Will the New ACA Lawsuit Wreak Havoc on Healthcare?

Leigh Page


September 05, 2018

In This Article

The Administration Takes Two Positions

The DOJ's opposition to the preexisting conditions provision in the ACA is an unpopular move politically. Three quarters of Americans think it's "very important" to keep it, according to a recent poll by the Kaiser Family Foundation.[6]

But it appears that the DOJ was following legal strategy, not political considerations, when it formulated its position.

The lawsuit, filed in February, is based on a change in the legal landscape, after Congress abolished the ACA's penalty for not buying insurance, as part of the Tax Cuts and Jobs Act, which passed last December.

The Republican AGs saw an opportunity to reopen the war against the ACA. The 2012 Supreme Court decision had upheld the penalty for not buying insurance as a constitutionally permissible exercise of Congress's taxing power. But without a "tax"—the penalty will end on January 1, 2019—the law would no longer be constitutional, the Republican AGs believe.

The Democratic AGs argue that the "tax" still exists; it just isn't being collected anymore. But the DOJ position, submitted in June, essentially agrees with the Republican AGs' interpretation. However, the DOJ has limited its case to a very short list of changes that it considers easier to defend in court.

Some Republicans See Fit to Push Back

Republican leaders' initial reaction to the DOJ position was "You did what?" In a statement released in June, Senator Lamar Alexander, chairman of the Senate health committee, excoriated the DOJ.

"There's no way Congress is going to repeal protections for people with preexisting conditions who want to buy health insurance," Alexander said. "The Justice Department argument in the Texas case is as far-fetched as any I've ever heard."[7]

The Trump Administration responded that the legal brief was just one of its positions. Alex Azar, the secretary of Health and Human Services (HHS), told senators in June that the DOJ's stance on the lawsuit involved legal and constitutional issues but wasn't meant to be a policy statement and, in fact, the administration actually supported coverage for preexisting conditions.

He invited Republicans in Congress to craft a bill that would fill the hole left by the DOJ's changes. "We share the view of working to ensure that individuals with preexisting conditions can have access to affordable health insurance," Azar said. "The president has always shared that and we look forward to working with Congress under all circumstances towards achieving that."[4]

Ten Republican senators are taking up that suggestion. A bill they introduced on August 23 would extend the HIPAA provision for employer-covered insurance so that it would apply to the individual market.

Alexander is one of the cosponsors. "I'm glad to join my Republican colleagues to ensure these protections continue, and I look forward to finding more ways to expand insurance options for Americans with preexisting conditions," he said.[8]

However, an analysis of the bill published on the Health Affairs blog found that it wouldn't completely restore ACA protections on preexisting conditions, because it would allow insurers to make exclusions subsequently on the basis of preexisting conditions, even if someone had already been paying their premiums. It added that the bill didn't address other problems with the DOJ proposal, such as rate-setting.[9]

Meanwhile, the Trump Administration took further steps to limit the rights of people with preexisting conditions. In August, HHS issued a final rule that would extend the use of short-term insurance from 3 months to almost 3 years, starting as early as October.

The administration said the new insurance rule would cut premiums in half by setting aside ACA requirements, including the protection for people with preexisting conditions.[10]

Critics of this new kind of cheap insurance have outlined how it could disrupt the individual market. Healthy people would rush to buy the cheaper insurance, leaving people with preexisting conditions in standard policies that follow ACA requirements. With fewer healthy people to pay for sicker people, premiums for these standard policies would rise.


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