Cartoon – The Stink of Unimportance
Cartoon – When you can’t compete on price, quality, features or service
Cartoon – We don’t have any Rebellious Employees
Cartoon – The Economy is Circling the Drain
Surprise Settlement In Sutter Health Antitrust Case
https://khn.org/news/surprise-settlement-in-sutter-health-antitrust-case/
Sutter Health has reached a tentative settlement agreement in a closely watched antitrust case brought by self-funded employers, and later joined by the California Attorney General’s Office. The agreement was announced in San Francisco Superior Court on Wednesday morning, just moments before opening statements were expected to begin.
While representatives for both sides confirmed they had reached a tentative settlement, they would not divulge details of the agreement, which must be approved by the court. Superior Court Judge Anne-Christine Massullo told the jury impaneled for the case that details likely would be made public during approval hearings in February or March.
There were audible cheers from the jury following the announcement that the trial, which was expected to last three months, would not continue. Officials with the attorney general’s office and Sutter Health declined requests for comment.
Sutter stood accused of violating California’s antitrust laws by using its market power to illegally drive up prices. Health care costs in Northern California, where Sutter is dominant, are 20% to 30% higher than in Southern California, even after adjusting for cost of living, according to a 2018 study from the Nicholas C. Petris Center at the University of California-Berkeley that was cited in the complaint.
The case was a massive undertaking, encompassing years of work and millions of pages of documents, California Attorney General Xavier Becerra said beforehand. If the plaintiffs prevailed, Sutter was expected to face damages of up to $2.7 billion.
The nonprofit giant has 24 hospitals, 34 surgery centers and 5,500 physicians across Northern California, with $13 billion in operating revenue in 2018. The state’s lawsuit alleged Sutter has aggressively bought up hospitals and physician practices throughout the Bay Area and Northern California, and exploited that market dominance for profit.
Among other tactics, it accused Sutter of employing an “all-or-none” approach to contracting with insurance companies, demanding that an insurer that wanted to include any one of the Sutter hospitals or clinics in its network must include all of them — even if some of those facilities were more expensive than a competitor.
Sutter Health consistently denied the allegations, saying its large, integrated health system offers tangible benefits for patients, including more seamless, high-quality care and increased access for residents in rural areas. Sutter also disputed that its prices are higher than other major health care providers, saying its internal analyses tell a different story.
The case was expected to have nationwide implications on how hospital systems negotiate prices with insurers. Even with details of the agreement not yet public, attorneys and patient advocates said they expect the settlement to mark a pivotal moment.
David Balto, a former federal regulator who is now an antitrust lawyer in Washington D.C., called the developments “precedent-setting.”
“You have all these metropolitan markets where you have large hospital systems, but Sutter Health in the Bay Area is like the filet mignon of the problem,” Balto said. “The problems in San Francisco are bigger than anywhere else. And you see that in how Sutter has exploited its market power to the nth degree.”
Sutter’s tactics were hard to challenge under antitrust law, Balto added. But “what [Becerra] did was bring together hard facts with top-notch scholarship proving there was an overwhelming problem and that Sutter’s strong-arm tactics were the cause of the problem.”
Anthony Wright, executive director of the advocacy group Health Access California, said he wasn’t privy to the settlement details, but that he expected it to include “some meaningful remedies in terms of adjusting some of the anti-competitive practices and contract provisions that Sutter has advanced over the years.”
“While we await the details of the settlement,” he said, “the lawsuit itself sends a strong signal to hospital chains across the nation and all health care providers planning to adopt predatory prices.”
Jaime King, associate dean and a professor of law at UC Hastings College of the Law, said Sutter’s decision to settle “in some ways is not a surprise. On the eve of trial, we often see big settlements.”
Still, she said, it comes at a cost: “I think it’s a shame we won’t ever get to see the evidence that would have been brought forward in this case about Sutter’s contracting and pricing practices. There are a lot of very large health systems that are charging a lot of money for their services, and this case had the opportunity to give us much more insight into what we’re spending our health care dollars on.”
