Reflections on the Third Anniversary of Saving the Affordable Care Act

It would be hard to overstate the importance of the Affordable Care Act, or its prominence in our political discourse.  Since its passage ten years ago, it has been associated with a dramatic reduction in the national uninsured rate (at one point dropping to nearly one half that of the rate at the time of the Act’s passage).  Standardization of health benefits is similarly associated with an improvement in access and coverage available to beneficiaries, as well as the Act ushering in important mechanisms for care delivery and payment reform.

The ACA is, simply put, the most important legislative achievement in health care reform since the enactment of Medicare and Medicaid nearly fifty years before.  Despite this, and despite broad recognition across stakeholders and parties as to the need for legislative action for health care reform, the ACA remains controversial and has been the subject of fierce opposition, including multifarious efforts to have it voided, delayed, defunded.

Three years ago, the ACA came the closest it’s been to repeal since the 2012 U.S. Supreme Court decision (NFIB v. Sibelius) affirmed (at least in substantive part) that it was the law of the land.  Fulfilling on campaign promises to “Repeal and Replace” the ACA, the then Republican-controlled Congress launched a concerted and committed campaign to repeal the ACA. 

This culminated in a Senate Floor showdown in the early hours of July 27, 2017, when Senator John McCain joined Senate colleagues Lisa Murkowski (Alaska) and  Susan Collins (Maine) and gave his famous  “thumbs down” to the effort to defund and invalidate the 2010 Act.

Here at Atrómitos, a number of us were involved in negotiating the passage of the ACA. 

Since then, the effective implementation of the health care delivery reforms has constituted a core component of our business and mission when partnering with providers, payers, and community organizations. The ACA, for all its imperfections (and we are acutely aware of the contradictions, complexity, and incompleteness of the legislation) has established a framework wherein private and public stakeholders can develop systems that enable far more efficient, equitable, effective, and sustainable care delivery across our communities. That is no small feat. Therefore, many of us watched that early morning Senate Floor showdown (yes we are nerds, we watch C-Span); we couldn’t let this anniversary of the defeat of the “Skinny Repeal” go unmarked.

Looking Forward: Danger on the Horizon

In addition to taking this as an opportunity to reflect on the events of three years ago – and to link to the superb political theatre of the late Senator McCain’s gladiator-style “no” vote, this is also a chance to look forward.  The battle over the ACA is not over.  In fact, this fall, the Supreme Court will revisit the constitutionality of the ACA, having accepted review of the 5th Circuit Appellate Court’s decision in Texas v. the United States. 

The ACA is going back to Washington, and this represents the biggest threat to its continued existence since Senator McCain stepped off the elevator and into the Senate’s chambers three years ago.

At its basis, Texas v. the United States challenges the constitutionality of the ACA following the removal of the penalty associated with noncompliance with the individual mandate by the Tax Cuts and Jobs Act of 2017 (“TCJA”), which “zeroed out” the penalty for noncompliance starting January 1, 2019.  Late last year, the 5th Circuit Court of Appeals partially affirmed the lower court’s decision, holding that the “individual mandate” was unconstitutional in the absence of any associated revenue generation, and remanded the matter back to the lower court to determine whether the individual mandate could be “severed” from the statute, or if the entire ACA must be struck down.  Democratic Defendants, including the 17 States and the U.S. House of Representatives, subsequently petitioned the Supreme Court for certiorari.  Briefs (including over three dozen Amicus briefs in support of the ACA) have since been filed with the Court, with oral arguments expected in October.

A Brief Overview of Texas v. United States

To understand the intricate legal quagmire and mental gymnastics of Texas v. United States, we must first understand two things.  The first is the Supreme Court’s 2012 decision in National Federation of Independent Business (NFIB) v. Sibelius.  In that landmark decision, the Court upheld the constitutionality of the individual mandate and Congress’ authority to implement most provisions of the ACA.  In rendering that decision, the Court tied the constitutionality of the ACA generally, and the individual mandate specifically, to Congress’ authority to tax (as opposed to the similar authority to regulate interstate trade under the commerce clause).   

In his majority opinion, Chief Justice Roberts reasoned that while the penalty associated with non-compliance with the mandate was not explicitly called a tax, it had the functional elements of a tax, a recognized preserve of the Congressional branch’s authority.  This may go down in first-year law courses as the “if it walks like a duck, quacks like a duck…you are getting taxed” analysis.  The Chief Justice identified four factors central to this analysis:

1. The penalty is directed to the U.S. Treasury when a taxpayer files his tax returns;
2. The method for determining the size of the penalty is determined in part by an individual’s taxable income and filing status factors;
3. The penalty is included in the Internal Revenue Code and enforced by the Internal Revenue Service, and
4. The penalty produced at least some revenue for the government.

That settled things.  As the highest court in the land, the Supreme Court is the ultimate arbitrator of the constitutionality of any legislation or act and interpretation of the constitutional powers of the Legislative and Executive branches, and lower courts are bound by its precedent.  As a general rule, consistent with stare decisis and “letting sleeping dogs lie” the Supreme Court does not revisit constitutional questions of authority unless there is a substantive change in circumstances or law. So what has changed in the interim? 

ENTER TCJA FROM STAGE RIGHT

That brings us to the second thing that we must understand: The Tax Cuts and Jobs Act (TCJA) of 2017. In addition to being the biggest overhaul of the tax code in over a generation, the TCJA is also important because it eliminated (or “zero-ed” out) the penalty associated with failing to maintain adequate health insurance as required under the individual mandate.  The close nexus the Court drew in 2012 between Congress’s authority to tax and the legitimacy of the ACA is now what brings this issue back to both the front pages and the bench.  This raises the question, if a “tax” raises no revenues for the government, one of the controlling factors Chief Justice Roberts cited in NFIB v. Sibelius, is it still a tax?

It also raises the question of whether the individual mandate, if deemed unconstitutional when untethered from Congress’ power to tax, can be separated from the remainder of the legislation.  The ACA is commonly understood as a “three-legged stool” – with the individual mandate (and the expansion of the insurance pool necessary to offset the costs associated with expanded minimum benefits and, specifically, restrictions on the ability to deny coverage on the basis of pre-existing conditions) – as an inextricable component to the integrity of the ACA’s design and feasibility.

These are complicated questions, rendered all the more complex by their importance and impact. In our next segment, we will dive into the tangled procedural history of this case, as well as an analysis of the legal arguments by the plaintiffs and defendants.  In the interim, we recommend the following resources.

RECOMMENDED RESOURCES

Kaiser Family Foundation, Explaining Texas v. US: A Guide to the Case Challenging the ACA (March 10, 2020)
The Rand Corporation, “What if the Supreme Court Strikes Down the ACA during the Pandemic”
The Urban Institute, “The Potential Implications of Texas v. United States: How  Would Repeal of the ACA Change the Likelihood That People with Different Characteristics Would be Uninsured” (June 2019)