The ACA, Your Hospital, and the Supreme Court With Larry Levitt
The ACA is once again in front of the Supreme Court, and a decision on its future will be likely handed down in June 2021. In the meantime, Larry Levitt joined Chip to discuss the ACA’s impact on hospitals and providers over the past decade. The EVP of Health Policy at the Kaiser Family Foundation shared his views on what we could expect from the Supreme Court and if the ACA is settled law once and for all.
Speaker 1 (00:05):
Welcome to Hospitals in Focus from the Federation of American Hospitals. Here’s your host, Chip Kahn.
Chip Kahn (00:15):
Good, timely and appropriate healthcare depends for most of us on having good healthcare coverage. It is essential that we have a national policy that can assure all Americans an avenue to coverage, regardless of their income or medical condition. The ACA enacted in 2010, provides a framework to make coverage a reality for all Americans, but the framework, which has been much maligned by some, needs tending to as all major programs that serve the public. Unfortunately, the political environment has not been ripe for perfecting action on ACA. Quite the contrary, it is amazing, the effort has covered as many Americans as it has considering the strong headwinds from certain policy makers over much of the act’s life.
The most recent headwind is playing out in the Supreme Court’s case, California versus Texas. The court heard arguments on November 10th, that focused on the constitutionality of the HCAs individual insurance mandate provision and related matters. At the hearing, the advocates and justices focused on the impact of the Congress’s 2017 change to the ACA’s individual mandate, the question of the plaintiff’s standing to bring the case and lower court decisions that found the entirety of the law was not severable from the question of constitutionality for the mandate. So a significant Supreme Court ruling lies ahead between now and June of 2021.
Hospitals have been tireless advocates for our patients in terms of supporting efforts to ensure health coverage and access to care. And we believe our patients will be best served by the pluralistic framework of ACA, which we have supported throughout its development and implementation. So with the change in administration, coming to Washington and the Supreme Court consideration of the ACA case, it is timely to consider the prospects for future health care coverage policy. Our guest is the perfect person to address these issues. Larry Levitt will discuss the implications of a change in the administration for health coverage, as well as the Supreme Court case. Larry is the Executive Vice President for Health Policy at the Kaiser Family Foundation. Glad to have you here this morning, Larry.
Larry Levitt (02:38):
Thanks for having me Chip.
Chip Kahn (02:39):
To get started Larry, can you tell us a bit about yourself and the work you do at Kaiser Family Foundation?
Larry Levitt (02:46):
Sure. Well, I was spent most of my career in health policy, both in government and in the nonprofit sector. Sometimes I describe my career as one of working on failed healthcare reform plans, but with the passage of the ACA, something actually succeeded. In a KFF, which is nonprofit institute focused on informing the public and policy makers and the media on healthcare issues, I oversee all of our health policy work. So everything from the ACA to private insurance, to Medicare, to women’s health, to global health.
Chip Kahn (03:21):
That’s really helpful Larry. To set some context for our conversation, many people probably do not fully understand their healthcare coverage or have deeply ingrained feelings about the ACA and don’t understand its role within our healthcare system. From your perspective, what kind of health care coverage should Americans have and how does the ACA play a role in assuring that?
Larry Levitt (03:48):
Well, I think often we in health care focus on access to healthcare in health insurance, and that is certainly important. If you look at what a comprehensive health insurance plan requires, it is certainly a broad set of benefits. So for example, in the individual insurance market, before the Affordable Care Act, it was very common for plans to exclude benefits like mental health or substance use treatment, maternity care, even prescription drugs. And it’s really hard to call a health insurance plan adequate unless it covers this broad set of services. But I think as important as the healthcare services that a plan offers, the cost sharing is also key. And I think we focus a little too much on whether people are insured or not, and not enough on how adequate that insurance is in terms of what patient out of pocket costs are.
And I think the ACA has done some real good things in that regard and fallen short in some ways. Medicaid, which has been a key component of the ACA’s effort to expand coverage offers very comprehensive benefits and minimal patient out of pocket costs. The marketplace plans are something of a mixed bag. I mean, for lower income people, they qualify for cost sharing reductions, which brings their deductibles and copays down quite a bit. But for middle income people, the deductibles and premiums have been really high and it’s a gap in the ACA as it exists now.
Chip Kahn (05:34):
So we will get to talking about the issue of perfecting the ACA, which I raised in my introduction, but before we get there, there is a potential big roadblock. And that’s this court case that has been brought against the ACA. I’m sure you listen to the ACA hearing the other day at the Supreme Court. What is your impression of the issues before the court?