Sutter continues to face trial on a separate federal antitrust lawsuit.
Other countries show Medicare for All doesn’t have to mean getting rid of private insurance
Bernie Sanders often points to Canada and Europe as models for universal health care coverage.
But the Vermont independent senator’s “Medicare for All” plan differs substantially from the insurance systems that exist up north and across the pond. Canadians and most European countries have private insurance industries alongside their government programs.
One of the most controversial provisions of Sanders’ Medicare for All proposal is that it essentially eliminates private insurance — allowing the industry to only offer benefits for services that are not covered by the federal program, such as cosmetic surgery. More than 150 million Americans buy private policies through their employers, and tens of millions more purchase private insurance through Medicare Advantage or on the individual market exchanges.
Sanders has made Medicare for All a centerpiece of his 2020 presidential campaign. Rivals ranging from President Donald Trump to former Vice President Joe Biden, who is also seeking the Democratic nomination, have gone the other way and argue that Americans should not be forced to give up policies they like. Sanders has defended his stance, slamming the private insurance industry for putting profits over patients.
But public and private insurance co-exist in Canada and many European countries. These developed nations require that everyone have coverage — with private insurance typically providing additional benefits, helping to pay out-of-pocket costs or allowing faster and broader access to medical providers. In some nations, such as the Netherlands and Switzerland, residents satisfy their coverage mandate with policies from private carriers.
In many developed nations outside of the US, residents expect a lot from their health systems but they are conscious of the cost, said Chris James, an economist specializing in health care for the Organisation for Economic Co-operation and Development, a consortium of 36 developed countries.
“It becomes a tricky political balance between those competing sets of demands,” James said. “They want more generous public provisions but they don’t want to pay too much more tax.”
How health care coverage works in other countries varies widely.
Canada, for instance, has a regionally administered public health insurance program, which is paid for by provincial and federal tax revenue, according to a 2017 report from The Commonwealth Fund. Patients don’t pay for hospital care and doctors’ visits. However, the universal program, known as Canadian Medicare, doesn’t cover outpatient prescription drugs, rehabilitation, home care, dental benefits, vision care and some other services. Some two-thirds of Canadians are covered by private plans, often through their employers, to cover these treatments. The insurers are mostly for profit.
England, meanwhile, has the very comprehensive National Health Service, paid for by taxes. Services are generally free, though there are some copayments for prescription drugs and some services, including dental care for most adults. Still, about 11% of residents sign up for private health insurance plans, which provide faster access to care, particularly elective hospital procedures, according to The Commonwealth Fund.
“They use it to jump the queue,” said Robin Osborn, senior adviser with The Commonwealth Fund.
The system is very different in other countries, however.
In the Netherlands, residents are required to buy private insurance, which is heavily regulated and paid for by payroll taxes paid by employers, premiums paid by enrollees, annual deductibles, copayments and general taxes. Lower-income folks receive government subsidies to help them afford the cost, James said. Some 84% of the Dutch also buy additional private coverage to pay for dental care, eyeglasses, physical therapy and other services, mostly from non-profit insurers, according to The Commonwealth Fund.
Germans are also mandated to have coverage. They can choose from more than 100 non-profit “sickness funds,” which covers a wide array of services, including drugs, physical therapy and dental work. Most are funded through payroll contributions that are split between workers and companies. About 11% of residents, mainly younger workers with higher incomes, opt out of this program and buy private coverage, which may offer a wider range of services with lower premiums, according to The Commonwealth Fund. Some of the private insurers are non-profit, while most are for profit.
Denmark, meanwhile, has a national health care system paid for mainly by income taxes, but 42% of residents buy additional coverage to help pay for prescription drugs, dental care and physical therapy, mainly from the non-profit Danmark, according to The Commonwealth Fund. Additionally, 30% have supplemental policies from for-profit insurers to give them expanded access to private providers.
