Industry Voices—The ACA is flawed, but a new legal threat could set the U.S. healthcare system back decades

View of the Supreme Court building
Can the ACA survive the latest legal challenge? And what are the consequences if it doesn't? (Getty/sframephoto/iStock)
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Jonathan H. Burroughs, M.D.

Yesterday, twenty states sued the federal government in US District Court in the Northern District of Texas over the Affordable Care Act, claiming that with the repeal of the individual mandate (considered a constitutional tax by the Supreme Court’s decision in 2012), the entire law was no longer constitutional and therefore is now invalid.

Can the federal law withstand the latest of many legal challenges? And what would be the consequences of a successful repeal?

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The Trump administration’s 2017 Tax Cuts and Jobs Act removed the tax penalty for individuals who do not purchase health insurance.

This is significant, because the Supreme Court’s landmark 2012 decision upholding the legality of the Patient Protection and Affordable Care Act (PPACA) didn’t side with the Obama administration, which argued that the law was permitted by the constitution’s commerce clause (the right of Congress to regulate commerce).

Rather, the court said the law represented a constitutional tax (under the taxing and spending clause of the constitution).

Therefore, the new complaint argues that without the foundational right to tax and because the law had no severability clause within it (the right to separate individual sections of the law), the law is no longer compliant with constitutional requirements and therefore should be declared unconstitutional.

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It should come as no surprise that the lead attorneys for this case are both Republicans (Texas Attorney General Ken Paxton and Wisconsin Attorney General Brad Schimel) or that the states enjoined in the case are traditionally “red” states.

This suit represents the latest salvo in the attempt to bring down a highly politicized law that was drafted and approved by the Democratic party alone without Republican input or support.

If the Department of Justice supports the defense of this lawsuit, it will likely wind up back at the steps of the Supreme Court. However, the prospect of defeating the law will have significant consequences that politicians—and everyone else—must keep in mind.

The sustainability of the Medicare Part A trust fund

A little-known fact about the ACA is that the Medicare Part A trust fund, which covers hospital payments, was predicted to be insolvent in 2017. Two measures in the ACA kicked the can down the road for the trust fund’s solvency by 12 to 13 years by increasing Medicare payroll deduction taxes for both employers and employees and by decreasing Medicare payments to hospitals.

Eliminating these measures would place the trust fund in financial jeopardy (unless corrective legislation was also passed) and thus place the financial viability of most hospitals in the United States at risk.

The number of insured Americans and the expansion of Medicaid

Before the ACA was passed in 2010, 48 million Americans (17.4%) lacked healthcare insurance of any kind and the average uncompensated care provided by healthcare organizations was more than 6.5%.

This was a problem for many reasons. Hospitals and physicians were not paid for services rendered, costs were shifted (those with insurance ended up paying more for everything) and individuals with chronic diseases waited until their conditions became more significant or even life threatening before seeking medical attention, driving up the cost of care for everyone (including the payers).

With the 2012 Supreme Court decision and the expansion of Medicaid (which is still gathering steam in traditionally red states), there are 20 million more covered Americans, leaving the number of uninsured lives at 28 million. (There are now 29 countries with a higher percentage of covered lives than the U.S.)

The invalidation of the ACA would not only eliminate the expansion of covered lives but would also turn back the clock.

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States would no longer be able to afford their Medicaid expansion and the program would contract, leaving tens of millions of our most vulnerable citizens without any form of healthcare insurance. This will again place hospitals, physicians and payers in jeopardy and have a significant impact in the access to healthcare services throughout the country.

The relative healthcare insurance monopoly in the U.S.

The ACA was, at its heart, a healthcare insurance reform law. And it took aim at what was, at the time, a virtual insurance monopoly.

As of 2010, approximately 37 states only had one or two insurance companies that possessed more than 70% of market share within its boundaries and that inhibited (or even eliminated) market-based competitive pricing.

With a contraction of Medicaid, an increase in uninsured lives and failure of the Medicare part A trust fund, the cost of healthcare services in the U.S. will skyrocket. High-risk pools (the people with life-threatening conditions who typically cost payers more than $100,000 a year) will intensify, driving all but the largest insurance companies out of healthcare altogether.

This will limit choice and accessibility and will have a significant impact on morbidity (complications) and mortality (death rate) of those with severe chronic or life-threatening illnesses.

Healthcare organizations, patients pay the price

It’s unfortunate that the ACA has been so politicized and polarized. It is a flawed law that needs significant rehabilitation.

However, undoing it will set our healthcare system back decades both in terms of financial viability of healthcare payers and providers and in the quality of care that patients receive.

Hopefully, the Supreme Court will grant yet another reprieve that will only be effective if both political parties can sit down and craft a bipartisan solution to finally replace it.

Jonathan H. Burroughs, M.D., president and CEO of The Burroughs Healthcare Consulting Network, is a certified physician executive and a fellow of the American College of Healthcare Executives and the American Association for Physician Leadership.