Key justices seem inclined to uphold the Affordable Care Act. But uncertainty remains.

Economist Sebastian Tello-Trillo discussed the Supreme Court’s upcoming decision on the healthcare law, as well as its policy implications.

In November, when the Supreme Court heard the most recent arguments against the Affordable Care Act, key justices seemed inclined to uphold the healthcare law. 

“But it's 2020,” Batten professor and health economist Sebastian Tello-Trillo told an online audience the following day. “We don't know what's going to happen. Everything is up for grabs.” 

In the latest edition of Batten Expert Chats, Tello-Trillo spoke and took questions on the future of the Affordable Care Act, which Republicans and President Donald Trump have been attempting to dismantle. Their most recent assault focuses on the tax law that penalizes people who refuse to enroll in health insurance. If you thought that portion of the act had already been repealed, you had good reason to: An earlier legal challenge gutted it, reducing the dollar amount of the penalty to zero. Now, “the argument is that because the penalty is zero, it’s not a tax,” Tello-Trillo said, “and that therefore the law is not valid and the entire ACA is unconstitutional.”

Previously, some justices—and indeed, former President Barack Obama, who signed the original bill into law—suggested that the act could not survive without the financial penalty. In its absence, however, “things have not collapsed in the way a lot of people thought,” Tello-Trillo said.

While it’s true that fewer people are now insured, the decrease hasn’t been dramatic. Research shows that government subsidies for premiums play a much bigger role than penalties in motivating people to enroll, Tello-Trillo said. Questions from the justices during last month’s hearing emphasized this fact, suggesting that even if the individual enrollment mandate is unconstitutional, that shouldn’t invalidate the rest of the law. 

The justices indicated that past actions from Congress might guide their final decision as well. “They're also saying, ‘Well, if Congress really wanted to repeal the whole thing, they should have or would have done it when they turned the individual penalty to zero,” Tello-Trillo explained.

The justices are expected to give their final ruling within the next six months. Although the court seems poised to uphold the entire act, Tello-Trillo outlined several other possible scenarios. The court might strike down the mandate portion only. “This is an area that probably doesn’t matter much policy-wise, because going from a penalty that’s already zero to a penalty that doesn’t exist—that’s not much change,” he said. And even without the mandate, some “workarounds” are possible, he pointed out: Congress could potentially raise the penalty to one dollar, making it constitutional again. 

Alternatively, the court could strike down other portions of the act, such as community ratings, which stipulate that insurance companies must charge people within the same geographic area comparable premiums, rather than charging individuals differently based on things like their medical history.

And then there’s the possibility of what Tello-Trillo called “a disaster scenario”: The court could declare the entire act unconstitutional. As a result, 20 million Americans could lose coverage—13 million of them through Medicaid expansion and 7 million through marketplace health insurance. Cost control and transparency measures could vanish, as could protections for Americans with pre-existing conditions. “There are a huge number of things that the ACA has embedded into our healthcare system,” Tello-Trillo said. 

Other serious consequences could arise from such a decision. Under the Affordable Care Act, Tello-Trillo said, the disparity in health insurance coverage between Blacks and whites has gone roughly from 10% down to 5%. Between Hispanics and whites, it has shrunk even more significantly—roughly from 25% to 15%. Those gaps could easily widen once again.

Even if the act is repealed, however, President-elect Joe Biden will likely move to replace it with a new plan, which Tello-Trillo termed “ACA plus.” By increasing government subsidies and offering them to more people, Biden aims to help Americans who qualify as “too rich” for Medicaid but currently don’t make enough to receive subsidies, Tello-Trillo said. 

Biden also hopes to add a public option, which was dropped from early versions of the original bill, to create competition with existing private insurers—the goal being to drive prices down and make health insurance more affordable for everyone. “Whether that will work or not, there are obviously questions,” he said. “But it's an interesting policy to be thinking about.”