“These systems each have carved out a role for private insurance,” Osborn said. “The universal coverage provides a comprehensive package of benefits that is generous. The private insurance, depending on the system, often enables people to get care that is either faster, has a slightly higher level of amenities or additional benefits.”
The Sanders campaign says that private insurers in other countries are very different from the American companies Sanders is fighting against.
“For the most part, for-profit, private insurance companies do not play a large role in other countries’ health care systems and, to the extent that they do play a role, they are tightly managed and kept in line by the government,” said Warren Gunnels, senior adviser to the campaign.
Don’t Confuse Changes in Federal Health Spending with National Health Spending
There has been confusion over estimates, like ours, that measure the effect of single-payer (i.e., Medicare for All) proposals on both federal spending and total national health spending.
The two are not the same, and too frequently, people use estimates of both and make misleading apples-to-oranges comparisons.
Federal spending versus national spending
Federal health care spending is the money the federal government spends on health care, whereas national health spending includes all health spending, regardless of who pays for it.
Federal health care spending includes spending on Medicare, Medicaid, the Children’s Health Insurance program, Affordable Care Act Marketplace premium subsidies, the Veterans Administration, US Department of Defense health care programs, support for health care professionals and hospitals providing uncompensated care, as well as other federal programs.
Changes in federal health spending represent amounts that would either need to be added to the federal budget (and funded through tax increases or additional government debt) or which would lead to cuts in other federal programs to free up sufficient federal funds.
National health care spending includes spending by the federal government, state and local governments, households, and employers. National health expenditures (NHE) are estimated annually by the Centers for Medicare and Medicaid Services (CMS) as the National Health Expenditure Accounts. Using our models’ projections and extending the CMS’s estimate for spending categories we do not model, we estimate that NHE for the 10-year period from 2020 to 2029 will total approximately $52 trillion dollars under current law.
What increases or decreases in these estimates mean
It is possible, for example, for federal spending to increase while national health spending decreases, if new federal programs take over some of the expenses currently paid for by employers and households and do it at a lower cost.
But if a federal program takes over some of the private spending and ends up providing more generous benefits, total national spending could still increase. Regardless, it is important to separate changes in federal spending from changes in national spending to understand the implications of any health care reform approach.
In our most recent report, we estimate that a broad single-payer reform (referred to as Reform 8: Enhanced Single Payer in the report) would increase federal government spending by $34 trillion over the 2020–29 period, $34 trillion beyond what the federal government already spends on health care.
However, this reform would shift almost all of the spending currently done by households, employers, and state governments over to the federal government. All people, regardless of whether they have insurance coverage today, would be covered by the new federal program.
How single-payer reform would affect federal and national spending
Under the single-payer enhanced reform, the new federal government program would provide more covered benefits than typical insurance offers today (including typical medical benefits but adding a new home- and community-based long-term services and supports benefit and adult dental, vision, and hearing benefits). All the costs would be covered by the federal government; no one would pay premiums or out-of-pocket costs (i.e., no deductibles and no copayments or coinsurance), including undocumented residents.
As a result, many people would get insurance for the first time, and many others would get significantly more generous insurance than they currently have. And with their new or improved insurance, many people would use more medical care than they do today.
The federal government would limit the fees paid to doctors, hospitals, and prescription drug manufacturers, which would help lower the program’s costs, compared with what it would be otherwise. In addition, the system would be simpler than our current “patchwork” system, so the administrative costs of running the program would be lower than in most private insurance plans; this also helps offset some of the new costs.
However, by our estimates, the increase in spending for people with this new generous coverage would outweigh the savings from lower prices for health care providers and lower administrative costs. As a result, total national spending would increase, even taking into account greatly reduced household, employer, and state government spending.
For this approach to reform, federal spending would increase by $34 trillion over 10 years, but health spending by individuals, employers, and state governments would decrease by $27 trillion, so national health spending would increase by $7 trillion over the same 10-year period, from $52 to $59 trillion.
