Christen Linke Young explains what would happen if the U.S. Supreme Court strikes down the Affordable Care Act (aka ACA or Obamacare): chaos.

The Supreme Court will hear oral arguments about the future of ACA on November 10. The Republican-controlled Senate is rushing through the confirmation vote on Judge Amy Coney Barrett so that she can be seated before the election. Her writings indicate that she will vote to overturn the ACA.

Young writes:

If the Court strikes down the ACA in its entirety, 20 million people would lose health insurance, a variety of protections for people with pre-existing conditions would be eliminated, and an extensive set of policies affecting Medicare, Medicaid, prescriptions drugs, and other parts of the health care system would be reversed.  Significant attention has been paid to the policy changes that elimination of the ACA would bring when fully implemented, but there has been more limited analysis of how health care stakeholders would cope with the sudden elimination of myriad ACA provisions in the short-term. This piece considers some of the major changes (outside the private insurance market) that would follow in the wake of Supreme Court decision eliminating the ACA and concludes that implementation is likely to be quite chaotic. While Congress could in theory ameliorate some of this chaos by quickly enacting legislation, the political trajectory of the ACA to-date does little to inspire confidence that such action would be forthcoming.

To begin with, she writes, there would be a “payment paralysis” in Medicare.

The ACA made many changes to Medicare, generally designed to reduce unnecessary spending and improve quality of care.  Those new rules are fully “baked in” to Medicare’s policies for making $800 billion in annual payments.  In many instances turning off these ACA provisions would not be straightforward and would require the federal government to conduct a careful legal analysis to understand what the statute requires once the ACA provision is removed. This undertaking would be particularly complex in instances where Congress has passed legislation since 2010 that either amended or presupposed the existence of an ACA provision. It would often raise novel questions of statutory interpretation, which would likely spur additional litigation given the financial stakes involved. These problems would play out in a range of concrete settings:

  • Health care providers and health insurers would face tremendous uncertainty in payments. The ACA made changes to how traditional Medicare pays virtually every category of health care provider, including hospitals, physicians, skilled nursing facilities, and many others, as well as major changes to how Medicare pays private Medicare Advantage plans. Reverting Medicare’s payment rules to a pre-ACA state would require revisiting dozens or even hundreds of policy choices the agency has made since 2010, which would likely take months or years. It might be particularly difficult to determine how Medicare should make payments to physicians since the 2015 Medicare Access and CHIP Reauthorization Act made significant changes to how Medicare pays physicians presupposed the existence of a number of ACA policies. It is unclear how CMS would make payments to providers and insurers while this process was ongoing, as it would face a choice between failing to make timely payments or making payments inconsistent with the law.
  • Re-opening the Medicare “donut hole” would be chaotic for insurance companies, drug manufacturers, pharmacies – and consumers. The ACA closed the Medicare Part D “donut hole.” In doing so, it required drug manufacturers to offer discounts for certain prescriptions to plans and changed the cost-sharing plans could charge enrollees. In the aftermath of a decision to eliminate the ACA, those manufacturer discounts might immediately end, and it would be unclear what beneficiaries in a newly reopened donut hole should be charged when filling prescriptions.  Nor would it be clear how to interpret many existing contracts that assumed ACA policy was in effect.  The agency would also need to determine how to interpret a 2018 law that made modifications to this ACA provision, which could generate additional litigation.
  • Health care systems that have invested in Accountable Care Organizations would face significant additional uncertainty.Accountable Care Organizations (ACOs) deliver care for about a quarter of Medicare beneficiaries, but all existing ACO payment models derive from the ACA. ACOs have made significant investments in redesigning care on the assumption that they could receive incentive payments if they met certain standards for the quality and efficiency of the care they delivered.  The federal government might attempt to resurrect some aspects of ACO models under non-ACA authorities, but its success is likely to be limited, and the scope of any new program will be quite uncertain as policy is developed, likely for years.  There would also be considerable uncertainty about how ACOs that had already signed contracts with CMS would be treated if the legal authority undergirding those agreements vanished.
  • Medicare’s authority for a variety of other demonstrations and quality improvement projects would be eliminated, disrupting all the payment streams impacted by those projects. As just one example, the Innovation Center’s Comprehensive Primary Care Initiative (one of about 50 active Innovation Center projects), has more than 3000 participating providersacross the country. As with ACO payment models, federal agencies might be able to resurrect portions of these initiatives using non-ACA authorities but doing so would be complex and time consuming. In the meantime, many of the payment changes bound up in these complex projects would need to be undone, impacting a wide variety of types of health care providers in uncertain ways.
  • The Medicare Hospital Insurance Trust Fund would face insolvency far sooner, and there would be significant uncertainty about when. Elimination of the ACA would eliminate taxes on high income household’s investment earnings that support the Medicare Hospital Insurance Trust Fund and require Medicare to pay more to insurance companies and providers, accelerating the insolvency of the trust fund, already projected for 2024. Some of these changes could also be retroactive, with insurance companies, providers, and high-income taxpayers seeking compensation (through the agencies, or through the courts) for past years. Therefore, the magnitude of the near-term impact on the Trust Fund is difficult to predict and might be affected by subsequent litigation.

And that is only the beginning of the problems that would be caused by tossing out a government health insurance plan that currently protects 20 million people. Read the whole essay.