ACA’s legal jeopardy: 4 questions

By | July 11, 2019

The Affordable Care Act — no stranger to a legal challenge — is again before a court poised to weigh in on its future. But it almost certainly won’t be the last stop for the law, as whatever the appeals court, where a three-judge panel heard oral argument this week in New Orleans, decides, likely will be appealed to the U.S. Supreme Court.

The three judges in the U.S. Court of Appeals for the Fifth Circuit are taking up the case after a lower court judge ruled late last year the ACA is unconstitutional without its individual mandate penalty, which Congress nixed in tax overhaul legislation.

The proceedings Tuesday offered more insight into what’s at stake and what the future holds for the nearly decade-old landmark law. Here are four questions and answers to consider going forward.

1. Who are the parties and what are the legal issues in question?

Texas and 17 other states, mainly red, brought the legal suit challenging the constitutionality of the ACA against the federal government. Two individuals would later join the Texas coalition.

California and 15 other mostly blue states and D.C. joined the suit to defend the ACA. The Democrat-led House of Representatives also joined once it was unclear whether the Trump administration’s DOJ would defend the law in court.

The key legal concerns in the case are standing, severability and mootness.

Standing refers to whether parties even have the right to bring or participate in the suit. In this case, it hinges on whether the parties have suffered a concrete injury as a result of the ACA. There are questions about whether the state and individual plaintiffs and the​ intervenors — the House of Representatives and the Democratic-led states — have standing in the first place.

The doctrine of severability determines whether parts of a law that a court strikes down can be saved or “severed” from the rest of the statute or whether the entire law must fall. Since the ACA’s individual mandate and its associated penalty were zeroed out by Congress, the question is whether the rest of the law can survive, given the Supreme Court held in 2012 the law constitutional based on the taxing power. With the penalty no longer in place, there’s a question about whether the remaining portions of the ACA can survive on their own.

Mootness would come into play in the case if the parties are found not to have standing. This means the court could vacate the trial court’s decision invalidating the ACA on the basis there’s no longer a “live case or controversy” if there’s no party qualified to actually bring the suit.

2. Could Congress really fix the issue?

The Trump-appointed judge on the three-judge panel suggested Congress could step in and resolve the issues.

“Can’t they put together a sort of cafeteria style package of all these individual features that are so attractive and popular in various quarters?” he asked. “They could vote on this tomorrow … boom, boom, boom, and root out the issue of severability.”

But Judge Kurt Engelhardt acknowledged that while the idea is technically feasible, it may not be practical in the current political climate.

The Senate, which remains Republican-controlled, isn’t part of the ACA lawsuit, Engelhardt noted. “There’s sort of an 800-pound gorilla that isn’t here,” he said.

The House cannot fix the problem itself, Douglas Letter, counsel for the Democrats in the House of Representatives, told the judge, saying President Donald Trump would “obviously not” sign any such legislation to fix it.

Health policy expert and ACA backer Tim Jost balked at the idea Congress could piece together a fix. He pointed out the ACA touches nearly every corner of the industry and affects nearly every American.

“If it were struck down, Congress could not possibly sort out the mess. I really think that the judges fail to understand this. Thinking Congress can fix this is incredibly naive,” Jost, a professor at Washington and Lee University School of Law, told Healthcare Dive.

3. What’s the immediate impact of a ruling?

A ruling is still likely months away. The judges could agree with the earlier ruling that struck down the ACA or remand the case back to that court. The appeals court judges could also uphold the law or determine only some parts of the law should be invalidated.

If the appeals court affirms the lower court’s ruling that the ACA is unconstitutional without the individual mandate penalty, supporters of the law would almost certainly appeal to the Supreme Court. 

There could be an interim stop before the Supreme Court, though. The parties can ask for the entire Fifth Circuit Court of Appeals to review the three-judge panel’s ruling.

Georgetown University health policy expert Katie Keith wrote in a blog post for Health Affairs on Tuesday the parties will likely seek a stay pending an appeal if any parts of the ACA are struck down.

“As a result, nothing would change immediately until there is a final decision from the Supreme Court (at least on whether it wants to hear the appeal or not),” she wrote.

The makeup of the high court has changed since the law first went before the justices in 2012. While that court was relatively evenly split with now-retired Justice Anthony Kennedy seen as the swing vote, a majority currently are conservatives.

In a somewhat surprising turn of events, George W. Bush appointee Chief Justice John Roberts cast the decisive vote in the 2012 case that upheld the ACA.

4. What’s the impact on coverage, industry if it’s struck down?

Senate Majority Leader Mitch McConnell said this week, if the ACA is ruled unconstitutional, he would work on a bipartisan plan to restore the law’s most popular provision — protection for people with pre-existing conditions.  

It seems unlikely the Kentucky Republican will be able to convince the Democratic-controlled House to save only certain elements of the law.

Democrats have hammered Republicans over their attempts to repeal the ACA without having a plan ready to replace it, putting some 20 million Americans who have gained coverage and protection through the law at risk.

Further, there are scores of other provisions within the law that are broadly popular: creation of the CMS innovation center, creating an FDA pathway to develop biosimilars and Medicaid expansion, to name just a few.

CMS Administrator Seema Verma said there is a plan in place to keep what’s working, but did not give any details of how that would be accomplished.

The industry of course would be hit as well, with managed care providers like Molina and Centene among the companies most affected.

Centene is one of the largest insurers selling plans on the exchanges, and covered about 1.5 million people across the country in 2018. About 15% of Centene’s revenue will be tied to marketplace plans while the majority (65%) generated from the Medicaid market, after its tie-up with WellCare is finalized.

As more people gained insurance coverage under the ACA — through both Medicaid expansion and the exchanges — it has benefited hospitals and health systems. 

Due to the uptick in coverage, the ACA has helped reduce uncompensated care costs at some hospitals, but more so in states that expanded Medicaid, according to a Health Affairs study.

There’s a close relationship between a hospitals’ finances and the Medicaid program, which suggests “there would be large decreases in uncompensated care costs from further expansion and large increases in those costs if the expansions are rolled back,” according to another study.

In 2018, HCA, one of the nation’s largest systems, said it cared for more than 400,000 patients who obtained coverage from the exchanges, and a significant chunk of those patients (78%) had no prior interaction with an HCA facility, the company said earlier this year.

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