administration projected, the program cannot maintain itself as designed, he said.
In Stephens’ assessment, the legislation “was not enacted with sufficient care, debate and/or legal craftsmanship.” But he also called it “one of the most important health care reform legislations” in U.S. history and “one of the few federal laws that affects all Americans, young or old, rich or poor, employed or not employed, and has no color biases.”
Yet the ACA cannot benefit all of the 42 million previously uninsured people it was proposed to cover, according to census-based data Stephens presented. Of those, roughly 12 million are illegal immigrants excluded from coverage. About 10 million more, he said, were eligible for Medicaid but did not know it.
That leaves 15 million “working poor” and 5 million young adults without health insurance, and many of those young people did not want it, he observed.
About 85 percent of the 8 million enrollees have received federal subsidies, based on family size and income, for their monthly health insurance premiums, Stephens reported.
One legal challenge currently threatens the subsidies, and if the subsidies are eliminated, many of those who have enrolled would probably drop their coverage, Stephens said. In the Halbig v. Burwell case, now awaiting a rehearing before the full D.C. Circuit Court of Appeals, a three-judge panel of that court ruled in July that subsidies were legal only in states with state-sponsored health insurance exchanges, and not under the federal exchange.
Only 16 states accepted federal funding to set up state-run exchanges. But seven states have exchanges established in partnership with the federal government and 27 states, including Georgia, declined to set up an exchange at all, so their residents purchase the coverage on the federal-run marketplace.
The portion of legislation that created the federal subsidies first passed in the Senate, and the D.C. Circuit’s previous ruling found that this was a violated the Constitution’s requirement that “all bills for raising revenue shall originate in the House of Representatives,” Stephens said. In the U.S. Supreme Court’s 2012 ruling that upheld the ACA as constitutional, a 5-4 majority also insisted that the “penalties” for not purchasing insurance were in fact taxes, and another potential challenge addresses the fact that the penalty tax also originated in the Senate.
“If the Supreme Court rules in either case, the future of the Affordable Care Act is in serious jeopardy,” Stephens said.
For individuals who are not exempt and do not purchase health insurance, the tax penalty is the higher of $95 or 1 percent of income annually. In 2015, that will rise to the greater of $325 or 2 percent of annual income. Under the employer mandate, which is being phased in for firms with 100 or more workers in 2015 and those with 50-99 workers in 2016, employers will pay a $2,000 penalty tax for each full-time employee not offered insurance.
The law’s definition of full-time employees as those who work 30 hours per week or more has lost support in Congress and will be reconsidered, Stephens predicted.
Wal-Mart Stores Inc. recently dropped its health insurance coverage for about 30,000 part-time workers, and Target and Home Depot have made similar decisions, he noted.
“Should the Affordable Care Act be repealed? I do not think so,” Stephens said. “However, without question, the Affordable Care Act needs to be fixed in order for the country to be able to afford the massive cost it will incur for the next decades.”
Total health care costs in the United States in 2012 were calculated at $2.8 trillion, dwarfing all other industries and accounting for almost 18 percent of the gross domestic product. They are expected to rise to $5 trillion in 2022, according to National Health Expenditure Projections he cited.
The actual costs of the ACA itself are unknown at this point, Stephens said, but the cost of establishing the HealthCare.gov website, originally budgeted at more than $300 million, has now topped $1 billion, he noted.
Concluding with predictions, Stephens called it “likely” that the individual and employer mandates and their tax penalties will be dropped. A 40 percent excise tax set to begin in 2018 on “Cadillac plans,” costing more than $10,200 per individual or $27,500 for family coverage, will be dropped, he predicted.
Tort reform is needed to reduce the cost of malpractice cases, antitrust laws should be reviewed to allow more efficiency in planning community health systems, and selling private health insurance across state borders should be legalized, Stephens said.
Portions of the federal plans can be maintained and “used as an option” for those seeking health insurance, he suggested.
“I believe such changes will be the next phase of health care reform in 2015 and especially in 2017, no matter who is elected the next president of the United States,” Stephens said.
Al Hackle may be reached at (912) 489-9454.