The Trump administration’s new attempt to have key pieces of the Affordable Care Act struck down in federal court — particularly the ban on insurance companies turning people away or charging them higher premiums based on a pre-existing condition — could have a serious and damaging domino effect throughout the health care sector. Insurance trade groups, health care experts and lawmakers say the fallout is likely to extend beyond the individual market, impacting many of the tens of millions of Americans who get their health insurance from an employer.
The Justice Department is arguing in a new court brief that the repeal of the individual mandate penalty Congress passed in 2017 as part of a tax overhaul renders several remaining parts of the Affordable Care Act unconstitutional — pointing to the Supreme Court’s 2012 ruling that upheld the heart of the ACA by interpreting it as a tax.
The DOJ, weighing in on behalf of 20 GOP-controlled states who are seeking to strike down the ACA in its entirety, says the ACA’s ban on discrimination based on pre-existing conditions and limits on charging older patients higher premiums are invalid, and they are requesting that the court put a halt to those provisions in January of 2019, when enforcement of the individual mandate is set to be terminated.
Republicans, who repeatedly promised last year that protections for pre-existing conditions would be preserved even as they voted to repeal the ACA, are panicking about the administration’s move, with an eye on its impact on this fall’s midterm elections.
“Everybody I know in the Senate, everybody, is in favor of maintaining coverage for pre-existing conditions,” Senate Majority Leader Mitch McConnell (R-KY) insisted to reporters on Tuesday. “There is no difference of opinion about that whatsoever.”
McConnell did not answer a reporter’s query as to what Congress would do if the protections were struck down.
Many legal experts believe the DOJ’s argument is extremely weak and will not succeed in higher courts, even if the arch-conservative Texas judge who will first hear the case may side with the Trump administration.
But if the legal strategy were to prevail, it would mean a return to the pre-ACA days, where, according to the Kaiser Family Foundation, 18 percent of people were denied insurance in the individual market because of a pre-existing condition. (Kaiser noted that this estimate was low, because “many people with health conditions did not apply because they knew or were informed by an agent that they would not be accepted.”)
The Trump administration’s bid to undo the ACA’s community rating rule would also mean that insurers could charge older patients much higher premiums, both in the individual market and for employees of small businesses.
But the fallout from such a court ruling would not end there.
Since the launch of the ACA, federal subsidies in the individual market have been calculated based on the assumption that sick and healthy people had to be charged the same amount. Without that equalizer, the subsidy system would be thrown into chaos.
“If insurers can underwrite each applicant based on health status, and deny some coverage who have preexisting conditions, determining the [benchmark] plan will be very difficult, if not impossible,” Tim Jost, a law professor emeritus at Washington and Lee University, told Axios.
The rule change would also blow up Obamacare’s online marketplace, which millions of people across the country have used since 2013 to compare and purchase health insurance plans during open enrollment. Such online comparison shopping is impossible if the consumer has to fill out an in-depth medical questionnaire — and sometimes urine and blood samples — to each insurer to learn if they will be allowed to buy coverage and how much it would cost.
Larry Levitt, the senior vice president of the Kaiser Family Foundation, explained to TPM that the majority of Americans who get their health insurance through a large group employer would also be impacted.
“Even before the ACA, individual employees couldn’t be turned down based on their health in employer health insurance plans. So, nothing would change there,” he said. But if an employee with a pre-existing condition did not have insurance before joining the company plan, Levitt added, the company plan could refuse to cover treatment for their particular pre-existing condition — a practice banned by the ACA.
“The Justice brief appears to include that prohibition as part of the guaranteed issue provisions in the ACA that would get thrown out,” he said.
Lawmakers who helped craft the ACA told TPM that the law’s complex, highly interconnected series of reforms should survive even without the individual mandate.
“We think that all the protections that were in the bill — pre-existing conditions, lifetime limits, the age tax — all of those things were discrete protections,” said House Minority Whip Steny Hoyer (D-MD). “Nobody who voted for the bill thought we should only protect pre-existing conditions if we have a mandate.”
Even Republicans who repeatedly voted to repeal the ACA, such as Sen. Mike Rounds (R-SD), told TPM they did not anticipate these protections evaporating as a result of the tax bill’s repeal of the mandate.
“I don’t think that was the intent,” Rounds said. “We did it because it saved money at the federal level, when you eliminated [the mandate]. And when we were doing the tax bill we were looking for additional revenue to complete our original mission, which was to change the tax code and jumpstart the economy.”
Sen. Lamar Alexander (R-TN), the chair of the Senate’s health care committee, went further, blasting the administration’s legal argument as “far-fetched” and at odds with Congress’ intent.
“Congress specifically repealed the individual mandate penalty, but I didn’t hear a single senator say that they also thought they were repealing protections for people with pre-existing conditions,” he said in a terse statement Tuesday night.
At his weekly roundtable with reporters, Hoyer blasted Republicans like Rounds and Alexander for being “a bit surprised” at the Trump administration’s legal argument against the ACA’s most popular provisions.
“They should have anticipated the consequences of their actions, not only on the tax bill, but all their actions from the adoption of the Affordable Care Act to undermine it at every stage they could,” he said.