Professor Lisa Sewell DeMoss is WMU-Cooley’s director of the Master of Laws Program in Insurance Law and the law school’s in-house expert on the difficult and complicated subject of insurance law. She is a wealth of knowledge on the topic and on many of the new developments being reviewed and considered inside the Affordable Care Act (ACA). Below she makes sense of the new health insurance laws and her legal take on what can or may happen.
On March 23, 2010, President Barack Obama put his signature on an historic piece of social legislation that fundamentally changed the private market for sale of individual and small group health insurance products in America. It has provided meaningful access to health care services for millions of Americans, financed through a shared burden of individual and employer-based financial incentives and subsidies, new excise and income taxes, and expanded participation in the jointly financed Medicaid program. These financial interdependencies provide essential funding to support the affordability and accessibility of individual consumers’ participation in the private health insurance markets. Indeed, without the premium subsidies provided by the ACA, the majority of consumers who have purchased individual policies on the health insurance exchanges established in 2014 under market reform provisions of the ACA would not be able to afford unsubsidized insurance products, based on the statutory definition of affordability.
The ACA has endured many legal challenges, three of which have been accepted by and reviewed by the U.S. Supreme Court. In the most recent appeal, King v. Burwell, the Court has been asked to determine that the language of the ACA expressly limits the availability of premium subsidies for individual health policies to insurance sold in markets established by state governments. In fact, of the 7.3 million polices sold under the ACA in 2014, 5 million were purchased on the federal electronic health insurance exchange, www. healthcare.gov, which was developed by the federal government to provide American consumers with access to ACA-based coverage in the 34 states that elected not to establish their own state-based markets for ACA compliance coverage. Of those 5 million purchases in 2014, 4 million received premium assistance because the purchasers qualified as individuals whose household incomes were equal to or less than 400 percent of the Federal Poverty Level.
A decision in King v. Burwell that eliminates premium subsidies for the newly insured in those 34 states is predicted to create significant disruption in the insurance markets. While Congress could easily address the language issue in a one sentence amendment to the ACA, virtually no one is predicting that the current Congress will take such action. Given the dire predictions of massive premium payment default, loss of newly acquired coverage by millions of Americans, the unlikelihood of state construction of new health insurance exchanges now that the developmental grants have expired under the ACA, a significant increase in the volume of uncompensated care provided by hospitals and doctors and the underwriting effects on the individual health coverage risk pools, it is conceivable that the political response to the elimination of premium subsidies will involve some sort of extension of the subsidies through the next presidential election cycle.
Regardless, the subsidies are inextricably linked to the requirement that each American be financially responsible for obtaining ACA-compliant, affordable health care coverage. Without an effective individual coverage mandate once millions of Americans are excused from compliance due to the unaffordability of unsubsidized coverage, will the balance of the ACA survive? Will the sickest of those who again find themselves uninsured migrate to the remaining states that offer subsidized coverage through their state insurance exchanges? Or, will a new political solution emerge to re-establish good health equality for all Americans as promised by the ACA? A decision by the Supreme Court is expected in June or July of 2015.