The figure below illustrates our estimates. In the first bar, we divide the $52 trillion estimated current-law spending on health care over 2020–29 into three pieces: $17 trillion in federal spending; $27 trillion in private spending and state and local government spending for medical care and dental care that would be subsumed into the new single-payer program; and $8 trillion in spending (a mix of government and private spending) that would not be affected by a single-payer program.
The $8 trillion includes costs associated with an array of expenses, such as medical care for members of the military and their families while military members are deployed, services provided to foreign visitors, acute care provided to people living in institutions (e.g., prisons and nursing homes), and the value of new construction and equipment put in place by the medical sector. This spending also includes long-term services and supports by states and individuals that would continue under reform. For our purposes here, we refer to this $8 trillion in spending as “spending not affected by single-payer.”
The taller second bar shows that the total national spending under a single-payer program would be higher than under current law. The $17 trillion in federal spending under current law would be shifted to help fund the new program, and the federal government would take over the $27 trillion in current health care spending by employers, households, and state and local governments.
Fully funding a new single-payer program would require an additional $7 trillion in federal spending beyond that repurposed $44 trillion. The $8 trillion in spending not affected by the single-payer program would continue to be funded by a mix of government and private sources.
Thus, it is not appropriate to compare an estimated increase in federal spending of $34 trillion over 10 years with a current-law level of national health spending of $52 trillion over the same period and conclude these are savings in national health spending.
And although many advocates believe that a single-payer system would increase federal spending but with the benefit of reducing national health spending, our estimates contradict that. According to our analysis, a broad single-payer reform, similar to current Medicare for All bills, would increase federal spending and increase national spending.
But as our full report also shows, a single-payer program can be designed to decrease national health spending, as can other approaches to achieving universal coverage.
The Case for the Public Option Over Medicare for All
How can the United States better control its health care costs and quality and still achieve universal coverage? The strongest choice is not Medicare for All, which would eliminate private insurance; it’s the public option, which would allow people to choose from Medicare or private insurers. But the public option can only succeed in controlling costs and quality and achieving universal coverage if it is implemented without the financing gimmicks that characterize Medicare.
In this article, we define the principles that can make the public option the legitimate and powerful competitor to private insurance firms and how this competition would expand access and improve cost and quality. But first we’ll clarify how extremely important the universal coverage is.
Universal Health Care Coverage: Life and Death Politics
Universal health care coverage is central to the physical, fiscal, and political well-being of a nation. Nowhere is that more evident than in the United States, the wealthiest nation in the world, which still has 28.3 million people without health insurance. Americans have literally died, gone bankrupt, become disabled, and stayed in dead-end jobs that offer insurance. And yet, despite the lack of universal coverage, the United States spends more as a percentage of GDP than any other nation and its quality of care is erratic. Even with its world-class resources and medical technology, it ranks the lowest among developed nations in avoiding preventable deaths.
Universal coverage has a long history in other developed countries. It began as primarily employer-based health insurance coverage in the 1880s in Germany, morphed into government-backed universal coverage in England in 1948, marched across Western and Eastern Europe in the ensuing 25 years, and then into Latin America, Africa, Asia, and Canada, making the United States the exception among developed countries. Finally, after 65 years and 12 presidents, the United States passed the Affordable Care Act (ACA) in 2010 to significantly reduce the 45 million Americans who did not have insurance.
The passage of the legislation was hard fought and its results, nine years later, are mixed. On the plus side, the ACA insured more than 20 million additional Americans, lowering the percentage of the U.S. population that was uninsured from 17% in 2008 to 10% in 2016, and fewer people have suffered financial shocks since being insured through the ACA. Although the data are early, it may help make Americans healthier.
