Personal Finance

The Supreme Court may gut the Affordable Care Act. What's next?

Key Points
  • The Supreme Court is expected to hear oral arguments in a case against the Affordable Care Act, also known as Obamacare, after the presidential election in November. 
  • The death of liberal justice Ruth Bader Ginsburg last week may increase the chances of the law being overturned. 
  • That may have far-reaching consequences, including less coverage and higher costs for many people and eroded protections for those with pre-existing conditions.
The U.S. Supreme Court.
Phil Roeder | Moment | Getty Images

The Supreme Court may soon erase the Affordable Care Act from existence — an outcome that could have far-reaching consequences for American health care.

The high court is expected to hear oral arguments in a case seeking to overturn the law, also known as Obamacare, in November after the presidential election.

It may be easier to secure a vote against the decade-old law if President Donald Trump can quickly install a sixth conservative justice to replace justice Ruth Bader Ginsburg, who died last Friday. She was among the liberal ranks of the nine-member court.

"Virtually the entire law is at stake," said Cynthia Cox, vice president at the Henry J. Kaiser Family Foundation, where she does economic and policy research on the Affordable Care Act.

Millions of Americans could lose  their health insurance as a result. They would likely face cost and access barriers to regain coverage, especially those with pre-existing conditions, according to experts. Expenses may rise for those who do retain their insurance, as they may lose coverage for some ACA-required services, experts said.

Case primer

U.S. Supreme Court (Front L-R) justices Stephen Breyer, Clarence Thomas, John Roberts, Ruth Bader Ginsburg, Samuel Alito, Jr., (Back L-R) Neil Gorsuch, Sonia Sotomayor, Elena Kagan and Brett Kavanaugh in November 2018. Justice Ginsburg passed away last week.
Chip Somodevilla | Getty Images News | Getty Images

The case, California v. Texas, hinges on a part of the Affordable Care Act known as the "individual mandate."

That provision requires people to have a minimum level of health insurance coverage or pay a financial penalty. The Supreme Court upheld this part of the law as constitutional in a 2012 case, NFIB v. Sebelius.

However, in 2017, the Republican-majority Congress eliminated the financial penalty associated with the mandate as part of a tax-reform package.

Plaintiffs in the upcoming Supreme Court case (who are primarily Republican state officials) argue the individual mandate is unconstitutional without the tax. They also argue the entire law is invalid without the mandate.

The Trump administration supports these positions.

What will happen?

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The question of what will happen if the Supreme Court rules against the ACA is hard to answer, experts said.

For one, the court wouldn't necessarily throw out the whole law in a ruling against it. Some parts might stay, for example. The law could also disappear in some states (like the ones challenging it) but not others.

Throwing it out entirely is also a gray area with multiple possible effects.

But one thing is clear: Millions would lose insurance and health coverage would change, experts said.

Coverage

More than 20 million Americans have gotten health insurance coverage as a result of the ACA.

That includes around 12 million people who became newly eligible through an expansion of Medicaid to low-income adults, according to the Kaiser Family Foundation. Thirty-four states and the District of Columbia adopted the expansion.

Another 11 million got insurance through new marketplaces where individuals could buy health plans. More than 2 million gained coverage through a provision extending dependent coverage to adult children up to age 26.

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It's possible even more people are now covered under these provisions. Millions of Americans have been laid off during the coronavirus pandemic and lost employer-sponsored health insurance along with their jobs. However, that data isn't yet available, Cox said.

Such people could continue their employer-based insurance through a program known as COBRA, but that coverage is generally prohibitively expensive, said John Graves, associate professor of health policy at Vanderbilt University. Individuals generally pay 102% of the insurance premium, but would lose their employer's portion of the cost — meaning a family of four could likely expect to pay $1,000 or more per month, Graves said.

Cost

Cost will be the biggest issue for people who lose coverage, said John Graves, associate professor of health policy at Vanderbilt University.

The health law has helped make comprehensive insurance plans more affordable for many Americans, through financial assistance for insurance premiums and subsidies for cost-sharing.

These would evaporate immediately if the ACA is invalidated, Graves said.

More than 9 million people receive federal assistance to pay insurance premiums — representing 86% of those enrolled through a state or federal health exchange, according to the Department of Health and Human Services. The average subsidy is $492 out of a total $576 monthly premium.

Insurance deductibles, co-payments and monthly premiums would increase for those who receive the financial aid, Graves said. That would likely occur in the next plan year (which generally starts in January) and perhaps sooner, he said.

Dollar limits on the amount of lifetime care a person receives would return absent the ACA. Caps on out-of-pocket costs likely would also go away.

Around 105 million Americans didn't have protections around lifetime limits to health benefits prior to the health law, the Department of Health and Human Services estimates. That included about 95 million people with employer-sponsored health coverage.

Other Americans who weren't receiving financial assistance may see premiums decrease, but that may be countered by higher cost-sharing if care is ultimately needed, Cox said.

Pre-existing conditions

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Currently, insurers can only adjust premiums for individuals based on age, geography and tobacco use, Graves said.

Without the ACA, insurers could raise premiums based on conditions like asthma and heart disease that are identified in a medical screening, Graves said.

Insurers may also deny coverage to people with pre-existing health conditions, such as diabetes and cancer. Such people were also previously subject to other practices, like waiting periods for health coverage.

About 27% of non-elderly adults — about 54 million people — had a declinable pre-existing health condition in 2018, according to the Kaiser Family Foundation.

Trump will issue an executive order aimed at protecting people with pre-existing conditions if the health law is overturned, a White House official said Thursday. However, it's unclear if the president has the authority to require insurers to cover pre-existing conditions.

Services not covered

Plans would also likely become less comprehensive, Graves said.

ACA-compliant health plans are required to cover 10 categories of essential health benefits, like maternity care, mental health and substance abuse treatment and prescription drugs. These were typically not available pre-ACA, Graves said. 

Prior to the requirements, 75% of plans didn't cover delivery and inpatient maternity care, according to Kaiser.