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January 15, 2019

Dr. Dylan Roby is an associate professor and the associate chair of the Department of Health Services Administration at the University of Maryland School of Public Health. His research focuses on impacts of reforms on health care delivery, financing, insurance coverage and health disparities.

Here Dr. Roby shares his insights and predictions for what is likely to happen with the Affordable Care Act (ACA) in 2019.

Terms with an asterisk are defined at the end. 

It has been almost one decade since the passage of the Affordable Care Act in 2010, are there any new changes we should be aware of this year?

The major change is the removal of the individual mandate* penalty in 2019. The Tax Cuts and Jobs Act of 2017 left the full individual mandate penalty in place for 2018, so as people file their taxes this year they could still face a penalty if they did not have coverage during 2018. However, there is no penalty in 2019, so there was concern that fewer people would sign up for health insurance during the recent open enrollment period. Right now, it looks like the 2019 numbers for federal and state health insurance sign-ups are lower than last year by about 4 percent. 

If healthier, younger people don’t buy coverage, and the people who do sign up for coverage use their benefits, we could see higher premiums year over year. A recent report I co-authored estimated that health insurance enrollment in California would decrease by 10.1 percent in 2020 due to the removal of the mandate. 

In many states, insurers priced that uncertainty into their health insurance offerings for 2019. In the 2018 legislative session, several states created new reinsurance* programs to stabilize their insurance market. Here in Maryland, our premiums are going down by between 5% and 10% on average because of the new reinsurance program. This year, members of the Maryland legislature are considering creating a state individual mandate penalty that could be applied to future purchase of health insurance during the 2020 open enrollment period.

I heard that a court decision recently struck down the ACA, is that true?

There was a recent federal district court decision in Texas vs. Azar that could upend the law due to the action taken by Congress and President Trump in passing the Tax Cuts and Jobs Act of 2017. Because they removed the individual mandate penalty, Judge O’Connor determined that the mandate was not “severable” from the rest of the law, and that it should be struck down in its entirety. 

But that would be virtually impossible to do. The ACA also includes the employer mandate to provide coverage, the Medicaid expansion, the creation of Accountable Care Organizations* and a plethora of other policies. The decision is not being enforced pending appeal, and is likely to be determined by the Supreme Court. One could also argue it would be rendered moot if a state passed their own individual mandate penalty, as Maryland is considering and DC has already done.

What do to the midterm election results mean for the ACA’s future?

I don’t anticipate any major changes to the ACA in the next legislative session, but I do think that the new Democratic majority in the House of Representatives and the several democratic wins in governors’ races and state houses are likely to partially protect the ACA from Republican attacks. The Trump Administration is using regulatory processes and guidance from CMS to provide states flexibility to implement work requirements (via Medicaid 1115 waivers) and to erode insurance benefits (via ACA 1332 waivers), and in some cases allow employers to opt out of providing family planning coverage.

However, increased congressional oversight of administrative law, legal challenges and the changes in state legislatures and governors who will not adopt those changes will be helpful in protecting some of the coverage gains we have seen throughout the country. Other states like Virginia, Maine and Utah are expanding their Medicaid programs, which will further entrench the Medicaid program as a core source of health insurance for U.S. residents in both conservative and liberal states. Although the administration recently stated that they want to pursue Medicaid block grants through administrative authority, it could hurt lower-income conservative voters in more conservative states.  Republican senators, representatives and governors who have to worry about the state share of the Medicaid program in their budget could oppose this approach.

In liberal states, we have seen an attempt to go further than the ACA to provide more coverage, as we have seen from Governor Newsom in California who wants to expand Medicaid to low-income undocumented immigrants up to age 26 and supports a state-level individual mandate and more subsidies to help people buy coverage on the health insurance exchange. We are likely to see that type of local or state-level movement toward universal coverage elsewhere. Despite the rhetoric, I don’t see how states can push the federal government toward single-payer demonstration programs that leverage the different state and federal revenue streams that support Medicaid, Medicare and ACA-subsidized insurance coverage unless there is a change in the White House during the 2020 election.
 

Glossary of terms:

Individual Mandate 
The Patient Protection and Affordable Care Act (also known “the ACA” or as Obamacare), passed in 2010. Starting in 2014, it required most Americans to have a basic level of health insurance coverage. This requirement is commonly referred to as the law's "individual mandate." The law imposes a tax penalty through 2018 on those who failed to have the required coverage. Starting in 2019, the penalty was reduced to zero by subsequent legislation (the Tax Cuts and Jobs Act of 2017).

Reinsurance 
Reinsurance is typically a separate insurance policy for insurers or large self-insured companies that want to protect themselves against very large losses from higher than expected spending. To protect insurance companies that provide insurance to individuals through the ACA marketplaces, several states have created new reinsurance programs to subsidize losses experienced by health insurers. This added protection often results in reductions in premiums, because the insurers can count on some help in handling unpredictable risks related to high-cost enrollees whose medical claims exceed expectations. Reinsurance is one way states have tried to address the removal of the individual mandate penalty. Many states, including Maryland, were able to get federal support for their reinsurance programs via federal section 1332 waivers.

Accountable Care Organizations
ACOs are groups of doctors, hospitals, and other health care providers, who come together voluntarily to coordinate care to their Medicare patients.The goal of coordinated care is to ensure that patients get high quality health care while also delivering savings to the Medicare program via the Medicare Shared Savings ACO Program or Medicare NextGen ACO program.

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Dylan H. Roby