But there are negatives too. The ACA’s slogan, “if you like your plan or doctor, you can keep it,” proved to be false for many. And 14.7 million of the more than 20 million were insured through Medicaid, the U.S. health insurance for the indigent, which the important Oregon Health Insurance Experiment found had no effect on health status (but it did have a positive effect on self-reported mental health status). Health care remains unaffordable to millions: Premiums for insurance purchased on ACA-related exchanges rose by a staggering 26%, which helps explain why unsubsidized enrollment declined by 2.5 million people between 2017 and 2018. Those newly insured who were not covered by Medicaid faced ACA policies with substantial deductibles of at least $1,400 for an individual or $2,800 for a family. Finally, the small numbers of insurers that agreed to participate in the ACA had little incentive to compete on price, lower out-of-pocket costs, or by offering a broad choice of providers.
So what the United States needs, and Americans want, are lower premiums and out-of-pocket costs for health care, a sufficient number of competitive private insurers to honor the promise “if you like your plan or doctor, you can keep it,” and, as surveys reveal, no exclusion for pre-existing conditions, no lifetime limits on benefits, and coverage for children up to age 26 on parents’ insurance.
The Medicare for All option, which would eliminate all private insurers, is clearly not the answer Americans want. They do not want to lose their private health insurance to a public bureaucracy or to pay its $3.2 trillion annual price tag in the form of higher taxes.
How the Public Option Can Cure the U.S. Health Care System
The aim of improving health care affordability, continued private insurance, and better access to quality providers can be achieved with the public option, but only if it is implemented with rates that reflect realistic underwriting and accurate and fair cost accounting.
The Medicare component of the public option is wildly popular: 85% of Medicare beneficiaries are satisfied with the federal program. And why not? Many doctors accept it, and the beneficiaries pay only a fraction of the cost, passing the rest onto future generations. The U.S. Congress, Democrats and Republicans alike, gives away benefits to users whose value substantially exceeds what they pay. Each beneficiary on average receives $310,000 more in benefits than they paid. The unpaid bills — $37 trillion at last count — have been kicked down the road to future generations in the form of bigger federal deficits. The Galen Institute reports that Medicare’s annual deficits are responsible for one-third of U.S. federal debt.
Yet, Medicare’s enormous scale confers genuine administrative and purchasing efficiencies. Medicare spends up to seven times less than private insurers on administrative costs. It also pays hospitals 40% less and providers 2 to 3.5 times less than private insurers do for the same services. Some contend that providers merely shift Medicare and Medicaid’s unpaid charges to private insurers, but that charge has been refuted. Rather, it is plausible that these payments appropriately help to squeeze out the one-third of health care expenditures that many experts view as sheer waste.
The public option can take advantage of these efficiencies but only if it is implemented without the financing gimmicks that have artificially lowered the costs of Medicare at the expense of our progeny and that would allow it to unfairly compete with private insurers.
To assure that all insurers play on a level playing field, public-financing principles must conform to those of private insurers. For one, the public option’s expenses must be financed by current users, not future generations. In other words, it should be pay as you go, just like private insurance. The public option’s accounting also should include all its expenses, such as the unfunded liability for Medicare employees’ post-retirement benefits, which are often buried in some fund other than Medicare’s. It must also account for the cost of the money that American taxpayers and debt holders have invested in building Medicare’s infrastructure, including its buildings, equipment, and workers. After all, private insurers incur costs to build the infrastructure that allows them to market their products; yet, under current accounting practices, Medicare gets these assets for free. To keep it real, expert accountants would routinely audit the public option’s financial statements to certify that its expenses are accurately stated, just as they do for private insurers.
Private insurers will be forced to compete with the public option’s lower costs through improved pricing, service, and quality. They can offer, for example, low-cost policies that transport enrollees from high-cost states to high-quality, low-cost ones such as Utah. Or they can emulate Ashley Furniture’s sending an enrollee to low-cost Mexico for an orthopedic procedure, replete with an American surgeon who was paid three times Medicare’s rate payments to the patient of $5,000 plus all her travel and out-of-pocket costs. (For political reasons, Medicare cannot emulate policies that favor certain states or send its enrollees out of the United States.) To help the private insurers to compete, new legislation should allow bundling of health, life, casualty, disability, and any other products, as well as the ability to sell across state lines. This enhanced competition among insurers and providers would lower costs, thereby increasing access to coverage and likely improving the quality of care.