Larry Levitt (05:59):
I did listen to it. It’s one side benefit of the pandemic is we actually get to hear these Supreme Court hearings in real time, which generally you can’t do unless you’re in the building. It’s remarkable that more than a decade after the ACA passed, we’re still looking at a potential existential threat to its very existence. And this court case has been a backdrop to our politics, to our elections for two election cycles now, with a lot of debate over the future of protections for people with pre-existing conditions. I think when I listened to the hearing, I came away relatively optimistic, cautiously optimistic that the ACA may in fact survive this threat. The basis of the case is that the individual mandate in the ACA is unconstitutional. Back in 2012, the Supreme Court ruled that the mandate was constitutional because it had a tax penalty tied to it. Congress in 2017, set that tax penalty to zero. So the argument here is that without a tax penalty, the individual mandate is unconstitutional.
And I think it’s quite likely that the court will in fact agree with that argument and throw the individual mandate out. The really big issue is whether the mandate can be separated from the rest of the law and whether the rest of the law gets thrown out along with the mandate under the argument that it’s not severable. And there, it felt like a majority of the justices felt that was sort of a road too far. And that in fact, the mandate could be thrown out, but the rest of the ACA could in fact survive.
Chip Kahn (07:38):
One way of thinking about the significance of the ACA is let’s look at the court for a second and just assume that they did strike the law. I mean, what would be the ramifications for Americans if on June 5th or some date, the next day, there was no ACA?
Larry Levitt (08:01):
The word that comes immediately to mind when you think about throwing the ACA out is chaos. 10 years in, the ACA is fully embedded into our healthcare system. And it’s not just about insurance coverage, although that is certainly important. The ACA has covered roughly 20 million people, probably more now with the pandemic and economic crisis, but the ACA also is central to how hospitals get paid under Medicare. It increased taxes, it offers free preventive services to everyone with insurance, it put caps on patient out of pocket costs, it eliminated annual and lifetime limits. It would be utter chaos if the ACA were precipitously thrown out, but it wouldn’t just be chaos in our healthcare system. It would be chaos in our political system as well. I think we have an emerging consensus around some things like pre-existing condition protections, but not even close to a consensus across the parties on how to accomplish that. So if the ACA were thrown out, I think it would dominate the political agenda for months, if not years.
Chip Kahn (09:12):
One aspect of that, that you’ve talked a lot about on Twitter is that the pre-existing condition clause itself is not sufficient to actually protect individuals for their insurance. Could you spend a moment just outlining that matter, that you need all the pieces of the pie in a sense in ACA to really assure people that they have protections against being excluded for pre-existing conditions?
Larry Levitt (09:45):
Yeah, I don’t think people fully understand the sort of whole set of pieces of that pie that are required to truly protect people with preexisting conditions, people who are sick. One is guaranteeing insurance that is certainly important, but it’s by no means sufficient. You also have to control premium surcharges for people who are sick. In the individual insurance market before the ACA, it was not only the norm that people with pre-existing conditions got denied insurance, but also the people who were sick got charged high premiums. So if you allow astronomical premiums for people with pre-existing conditions, it doesn’t do any good to say that they’re guaranteed insurance, but it’s also about the nature of the insurance, what we started talking about, what benefits are required? Are annual and lifetime limits allowed? Meaning that someone who’s very ill just has their insurance run out on them.
Are insurers allowed to exclude coverage or have waiting periods for pre-existing conditions? It was not, again, not uncommon for the ACA that you had a pre-existing condition, let’s say asthma, you might get covered, but the insurer would exclude coverage of your respiratory system. So that doesn’t do you much good. And then there’s keeping the insurance market stable. If you just guarantee people with pre-existing conditions coverage but you don’t do anything to bring healthy people into the market, you’ll end up with what actuaries call a premium death spiral. Premiums will just skyrocket. And the ACA had a carrot in the form of subsidies and a stick in the form of the mandate to bring healthy people into the market. The stick’s now gone, but I think most people believe that the carrot was always the more powerful force anyway.
Chip Kahn (11:32):
Larry, assuming then that the Supreme Court does uphold the law and this pre-existing condition issues that you’re giving us the details on, is so complex that even those who have long opposed ACA probably will, I don’t want to say end their opposition, but sort of let it go. Let’s move on, I think then to the future, and we have January 20th, the new administration coming in, obviously they have a different attitude about ACA and healthcare coverage. What do you think the new Biden administration can do administratively within the framework of ACA to increase the possibility of coverage for more Americans?
