11.14.14

An Eventful Month for Obamacare: November Presents Two Major Challenges to Health Reform

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Healthcare.gov
November has been a busy month for the Affordable Care Act. On November 15, the second round of Healthcare.gov’s open enrollment will begin. And on November 7, the Supreme Court agreed to hear a case that threatens to undermine the law in the large majority of states. This blog explores these two issues, concluding with a discussion of two other near term challenges to Obamacare.
2015 Open Enrollment
Last year’s botched rollout of Healthcare.gov was a technological (and political) disaster for Obamacare. All indications are that this year’s open enrollment period will run more smoothly (the website was even made available early for users to preview plans, something that would have been unthinkable last year).
Assuming fewer technological problems, the focus this year will be on two key issues. First is the price of premiums. Because the Affordable Care Act bans price discrimination based on health status (with limited exceptions for tobacco use and age), critics of Obamacare have predicted that the cost of insurance premiums will spike as insurers cope with the new pool of sick enrollees. While early analysis suggests that a feared spike in premium prices has not materialized, more data will be forthcoming once open enrollment begins.
To prevent a premium spike, Obamacare must attract young, healthy enrollees to offset the sicker and more at-risk people insurance plans are now required to cover. So the second focus this year will be on how many people enroll (and re-enroll) in the program, with special attention paid to the low-risk young and healthy. Attracting new enrollees will be more difficult this year as much of the “low-hanging fruit” signed up for coverage in 2014 (something the U.S. government seems to have realized as it recently downgraded its enrollment estimates).
Faced with these challenges, President Obama may need to consider some unconventional tactics to promote health reform…

King v. Burwell’s existential threat
Among the Affordable Care Act’s crucial reforms are tax subsidies (“premium tax credits”), designed to offset the cost of premiums for low-income individuals. Without these, Obamacare’s individual mandate, which requires everyone to purchase insurance or pay a penalty, would become untenable (and unconscionable). Without the individual mandate, the young and healthy could decide not to enroll, preferring to wait until they need health care. This would lead to markets dominated by the sick or at-risk, resulting in unaffordable insurance premiums.
Earlier this month, the Supreme Court agreed to hear a case that goes to the heart of these subsidies. The issue in King v. Burwell comes down to five words. The Affordable Care Act states in several places that subsidies are available to those enrolled using an “Exchange established by the State.” However, 34 of the states have not established their own exchanges, leaving administration to the federal government. Those challenging subsidies to the federally-run exchanges argue that the language is clear and unambiguous, leaving the the Court’s with an obvious choice, while the law’s proponents claim the phrase should be interpreted in light of the law as a whole, which they read as suggesting that Congress did not intend to limit subsidies only to state-run exchanges.
Were the Court to rule that the language should be interpreted literally, it could render the individual mandate untenable in the 34 states that currently use the federal exchanges. To avoid these consequences, states would have options to enter the exchange if they so chose. However, given the current political climate, many states would likely opt instead to do nothing, hoping that Obamacare would unravel as a result.
Other issues
There are several other crucial tests facing the Affordable Care Act in the near term. Two of the most significant include the changing political makeup of Congress and the implementation of the long-delayed employer mandate. First, Republican-control of both branches of Congress will give Republicans more power to drive the agenda. Both House Speaker Boehner and Senate Majority Leader Mitch McConnell have vowed to repeal the law, making compromise in the near term unlikely. President Obama would, of course, veto any bill that seriously undermined the provisions of the Affordable Care Act.
Implementation of the employer mandate will also prove an important, and perhaps difficult, hurdle over the next year and a half. Originally meant to begin in early 2014, the mandate has been delayed several times. Currently all signs point to the employer mandate being put into effect in 2015 for companies with more than 100 full-time employees, and in 2016 for companies with 50-99 full-time employees. The employer mandate is one of the last large pieces of unfinished business. Its successful implementation would represent a major milestone, bringing Obamacare close to full implementation.

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The views reflected in this blog are those of the individual authors and do not necessarily represent those of the O’Neill Institute for National and Global Health Law or Georgetown University. This blog is solely informational in nature, and not intended as a substitute for competent legal advice from a licensed and retained attorney in your state or country.

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