We personally believe that the United States would be better off emulating three European countries — Germany, Switzerland, and The Netherlands — which are lauded for the quality of their universal coverage health care systems and yet spend far less on them than the United States. These countries are fiscally much healthier than nations with government-run health insurance systems akin to Medicare for All. But the reality is this model is politically untenable in the United States because it relies entirely on private insurers and would require eliminating highly popular Medicare and giving people vouchers for buying private-insurance policies.
Americans generally like both private insurance and Medicare but universally deplore their costs. Medicare for All eliminates private insurers and increases taxpayers’ burden. The public option keeps private insurers and controls health care costs. However, it will require legislative and governmental administrative backbone and independent oversight to assure that the public option achieves these goals legitimately — without resorting to Medicare’s financing gimmicks.
Americans already pay a ‘gigantic’ hidden health-care tax, economists say
That’s the argument put forth in Emmanuel Saez and Gabriel Zucman’s new book, “The Triumph of Injustice.” The economists at the University of California at Berkeley, who have advised Warren and Sen. Bernie Sanders (I-Vt.) on the creation of a wealth tax, call private health insurance costs “taxes in everything but name.” They are automatically deducted from workers’ paychecks. And they are essentially mandatory for families who don’t want to be crippled by long-term health-care costs or unexpected illnesses.
“Whether insurance premiums are paid to a public monopoly (the government) or to a private monopoly (the notoriously uncompetitive US private health insurance system) makes little difference,” the economists write. “Both payments reduce the take-home pay of workers; and although it’s always possible to evade taxes or to refuse to pay one thin dime to insurance companies, in practice almost everyone abides.”
The issue sparked a spirited discussion during Tuesday’s debate in Ohio for the 12 Democrats vying to take on President Trump in 2020, with Warren and Sanders’s plans getting blasted as being overly expensive and unworkable. Warren was specifically called out for refusing to say whether her proposal would result in higher taxes for the middle class or get into how it would eliminate employer-sponsored coverage for 160 million Americans. Although she vowed that her plan would not raise overall costs for the middle class, she notably evaded the specific issue of taxes.
Saez and Zucman have produced an estimate of just how much we’re already paying for health insurance and find it’s a little north of $1 trillion per year: “close to 6% of national income in 2019 — the equivalent of one-third of all federal income tax payments!” Health insurance costs raise the average effective tax rate on American labor from 29 percent to 37 percent, they said.
Thinking about health-care costs in this way is useful, Saez and Zucman write, because it allows for better tax comparisons between the United States and other wealthy countries, most of which fund health care via their tax codes. “Americans on average keep about the same fraction of their pretax income as their European brethren,” they write.
One of the key uncertainties about transitioning to a Medicare-for-all plan like the ones proposed by Warren and Sanders is whether doing so would raise or lower total health-care costs. Preliminary estimates have so far yielded wildly divergent outcomes, in part, because the financing specifics behind various candidates’ plans are largely still up in the air. How the change would affect the wallet of the typical middle-class tax payer relative to other groups also remains an open question.
But the Saez and Zucman data underscore that Americans already are paying a large health-care levy that is for all intents and purposes mandatory. If you consider health insurance costs as a tax on labor, as they do, it means the extremely rich, who derive most of their income from capital, are carrying a disproportionately light share of the total health cost load.
Heads Up: A Ruling On The Latest Challenge To The Affordable Care Act Is Coming
A decision in the latest court case to threaten the future of the Affordable Care Act could come as soon as this month. The ruling will come from the panel of judges in the 5th Circuit Court of Appeals, which heard oral arguments in the Texas v. Azar lawsuit.
An estimated 24 million people get their health coverage through programs created under the law, which has faced countless court challenges since it passed.
In court in July, only two of the three judges — both appointed by Republican presidents — asked questions. “Oral argument in front of the circuit went about as badly for the defenders of the Affordable Care Act as it could have gone,” says Nicholas Bagley, a professor of law at the University of Michigan. “To the extent that oral argument offers an insight into how judges are thinking about the case, I think we should be prepared for the worst — the invalidation of all or a significant part of the Affordable Care Act.”