Larry Levitt (12:24):
President Elect Biden has a sweeping healthcare agenda. If Democrats do not take the Senate which hinges on to a runoffs in January in Georgia, then the administration will be left largely with administrative actions. Things like a public option, like expanding the ACA subsidies, which Biden has proposed, require Congress. And those will be tough with Republican control of the Senate. But there is a lot the Biden administration can do administratively. So things like reopening the enrollment period in the context of the pandemic and the economic crisis, letting people who were uninsured sign up, even after open enrollment expires in mid-December would help. I think increasing outreach and consumer assistance, the Trump administration cut ACA outreach by 90%, cut grants to navigators, which help people enroll by over 80%. I would expect to see the Biden administration reverse those cuts and maybe even expand outreach beyond what was done in the Obama administration.
And that just creates a very different environment. The Trump administration has worked to undermine the ACA and has certainly not work to inform people about their options, especially in the middle of a pandemic and an economic crisis. I think we’ll see a very different posture from the Biden administration in the past few years, in terms of state flexibility. The Trump administration has given states quite a bit of flexibility in Medicaid and in the ACA to restrict or limit coverage. I would expect the Biden administration to reverse those guidelines. And in fact, look to states to try to expand coverage through waivers. And then I think there will be a big debate around short-term insurance plans. These are plans that the Trump administration expanded. They don’t follow any of the ACA’s rules, including protections for people with pre-existing conditions. I think the Biden administration may be hesitant to take coverage away from people that they’ve already bought, but will look to restrict enrollment in those plans going forward.
Chip Kahn (14:34):
Larry, even if the Congress is divided so that a major change in coverage public option is not on the table, there still may be the possibility of technical changes and other kinds of ways to shore up and make ACA in a sense more potent in terms of its affordability aspects for premiums and consumers. If you were going to do a legislative agenda, that didn’t go the whole way, but dealt with a lot of the details. And going back to my point in my opening remarks, in a sense, perfected the act within the framework. What would your agenda be? And I don’t know if it would be possible that Congress would take it up, but what would your agenda be?
Larry Levitt (15:18):
Yeah, and I think that’s a really important point. I mean, you know as well as anyone that even in a divided government, things can still happen, whether it’s under the radar or as part of larger budget deals. And I think we may start to see a softening of the just blanket opposition among Republicans to anything ACA related. And there are some maybe modest steps that the parties could agree on. So for example, there’s something called The Family Glitch. This is where families with employer coverage face very high premiums, but are locked out of the ACA marketplace and the subsidies to help them afford insurance. Fixing that Family Glitch might be something that people could agree on. Maybe even modestly increasing the premium subsidies under the ACA. The group that really struggles right now is the middle class. They make too much to qualify for ACA subsidies, but not enough to truly afford insurance on their own.
That’s a constituency that should appeal to both parties and I think there will be discussion of folks caught in the coverage gap. These are people in the dozen states that have not expanded Medicaid, who have incomes below poverty, and don’t make enough to qualify for the ACA subsidies, but make too much to qualify for the pretty stingy Medicaid programs in many of these states. Maybe there’s some sweeteners that help these remaining states expand. Federal government now pays 90% of the cost of the Medicaid expansion. Maybe that could bump up to 100% to entice some of those states in, or maybe there’s some backup mechanism to cover these very low income folks in these states.
Chip Kahn (17:08):
Well, this has been very, very helpful, Larry and we so much appreciate you joining us today. And I think we’ve hopefully given our audience a good sense of where we are with the ACA, as I mentioned, the current headwinds and maybe the possibilities of improving coverage for more Americans as we move into a new administration.
Larry Levitt (17:29):
Thanks Chip. I look forward to continuing the conversation.
Speaker 1 (17:37):
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Larry Levitt, Executive Vice President, Health Policy, Kaiser Family Foundation (KFF)
Larry Levitt is Executive Vice President for Health Policy, overseeing KFF’s policy work on Medicare, Medicaid, the health care marketplace, the Affordable Care Act, women’s health and global health. He previously was Editor-in-Chief of kaisernetwork.org, KFF’s online health policy news and information service, and directed KFF’s communications and online activities and its Changing Health Care Marketplace Project.
Prior to joining KFF, he served as a Senior Health Policy Advisor to the White House and Department of Health and Human Services, working on the development of President Clinton’s Health Security Act and other health policy initiatives. Earlier, he was the Special Assistant for Health Policy with California Insurance Commissioner John Garamendi, a medical economist with Kaiser Permanente, and served in a number of positions in Massachusetts state government.
He holds a bachelor’s degree in economics from the University of California at Berkeley and a master’s degree in public policy from Harvard University’s Kennedy School of Government.