The affordable care act – five years goes by so fast

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The Patient Protection and Affordable Care Act (ACA) was passed more than five years ago. Never has a piece of federal legislation been in the controversy spotlight for this length of time.

Typically, new federal and state laws require some tweaking before, during or after they are implemented. Fix-it bills can clarify the original intentions of lawmakers, correct mistakes and make the legislation practical to implement. In the ACA’s circumstance, be-cause of the high level of animosity surrounding the law’s fundamentals, significant fixes are not politically feasible.

Congress addressed about a dozen, below-the-radar fixes that have not been newsworthy—repealing the Free Choice Voucher Program and exemptions for TRICARE health plans, for example. This has left the majority of the heavy lifting fix-it work with the ACA’s three primary regulatory agencies: the IRS, the Department of Health and Human Services and the Department of Labor. Each of these agencies issued regulations, determinations and fixes. And, on a number of major cross agency topics, have issued joint releases to provide singular direction through ambiguous and conflicting provisions.

More than 30 safe harbors, definitions and delays by administrative action have been issued over the last five years, which creates additional controversy and litigation.

The path the ACA took through the legislative process did not provide it the typical amendment process, so it contained provisions that are difficult to implement and opened it up for legal challenges. Without a fix-it bill, it will be up to the courts and, in many instances, the U.S. Supreme Court, to determine if agency actions are consistent with the ACA.

This term, the court will decide if the IRS was within its authority to grant premium subsidies to individuals obtaining policies in states utilizing the federal exchange. Legal scholars are expecting the court to allow the subsidies to continue, despite the feelings of ACA opponents. But nothing is certain. Congress could simply act to clarify the provision to include or exclude the federal exchange states and take it out of the courts hands, but they are paralyzed to even attempt to do so.

At this point, conventional wisdom holds that while the Supreme Court may strike down a provision or two, it will not repeal the entire ACA. So if we could wave a magic political wand of bipartisan cooperation, what could be fixed in the ACA to make it a better and a more practical piece of legislation?

An original goal of the ACA was to pro-vide access to coverage for the approximately 47 million people who are uninsured. But instead of just expanding Medicaid and providing subsidies for lower income earners to buy insurance, a battle between the single payor advocates and the market regulator camps resulted in mass disruption to the individual and employer group markets that already had coverage. To make it all work, the healthy (younger, low health care utilizers) need to enroll to partially offset the high utilizers (those with pre-existing and chronic conditions) who have enrolled in mass. So what could be done to cause healthy people, who are typically younger, to buy health insurance?

Basic economics says if something is relatively expensive, people buy less. If it is relatively inexpensive, people buy more. Through the ACA’s mandated age relativities (the premium cost of one age compared to another), younger people are paying two to three times the actual costs for their segment. This subsidizes the premium costs for the older ages. So a quick fix is to encourage purchasing by doing away with the younger age surcharge.

Encouraging people to buy does not guarantee they will. A more surefire tool would be a strong financial penalty. The individual man-date does not have enough bite to get most of the young and healthy to buy. For many, paying the tax cost is significantly less than buying insurance. So, raising the tax seems like a viable fix. But this solution creates a more complicated matter. When the Supreme Court ruled the individual mandate fee/penalty was a tax, it greatly limited congresses ability to increase it to the point of effectiveness.

Justice Roberts, in his opinion, warned that, while it is permissible to use a tax to influence behavior, for an assessment to be a tax—and not an unconstitutional penalty or mandate—it must leave an individual with a meaningful choice and not become “so punitive” that it begins to resemble a punishment or a mandate.

By Ron Lang, CEO of CalCPA Group Insurance Trust

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