A recent decision by a federal judge that the Affordable Care Act is unconstitutional could disrupt the national health care insurance market. States like New Jersey might be hit particularly hard, according to some observers, although at least one insider said that, based on signups, the initial exuberance over the ACA appears to have cooled.
President Donald Trump and his allies have made no secret of their desire to overturn the ACA, also known as “Obamacare” after its champion, former President Barack Obama. Those efforts got a boost in late December when U.S. District Court Judge Reed O’Connor of Texas ruled in a lawsuit filed by a 20-state coalition and found that the 2010 law became invalid after Congress decided to reject the “individual mandate” penalty levied against people who don’t purchase health insurance.
Recognizing the upheaval his ruling could cause, O’Connor put a stay, or hold on any action, during subsequent appeals.
Hospitals and patients would be hurt if the ACA is eliminated, according to some health care officials. “There’s no debate that the ACA brought health insurance coverage to more Americans,” said Cathy Bennett, president and CEO of the New Jersey Hospital Association. “New Jersey’s uninsured rate was 15.4 percent in 2013 before the ACA’s coverage provisions took effect. In 2017 — the most recent data available — it was 8.9 percent. That’s 488,000 additional people with health insurance. I think the greatest cost of a dismantling of the ACA would be the human cost in individuals who would no longer have the benefits of health insurance or the patient protections that are defined in the law, such as the mandate that people cannot be denied insurance coverage based on pre-existing conditions.”
But there would also be financial effects on hospitals and health systems, she added. “Back in 2013, before the ACA’s individual mandate took effect, the total value of charity care for the uninsured in New Jersey reached $1.3 billion,” according to Bennett. “Hospitals received $650 million in subsidies from the state to offset the costs of that care, but the remaining $650 million went unpaid and was absorbed by hospitals. That places a tremendous burden on our health care system. It’s a much better choice for healthy communities to invest in insurance coverage that helps keep people well.”
Garrick Stoldt, CFO of Saint Peter’s HealthCare System — which includes Saint Peter’s University Hospital in New Brunswick — is worried about whether hospitals like his could be left holding the bag if the ACA is gutted. “As a result of the ACA, some Medicare reimbursements declined, so we lost some revenue there, but the Medicaid program [which covers low-income and other individuals and families] was expanded,” he said. “We’re a Disproportionate Share Hospital, which serves a high number of indigent people. Currently, more of them have been covered under the expanded Medicaid program, but if that goes away as part of an ACA dismantling, they would probably go back to charity-care status and our reimbursement could go down to 28 cents of each dollar we received under Medicaid. We have a family health center that gets about 60,000 visits a year, so that could be a significant hit.”
Stoldt acknowledges that the ACA covered more people, but he’d like to see some tweaks. “To entice physicians to take on Medicaid patients — hopefully improving their preventative and other care by having a steady doctor — instead of relying on clinics, the ER or federal health centers — doctors’ Medicaid reimbursement was increased, but it was only for a two-year period,” he noted. “Consequently, doctors didn’t sign up in significant numbers. Also, the higher reimbursement rate was only for primary care physicians. So even under the ACA, low-income and other underserved populations can find it difficult to access a specialist.”
Stoldt would like to see a “federal solution” to some of the ACA’s shortcomings. “After the first year of the ACA, the number of insured people coming to us remained fairly flat,” he noted. “I think that many people lost their commercially purchased insurance because they didn’t meet the ACA’s minimum-care requirements, so they went out and bought health insurance on the exchange, but they weren’t really ‘newly insured’ patients — it was just trading in one policy for another. If they can address different pieces of the ACA, it might be more politically acceptable. There’ll be a need to find common ground.”
In today’s political environment that could be a tall order.
“My first concern is for the millions of Americans, thousands of whom live in New Jersey and receive care in our state’s 71 acute care hospitals,” said Brian Gragnolati, president and CEO of Atlantic Health System; he also serves as chair of the American Hospital Association (AHA). “These are the patients and families who will be most affected by any action undermining the Affordable Care Act. The ACA expanded health insurance coverage, giving millions of individuals access to life-saving care, and provided important consumer protections, ensuring that patients do not face lifetime limits on health benefits or discrimination based on pre-existing conditions.”
Gragnolati said health care organizations could be hurt if the ACA is torpedoed. “It would also have devastating effects on much-needed reforms around innovation in health care and the push toward greater value,” he explained. “Those efforts are critically important to Atlantic Health System and to health care providers across the state who are committed to providing better access, affordability and inclusion for all the patients we serve.”
Other health care officials are equally worried. When O’Connor issued his decision, AHA president and CEO Rick Pollack noted that “America’s hospitals and health systems are extremely disappointed with today’s federal district court ruling on the constitutionality of the Affordable Care Act. The ruling puts health coverage at risk for tens of millions of Americans, including those with chronic and pre-existing conditions, while also making it more difficult for hospitals and health systems to provide access to high-quality care. We strongly disagree with the ruling and urged the court not to accept the plaintiff’s severability argument in an amicus brief filed earlier this year along with other national organizations representing hospitals and health systems. We join others in urging a stay in this decision until a higher court can review it, and will continue advocating for protecting patient care and coverage.”
A political solution?
One attorney, however, thinks an Obamacare fix may come from legislators instead of the courts.
“So much of these decisions are tied up in politics,” said John Fanburg, managing member at Brach Eichler and chair of its health law practice. “Based on what I see in New Jersey and across the nation, enrollment under the ACA has decreased, but it’s still significant.”
In 2019, about 8.4 million people nationally signed up under the Health Insurance Marketplaces established by the ACA, down from 11.8 million in 2018, which itself was a drop from 12.2 million in 2017, according to data from the Kaiser Family Foundation. New Jersey also showed a slowdown, with 255,246 signups in 2019, compared to 274,782 in 2018, and 295,067 in 2017.
Despite the drop-offs, “nationally, millions of people enrolled and people continue to need health insurance, so the ACA is not likely to be eliminated,” added Fanburg. “This latest ruling may prompt discussions and moves to improve it, but I think it’s a political issue and not just a legal issue.”
In New Jersey, Gov. Phil Murphy has signed the New Jersey Health Insurance Market Preservation Act, which requires state residents to carry health insurance or pay a penalty.
Individuals, businesses and health care organizations have a big stake in the outcome of the ACA fight, Fanburg said. “If the ACA is overturned and New Jersey passes some sort of health care fix then how will it be funded?” Fanburg asked. “If you want a car, you have to carry car insurance, but the difference is that no one requires you to own a car to begin with. Will taxes go up to support a state-based healthcare solution? New Jersey is already a heavily taxed state, and even more people may leave if taxes go up again.”