Once again, the fate of the Affordable Care Act (ACA), the health law passed under the Obama administration in 2010, will be in the hands of the Supreme Court. The court heard oral arguments in the case, California v. Texas, on Tuesday. A decision is expected in the spring. This is the third time the law has been tested in the Supreme Court, but this time experts are not certain the outcome will be as favorable as it was in 2012 and 2015 due to the loss of Justice Ruth Bader Ginsburg and her replacement with Amy Coney Barrett.
The current case focuses on the constitutionality of the “individual mandate”: the requirement that everyone either has health insurance or pays a penalty. The individual mandate was ruled to be constitutional in the 2012 Supreme Court decision because the court found that the penalty functions as a tax and the Constitution allows the government to collect taxes for the general welfare. If it wasn’t considered to be a tax, then it would violate the Commerce Clause because the government cannot require a person to purchase a product. The litigants in the current case argue that since Congress lowered the penalty to $0 in 2017, it no longer qualifies as a tax and, as a result, the individual mandate is no longer constitutional.
If the mandate is found unconstitutional, the critical question in this case becomes whether the entire Affordable Care Act would then be considered unconstitutional as well. This is the question of severability: whether the individual mandate can be separated from the law, meaning the law could still function without it, or whether it is an integral part of the law and its loss would mean the entire law would be invalid.
What is at stake in this case is the potential loss of the entire health care system that has been built over the last 10 years around the provisions in the ACA.
A ruling against the validity of the ACA would eliminate the health insurance markets where 11 million people purchase their coverage. It would end the Medicaid expansion, which has covered an additional 12 million people. And, it would do away with other popular requirements of the law, such as its ban on charging higher premiums for people with pre-existing conditions, its requirement that health plans cover a set of essential benefits, and its extension of family coverage to the age of 26. It could also have adverse impacts on Medicare and on hospitals that receive federal funds through the law.
Is the Supreme Court likely to strike down the entire law in a time of recession in which millions of people have lost their employer-sponsored health benefits and a COVID-19 pandemic is surging in most states? Legal experts seem to believe that is unlikely. The court has several options before it other than nullifying the entire law, as Amelia Thomson-DeVeaux describes in fivethirtyeight.com.
The court could simply rule that the state of Texas and the two individuals who filed the lawsuit do not have legal standing to bring the case before the court. In that situation, the case would be dismissed.
The court could rule, consistent with its decision in 2012, that the penalty is still a tax, in which case nothing would change.
Or the court could rule that the individual mandate is no longer constitutional but that the loss of the mandate would not impact the rest of the law. The ACA has been essentially functioning without a mandate since the penalty was lowered in 2017.
There are other potential outcomes. Congress could pass a law raising the penalty even to $1, which would make the case moot. This is unlikely to happen if the Republicans are in control of Congress. They have been hostile to the ACA since its inception. The Supreme Court also has the power to delay the date when its decision takes effect, which would give Congress more time to act.
The court signaled on Tuesday that it is likely to preserve the ACA. During the oral arguments on Tuesday, two conservative judges indicated they would uphold the ACA.
Legal scholar Marjorie Cohn, who writes the Human Rights and Global Wrongs column on this site, offered this analysis to Truthout:
It appears from Tuesday’s Supreme Court argument that there are 5 votes to save the Affordable Care Act. Roberts and Kavanaugh are likely to vote with Breyer, Kagan and Sotomayor to uphold the ACA. Roberts said, “It’s hard to argue that Congress intended the whole Act to fall when they didn’t try to do that” in 2017. “They left it to us and that’s not our job.” Kavanaugh said, “I tend to agree with you that it is a very straightforward case under our precedents, meaning that we would excise the mandate and leave the rest of the act in place.” Thomas, Gorsuch and Alito appeared willing to throw the baby out with the bathwater and strike down the entire ACA. Barrett’s position was unclear although she criticized Roberts for voting to uphold the ACA in a prior case.
This is not surprising because the health insurance lobbyists support upholding the law. They were the ones that demanded the individual mandate in the first place. The ACA has been very good for their profits as it not only sells their products in state and federal marketplaces, but it also subsidizes the purchases and reinsures them if insurers pay out more than a certain amount on health care.
The Congressional Budget Office estimates that federal subsidies for health insurance will total $920 billion in 2021. Of that, 40 percent is for private health insurance through employment and exchanges and 60 percent is for public insurances, Medicaid and Medicare, but most Medicaid enrollees are in privately managed plans and one-third of Medicare enrollees are also in private plans.
In fact, health insurance corporations are increasingly turning to government plans as a major source of revenue. Modern Healthcare reports that by 2017, more than half of health insurance premiums for commercial insurers were paid by the government. For the largest insurance corporation, UnitedHealthcare, government plans accounted for nearly 60 percent of their premiums or about $81 billion.
Counter to what one would think, the COVID-19 pandemic has been a boon for the health insurance industry. Investopedia describes it as a “sweet spot” for private insurance corporations. They are in the position to raise the price of premiums and ask the government for whatever they want. In addition, many people are delaying or forgoing care, meaning health insurers are paying out less for routine care, and investors feel confident about the future since Joe Biden openly opposes national improved Medicare for all.
With the fate of the ACA in question, and now that private health insurers are receiving most of their revenue from the government, it makes sense to question whether we even need private insurers. They are basically becoming administrators of public insurance plans, but they do so with incredible waste in the forms of outrageous salaries and bonuses for their corporate heads and profits for Wall Street investors. One-third of our health care dollars is spent to administer the myriad health insurance plans — the highest percentage spent on administration by any country — rather than to pay for health care.
Private health insurers are legally required to maximize profits for their investors. To accomplish that, they charge premiums as high as they can get away with, push more and more of health care costs onto individuals as co-pays and deductibles, and restrict where patients receive care and what care they have. This has not served the people well even in the best of times, with hundreds of thousands of families going bankrupt due to medical illness and tens of thousands of people dying of preventable causes each year.
The current health care system has put the United States at a stark disadvantage compared to other countries during the pandemic. The countries that have performed the best have national systems that are universal and run by the government. They were able to respond quickly with a coordinated plan and move resources, health professionals, supplies and equipment, to where they were needed. Everyone was in the system so they could get care when needed without having to pay for care up front or worrying about the cost. And, importantly, the public trusts the health care system because it functions for the benefit of the people instead of the profits of the corporations.
Perhaps California vs Texas provides us with an opportunity to have a public dialog about what kind of health care system we need to have. The pandemic and the recession are going to be with us for the foreseeable future. With a new Congress and incoming president, now is the time to make the demand for national improved Medicare for All.
The ruling class is never going to just give us a health care system that works for the people — we are going to have to organize and mobilize for it. With the majority of people in support of national improved Medicare for All, there couldn’t be a better time to make the demand.
The stakes have never been higher (and our need for your support has never been greater).
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