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What Arizona can do to prepare for a post ACA

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A federal judge in Texas (Judge Reed O’Connor) dealt a blow to the Affordable Care Act in December when he ruled in Texas v. Azar that the ACA is unconstitutional in its entirety, including the implementation of market reforms (e.g. protections for folks with pre-existing conditions), the health insurance marketplaces, and the expansion of Medicaid.

Fortunately, he didn’t issue an injunction ordering the administration to stop implementing the law – so the ACA will remain the law of the land for now.

Will Humble

Will Humble

Back in February, 20 states (including Arizona) filed the lawsuit seeking to invalidate the three legs of the ACA stool: pre-existing condition exclusions, community rating, and guaranteed issue.

The ACA prevents health insurance companies from: 1) denying someone health insurance because they have a pre-existing condition – called the “guaranteed issue” requirement; 2) refusing to cover services that people need to treat a pre-existing condition – called “pre-existing condition exclusions”; and 3) charging a higher premium based on a person’s health status – called the “community rating” provision.

The U.S. Department of Justice isn’t defending the ACA because they agree with the plaintiff states. In fact, the Justice Department has urged the court to strike down the law. Luckily, several states including California are defending the law.

The plaintiffs (including Arizona) argue that since the new federal tax reform law removed the financial penalty for not having health insurance, the ACA is now unconstitutional.

So, Will the Supreme Court Uphold the ACA Again?

The December ruling isn’t the last word. The case will certainly be appealed in the federal appellate court system and then to the U.S. Supreme Court, which has a different cast of characters than it did when the ACA was originally upheld back in 2012 by a 5-4 vote.

Since then, Justice Gorsuch replaced Justice Scalia and Justice Kavanaugh replaced Justice Kennedy. Both Scalia and Kennedy voted against the ACA – so presumably not much on that score has changed.

Chief Justice Roberts voted with the majority that upheld the law. His argument rested on the ACA’s link to the financial penalties for not having health insurance. But remember, the financial penalties for not having health insurance were removed from the IRS tax codes in last year’s federal tax overhaul, pulling out the structure that Roberts used in his argument.

In the 2012 ruling, Justice Roberts wrote that: “… the Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax… because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”

Roberts rejected the Obama Administration’s argument that the federal government’s authority to regulate interstate commerce provides the authority needed for the ACA to be constitutional (the court struck down that argument 5-4).

The bottom line is that the ACA, including its protections for folks with pre-existing conditions, may very well be in jeopardy if Chief Justice Roberts views the ACA as fundamentally different now that the financial penalties for not having health insurance are gone.

What Happens in Arizona if the ACA Goes Away and How Can We Prepare?

It’s easy to see how the ACA could end up being struck down in a couple of years once this case gets to the highest court. Gone would be the health insurance market reforms like protection for folks with pre-existing conditions, community rating pricing and guarantee issue as well as Medicaid expansion and the health insurance marketplaces.

Fortunately, Arizona is partially in control of our own destiny if the ACA is struck down. We couldn’t do much about Medicaid rolling back to pre-ACA levels or the loss of subsidies on the marketplace, but we could have some control over the market reforms like pre-existing condition exclusions, community pricing, and guarantee issue.

Several states already have their own laws that incorporate some or all the ACA insurance market protections. Arizona could do the same.

The good news is that we have time before the Texas v. Azar case makes it to the Supreme Court. A reasonable first step would be for the governor to ask the Arizona Department of Insurance, the Arizona Department of Health Services and AHCCCS to generate (or commission) a report outlining the real-life impact in Arizona in the event that the Texas v. Azar suit is ultimately successful. The report would also put forward options for state-based health insurance market reform laws that could be enacted to require things like prohibiting pre-existing condition exclusions.

Such a report would give the Arizona Legislature an analysis with which to evaluate public policy options for state-based market reforms.

I know what you’re thinking: It’s impossible to pass these kinds of market reforms in Arizona. Maybe, but many thought Arizona’s expansion of our Medicaid system back in 2013 was impossible.

That case study shows that with the right kind of leadership on the Ninth Floor, anything is possible.

— Will Humble is the executive director of the Arizona Public Health Association and former director of the Arizona Department of Health Services.

2 comments

  1. Coverage for “pre-existing conditions” is not insurance, it’s charity. Insurance is about pooling the individual risk of a catastrophic event with others who face the same possibility, but the risk associated with a pre-existing condition is already at 100%. Such coverage is akin to trying to buy homeowners insurance the day after your house burned to the ground. There’s nothing wrong with wanting to help someone in such a situation, but that help is not “insurance.”

  2. Mr. Humble, while a repeal of the ACA could be handled easily through state action, our present Governor and Legislative leaders are mostly opposed to the benefits of the ACA. Republicans in general, and our current state party is, and has been , opposed to a health care network that pools disparate groups in order to secure the most economically feasible network for the people of Arizona. Our best hope is to elect a Democratic majority in both houses of our legislature by the time this case makes it to SCOTUS. One of the hardest fights we have seen in recent years was the expansion of Medicaid. What most Arizonans don’t realize is that repealing the ACA will increase healthcare costs dramatically. We were on the verge of losing at least eight hospitals. People using the emergency room for basic healthcare drove up costs significantly. I believe the facts were lost on most anti-ACA people due to the skin color of the President who led the movement to pass it.

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