Important caveat: Regardless of this ruling, the Affordable Care Act is still the law of the land. Whatever the 5th Circuit rules, it will be a long time before anything actually changes. Still, the timing of the ruling matters, says Sabrina Corlette, director of the Center on Health Insurance Reforms at Georgetown University.
“If that decision comes out before or during open enrollment, it could lead to a lot of consumer confusion about the security of their coverage and may actually discourage people from enrolling, which I think would be a bad thing,” she says.
Don’t be confused. Open enrollment begins Nov. 1 and runs at least through Dec. 15, and the insurance marketplaces set up by the law aren’t going anywhere anytime soon.
That’s not to underplay the stakes here. Down the line, sometime next year, if the Supreme Court ends up taking the case and ruling the ACA unconstitutional, “the chaos that would ensue is almost possible impossible to wrap your brain around,” Corlette says. “The marketplaces would just simply disappear and millions of people would become uninsured overnight, probably leaving hospitals and doctors with millions and millions of dollars in unpaid medical bills. Medicaid expansion would disappear overnight.
“I don’t see any sector of our health care economy being untouched or unaffected,” she adds.
So what is this case that — yet again — threatens the Affordable Care Act’s very existence?
A quick refresher: When the Republican-led Congress passed the Tax Cuts and Jobs Act in 2017, it zeroed out the Affordable Care Act’s penalty for people who did not have health insurance. That penalty was a key part of the Supreme Court’s decision to uphold the law in 2012, so after the change to the penalty, the ACA’s opponents decided to challenge it anew.
Significantly, the Trump administration decided in June not to defend the ACA in this case. “It’s extremely rare for an administration not to defend the constitutionality of an existing law,” says Abbe Gluck, a law professor and the director of the Solomon Center for Health Law and Policy at Yale University. “The administration is not defending any of it — that’s a really big deal.”
The basic argument made by the state of Texas and the other plaintiffs? The zero dollar fine now outlined in the ACA is a “naked, penalty-free command to buy insurance,” says Bagley.
Here’s how the argument goes, as Bagley explains it: “We know from the Supreme Court’s first decision on the individual mandate case that Congress doesn’t have the power to adopt a freestanding mandate, it just has the power to impose a tax.” So therefore, the argument is that “the naked mandate that remains in the Affordable Care Act must be unconstitutional.”
The case made by the plaintiffs goes further, asserting that because the individual mandate was described by the Congress that enacted it as essential to the functioning of the law, this unconstitutional command cannot be cut off from the rest of the law. If the zero dollar penalty is unconstitutional, the whole law must fall.
Last December, a federal judge in Texas agreed with that entire argument. His judgement was appealed to the panel of judges in the 5th Circuit. Even if those judges agree that the whole law is unconstitutional, that would not be the end of the story — the case will almost certainly end up before the Supreme Court. It would be the third case to challenge the Affordable Care Act in the nation’s highest court.
So if the ruling will be appealed anyway, does it matter? “It matters for at least two reasons,” Bagley says. “First of all, if the 5th Circuit rejects the lower court holding and decides that the whole law is, in fact, perfectly constitutional, I think there’s a good chance the Supreme Court would sit this one out.”
On the other hand, if the 5th Circuit invalidates the law, it almost certainly will go the Supreme Court, “which will take a fresh look at the legal question,” he says. Even if the Supreme Court ultimately decides whether the ACA stands, “you never want to discount the role that lower court decisions can play over the lifespan of a case,” Bagley says.
The law has been dogged by legal challenges and repeal attempts from the very beginning, and experts have warned many times about the dire consequences of the law suddenly going away. Nine years in, “the Affordable Care Act is now part of the plumbing of our nation’s health care system,” Bagley says. “Ripping it out would cause untold damage and would create a whole lot of uncertainty.”
