On December 18th, a historic day for American politics, the Federal Court of Appeals for the Fifth Circuit in New Orleans handed down a controversial decision: The Affordable Care Act’s (ACA) Individual Mandate was deemed unconstitutional. This decision will undoubtedly impact the future of the ACA, and we’ll explain how. But first, let’s examine how we arrived at this junction.

The “Individual Mandate” was first implemented as part of the Affordable Care Act, which is often referred to as “Obamacare.” For plan years through 2018, Americans who could “afford”[1] health insurance but chose not to buy it were forced to pay a fee (penalty) when filing their federal taxes, called the “Individual Shared Responsibility Payment.” The individual mandate has long been a significant point of contention for opponents of the ACA, as it attempted to force Americans to have healthcare. However, it could not be repealed without scrapping the entire ACA. This was because the Supreme Court of the United States (SCOTUS) upheld the mandate based on Congress’ power to impose taxes. As part of the Trump Administration’s tax reform in 2018, the individual mandate penalty was reduced to $0, effectively repealing it for 2019 and beyond. This in itself was a big win for opponents of the ACA, but also had larger implications. And herein lies the lesser-known component of this plan: If the penalty is $0, then it really can’t be considered a tax anymore, and therefore SCOTUS’ ruling to protect the mandate is null.

As a result of a lawsuit by a group of Republican governors and state attorneys general, Judge Reed O’Connor of Texas struck down the entire Affordable Care Act based on the grounds that the Individual Mandate was unconstitutional, and therefore the entire ACA was unconstitutional because the rest of the law can’t stand without the mandate. Following the ruling, an appeal was filed, which leads us to the most recent decision by the Appeals Court in New Orleans.

Opponents of the ACA were hoping that the decision by the conservative-majority panel would confirm Judge O’Connor’s ruling, but instead took the case in a different direction. Although the panel ruled 2-1 that the requirement that people have health insurance was unconstitutional, they did not invalidate the law, instead deciding that the case should be sent back to Judge O’Connor for more due diligence into which parts of the law could survive without the mandate.[1] A legal doctrine called severability holds that if a portion of a statute is deemed unconstitutional, then it must be diligently determined whether the unconstitutional portion can be taken out without affecting the intent or execution of the statute, therefore keeping as much of the statute in effect as possible. Further, the court recommended that only those parts of the law that were found to be unconstitutional, or cause harm, should be stricken. This unexpected decision leaves the law in limbo for the foreseeable future, as we will now likely have to wait until after the 2020 presidential election to hear anything back from Judge O’Connor. In addition, on January 10th the federal government recommended that SCOTUS delay its hearing of this case until the lower courts can weigh in again, which could mean the case would not be resolved until June of 2022.

Regardless of your personal beliefs on the subject, the ACA has had a significant impact on Healthcare in America. According to an analysis done by the Department of Health and Human Services, more than 50 million non-elderly Americans have some type of pre-existing condition, and as many as 82 million of these Americans have employer-based coverage.[1] Without the ACA, these people could again be denied health insurance coverage, and insurers would no longer have to cover people up to age 26 under their parents’ plans. Pre-existing conditions have been a central argument of the health care debate that had a significant impact on the 2018 election in which Democrats won a majority in the House of Representatives.

This brings us back to our original question: If we do see an eventual repeal of the ACA, what impact will this have on America and New Yorkers? On a national level, we could see some significant changes to protections like pre-existing conditions, essential health benefits, and community rating, but they will vary quite a bit on a state-by-state basis. For example, New York has codified a number of ACA provisions into state law in order to continue the protections that the law has provided. In some respect, New York’s laws actually provide more protection than the ACA currently does. Some examples of NY’s codified ACA provisions include:

-Fully expanded Medicaid

-Fully-state based ACA exchange

-Restricted short-term, limited-duration health insurance plans

-Codified community rating

-Codified 10 essential health benefits

-Codified guaranteed issue

-Codified 1:1 age band for premium rates

-Eliminated annual or lifetime coverage limits

In addition, five states (California, District of Columbia, Massachusetts, New Jersey, Rhode Island, and Vermont) have their own individual mandate already in place or have one set to go into effect in 2020. It’s not so farfetched to imagine one being implemented in NYS as well. Ultimately, NY is one of the most protected against a potential repeal of the ACA, and with a state legislature controlled by Democrats, we wouldn’t expect that to change.

At Bond, we strive to take the confusion out of healthcare legislation for our clients and their employees. We take this job very seriously and strive to provide industry-leading education and advocacy services free of charge. If you have any questions on the updates we provide, please don’t hesitate to call us at 585.248.5870 or email us at info@bondbenefits.com. To make sure that you receive our updates going forward, follow us on LinkedIn or Facebook!

[1] We use this term carefully as affordability standards handed down by the federal government have had negative consequences on employees in certain income brackets.

[2] https://bondbenefitsconsulting.com/wp-content/uploads/2019/12/US-Court-of-Appeals-5th-Circuit-ACA-Decision.pdf

[3] https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/preexisting