Why the ACA Remains Vulnerable

Published on December 13, 2012by Arti Virkud

One might assume that President Obama’s reelection would have sealed the deal on the fate of the Affordable Care Act (ACA), the health reform law passed during Obama’s first term in office. Even prominent Republican ACA-opponents like House Speaker John Boehner have declared the ACA to be the “law of the land.” Public opposition to the law is at its all time low. Yet even after President Obama’s resounding re-election, opposition lawmakers continue their efforts to repeal the Affordable Care Act.

To be sure, many aspects of the ACA legislation have already been enacted including bans on lifetime caps to benefits in insurance plans, coverage for young adults by their parents’ health plans, and refunds to policyholders whose insurance companies have spent less than 80 to 85 percent of premiums on care. Yet, the sweeping law has plenty more to deliver.

Unfortunately for supporters of the ACA, there are still several weapons left for those who hoped for the death of the legislation. Opponents have devised various “plans of attack,” including a systematic effort to discredit components of the bill as they reach the horizon.

Three forthcoming pieces of the legislation are particularly vulnerable. Let’s take a look at each here.

First, the nascent state health insurance exchanges are a particularly vulnerable piece of the ACA. These health insurance exchanges are online marketplaces that will allow Americans to comparison shop for private insurance plans and to purchase insurance policies at group rates. States are given the option to run these exchanges on their own, otherwise the federal government can step in and establish a Federally-facilitated Exchange (FFE).

The states have until the extended deadline of December 14 to notify regulators of their intention to set up exchanges, and so far only 17 have decided to pursue a state-based exchange. Five have decided on a Partnership Exchange, where the state plays a role in the development and operations of the FFE. The remaining 28 states are in various states of uncertainty or resistance.

Those resisting are hoping to attack the exchanges by undermining the legislation’s wording, claiming internal revenue service (IRS) “interference.” What interference? The legislation stipulates that federal subsidies are only available for state exchanges, not for FFE participation. However the IRS has stated it will provide subsidies for both. Rep. Scott DeJarlais (R-Tenn.), for example, accused the IRS of exercising “unprecedented power to rewrite a rule and bypass Congress.”

In this way, Republican leaders hope to chip away at the exchanges with the intention of re-mobilizing dissenters against the ACA. More likely, however, states with rebellious leaders will leave their citizens deprived of the subsidies meant to help them afford health coverage.

A second aspect of the legislation that is open to attack is the expansion of Medicaid, one of the most critical aspects of the law, offering the single largest increase in health care coverage. Effective January 2014, any individual with an income below 133 percent of the Federal Poverty Level (FPL) will be eligible for Medicaid, and the federal government will be responsible for 100 percent of the costs of expanding the states-run program until 2016, gradually decreasing to 90 percent in forthcoming years. However, the Supreme Court has ruled that participation in Medicaid expansion is optional for states.

Opponents of the expansion have little to gain. Recently, the Department of Health & Human Services denied states the opportunity to volunteer for partial Medicaid expansion that would be funded by the federal government. The attempt to get partial expansion was intended to allow states to get away with less federal involvement and less work to manage new enrollees.. Yet without a middle ground, states will choose between an expansion that will cost them nothing in the next three years, or a refusal to expand Medicaid services altogether.

The third piece of the ACA that Republican lawmakers have set their sights on is repealing the medical device tax, a 2.3 percent excise tax to be levied on manufacturers, producers, and importers of certain medical devices. This tax is responsible for providing one of the largest revenue streams for the ACA.

By attempting to repeal this tax and other financial components of the health care reform law, Republican leaders hope to undermine revenue sources meant to sustain more costly endeavors, like the Medicaid expansion and state health exchanges. If successful, GOP lawmakers believe that they can villainize the law in upcoming budget discussions.

Each of these three pieces of the legislation is critical in its own right to the success of the ACA overall, and opposition to any of them could seriously hamper its long-term outcomes. And looming on the horizon is the ever-approaching fiscal cliff, which could have serious implications for how lawmakers approach these issues moving forward.

However, what is clear is that the ACA, as a law, is here to stay — which means that even if the opposition has its way, there should be some time to find adequate fixes.

Edited by Abdul El-Sayed.