Smart Benefits: What Does COVID-19 Mean for the ACA Challenge?

Smart Benefits: What Does COVID-19 Mean for the ACA Challenge?

The future of the Affordable Care Act (ACA) continues to be uncertain as Texas v. U.S. – which challenges the ACA’s individual mandate and raises questions about the entire law’s survival – remains unresolved pending the Supreme Court’s hearing of the case, which could happen as early as October.

But now some Democrats are calling for an end to the legal challenge in the midst of the COVID-19 pandemic, when many Americans are losing their jobs and benefits. And it remains to be seen whether amicus briefs filed by healthcare stakeholders in support of the law will cite the use of ACA benefits during the outbreak.

The Individual Mandate

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The ACA’s individual mandate provides that most people must maintain a minimum level of health insurance coverage; those who do not must pay a financial penalty to the IRS. In 2017, Congress set the individual mandate penalty at $0 as of January 1, 2019, leading to the current litigation. In December 2019, the U.S. Court of Appeals for the 5th Circuit determined that the individual mandate was no longer constitutional because the associated financial penalty no longer “produces at least some revenue” for the federal government. The 5th Circuit declined, however, to decide whether the rest of the ACA must be struck down as a result and sent it back to the trial court. In March, the Supreme Court announced that it would hear the case.

What Happens if the Law is Struck Down?

If the Supreme Court determines that the individual mandate is unconstitutional, and invalidates just that provision, the practical result will essentially be the same as the ACA exists today. If, however, all or most of the ACA is overturned, nearly everyone would be affected in some way. A host of ACA provisions could be eliminated, including protections for people with pre-existing conditions, subsidies to make individual health insurance more affordable, expanded eligibility for Medicaid, coverage of children up to age 26 under their parents’ insurance policies, coverage of preventive care with no cost-sharing, and a series of tax increases to fund these initiatives.

The Current State of Things

For now, the ACA remains in effect pending the outcome of the litigation. While the case could be argued as early as the fall of 2020, a date has not been set yet and the Court will likely not issue a decision until 2021. As a result, 10 years after the ACA was enacted, the only certainty right now is that there is continuing uncertainty about its survival.

Sam Slade is Managing Director, Employee Benefits, at The Hilb Group of New England, where he delivers consultative advice and services. He is an industry veteran with extensive experience in all aspects of employee benefits, including underwriting, plan design, communications, compliance, and analytics, with a particular focus on alternative funding and self-insurance. Most recently, Sam served as Vice President of the Employer Segment at BCBSRI, where he worked to help the company evolve its self-insured capabilities. Previously, he was the Employee Benefits Practice Leader for USI in Rhode Island after selling his own firm, Bluff Head Enterprises, to the company in 2011. Sam’s career started with The Travelers.