Opinion: The ACA after King v. Burwell: Challenges and opportunities ahead

By Elisabeth Arenales

Last month’s ruling by the U.S. Supreme Court on the King v. Burwell case not only upheld the ability of people to access premium tax credits from the federal health care exchange, but it affirmed once again, that the Affordable Care Act is here to stay.

The 6-3 ruling was notable because it was the second ACA opinion authored by Chief Justice Roberts and because it was written with breathtaking clarity. The decisiveness of the opinion, which rested on the court’s analysis that Congress intended to “create health insurance markets not destroy them,” quite likely forecloses additional challenges to the ACA based on the language or structure of the legislation. The court’s ruling pushes any major restructuring of the ACA back to Congress.

Elizabeth Arenales

Elizabeth Arenales

Short-term, it’s unlikely anything will happen while the ACA’s architect, President Obama, is still in office and neither chamber has a veto-proof majority.

Longer term, it remains to be seen whether the ACA becomes a major issue in the presidential campaign. It seems somewhat unlikely unless there is a specific proposal on the table to replace the ACA and particularly the act’s most popular provisions (which include guaranteed issue of insurance, free preventive care, no annual or lifetime limits, closure of the Medicare prescription drug “donut hole” and prohibition of the insurance company practice of rescission, among many others).

Having said that, here are some of the judicial challenges that lie ahead for the ACA:

The House vs. President Obama – Probably the most interesting case is the one filed by Republicans in the U.S. House of Representatives against the Obama Administration. The case challenges Obama’s order to delay the requirement that large employers provide insurance to their employee or face a penalty. The administration has twice waived the mandate, and House members question whether he had the authority to do so.

The suit, which was also filed against the secretaries of Health and Human Services and the Treasury, additionally claims Congress never appropriated the money the administration is using to make direct payments to insurers to defray the expense of providing cost-sharing benefits to the insured. Though Congress did not allocate the use of the funds (estimated at $178 billion over a 10-year period), there’s a question of whether members of Congress have standing to challenge the expenditure. Many say the courts won’t be interested in the details of how the money was appropriated and the courts may even assume that Congress intended to spend the money since it passed the ACA. Even if the House prevailed, it’s likely that insurance companies (who would still be required to offer insurance as if tax credits were available to their customers) would file suit so they could get paid. The case is pending in the United States District Court for the District of Columbia.

The origination issue – Other lawsuits have contended that the ACA violated the origination clause of the U.S. Constitution. Revenue-raising bills are required to originate in the House, but the ACA originated in the Senate. So far, two courts have struck down origination-clause challenges — although one, the 5th Circuit Court of Appeals, left the door open for a plaintiff who had been directly injured by the ACA to file suit. The D.C. Circuit dismissed an origination clause challenge saying that the ACA was not primarily passed for the purpose of raising revenue. Some members of Congress also have raised the origination clause as a basis for challenging the ACA.

Other challenges – In addition to the aforementioned cases, there are a large number of cases challenging the ACA’s contraception-coverage requirement. Though the Supreme Court last year ruled that organizations like Hobby Lobby that object on religious grounds are not required to pay for contraception, the Obama Administration responded by introducing a workaround that allows enrollees who work for such organizations to receive separate payments for contraception services at no additional cost to the employer or employee. Regardless of the workaround, the issue is likely to continue to play out in the lower courts. While it’s important, the contraception issue most likely won’t fundamentally undermine the ACA.

With the major legal challenges to the structure and language of the ACA seemingly winding down, what can we expect within the policy landscape in Colorado that could affect the effectiveness of health reform down the road? Here are three factors to consider:

Connect for Health Colorado – Had the King v. Burwell ruling gone the other way, Colorado would have been immune from much of the inevitable fallout that states without health insurance exchanges would have encountered. Colorado’s bipartisan decision to create its own state marketplace, Connect for Health Colorado, not only protected us from potential fallout from the King decision, it also keeps our options open for the future. Though Connect for Health Colorado has experienced its share of start-up problems, its performance continues to improve. By having our own exchange, Colorado will have an opportunity to undertake innovation down the road that would not be possible if the state defaulted to the federal exchange. For example, Connect designed a way for shoppers to look up drug coverage by health plans on its website. That concept is considered a model for other states.

Innovation – Colorado is doing much to deliver better health care, reduce costs, improve quality and integrate services. Colorado Medicaid’s Accountable Care Collaborative (ACC) is working to reduce costs and provide better, more coordinated care. More than 900,000 Medicaid enrollees currently participate in the ACC. Colorado has a pilot global payment program run by Rocky Mountain Health Plans with 33,000 enrolled Medicaid members. Over the next four years, the state will receive up to $65 million from the Center for Medicare and Medicaid Innovation to implement and test its State Health Care Innovation Plan. The funding will assist Colorado in integrating physical and behavioral health in more than 400 primary care practices and community mental health centers comprised of approximately 1,600 primary care providers. The state also will work to establish partnerships across public health, behavioral health and primary care sectors. The State Innovation Model (or SIM) and other grants show how Colorado is on the cutting edge of health care innovation and demonstrate how stakeholders are working to build a system that provides better and more cost-effective care.

Markets – Mergers and acquisitions between private health insurance companies and hospital organizations are raising concerns about the potential impact on consumers, health care costs and quality. With the announcement that Anthem will purchase Cigna for $54 billion, and last month’s announcement that Aetna is purchasing Humana for $35 billion, consumers may have a lot to worry about. While arguments can be made that such mergers could help realize efficiencies and economies of scale, the big question is whether the end effect of consolidated markets will be good or bad for consumers and whether regulators have the tools and resources they need to keep pace with these changes.

Elisabeth Arenales is the director of the Colorado Center on Law and Policy’s Health Care Program.


Opinions expressed in Health News Colorado represent the views of the individual authors.

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