The ACA is dead. Long live the ACA.

Just before the holidays, news broke that the Affordable Care Act (ACA) had been struck down by a federal judge in Texas. I found it interesting how little fanfare the announcement received – when the first legal challenges to the law were mounted several years ago, the rulings received breathless coverage on all of the news networks. December’s announcement seemed to come and go quietly – perhaps because of the holidays, or perhaps because there are no immediate changes to enforcement of the law. Regardless, I figure it makes sense to talk about what’s occurred and what is likely to happen going forward.

As background, the ACA survived the first legal challenge to the Individual Mandate in 2012, when the U.S. Supreme Court ruled that the Mandate was legal because – contrary to the way it was framed by the Obama administration – it was a tax, and the federal government has the right to levy taxes. In the meantime, as part of the Tax Cuts and Jobs Act of 2017, the Individual Mandate penalty was lowered to $0. A coalition of Republican-led states then went back to court, arguing that if the penalty was $0, the constitutional justification for the Mandate was eliminated. The judge in Texas agreed, and furthermore ruled that since the Individual Mandate is “essential to” and “inseverable from” other ACA provisions, the entire ACA fails.

Given how important the ACA has been to health plan design and administration over the last decade, this seems like huge news. However, the judge did not enter an order to block the enforcement of the ACA, nor have the White House or regulatory agencies taken any steps to change strategies. Because the Trump administration has chosen not to defend the ACA in court, the defense is being led by a coalition of Democratic-led states. The group plans to appeal last month’s ruling, so the Center for Medicare and Medicaid Services (CMS) – the agency responsible for ACA implementation – has confirmed the ruling has no immediate impact. Many in the legal community expect that this case is headed for the Supreme Court, so this matter may drag out for some time.

I am sure many of my friends in Human Resources have fantasized about a repeal of the ACA over the years – especially when grinding through their mandated reporting. If the ACA was ultimately to be struck down, I am sure many would celebrate the end of the Employer Mandate and the associated reporting. But as I’ve been telling clients for some time, repeal or invalidation of the law has lots of other consequences. Many ACA provisions are wildly popular, such as the expansion of coverage under group plans to “adult children” and the elimination of pre-existing condition provisions.

It is hard to imagine legislators on either side of the aisle abandoning these popular ACA features, so one would imagine they would take action to protect at least some parts of the ACA, if it came to that. But as we all know, Washington is a contentious place these days, and legislation may become even more difficult to pass with the Democrats having regained control of the House in the midterm elections. The ACA has been a radioactive political football since the moment it was proposed… and it looks like the football is going to be kicked around for a few more years.

Does the saga of the ACA fascinate you? Interested in getting more of Chris’s insights on regulatory impacts? Give us a shout at bayoubenefits@gmail.com.