From March 26 to 28, the U.S. Supreme Court will start taking up the constitutionality of President Obama’s 2010 health care reform law, known as the Affordable Care Act
. If the law is ultimately struck down — the court’s decision is likely this summer — what would that mean to you and your family?
Before I address that question, it’s important for you to understand what’s being challenged and when the key provisions of the law are set to take effect.
Conservative opponents — including all the Republican presidential contenders — object primarily to the law’s “individual mandate,” scheduled to become effective in 2014, which they maintain is unconstitutional.
Under this mandate, all U.S. citizens will be required to have health insurance or they’ll pay a fine. By 2016, the fine will be $695 for individuals and $2,085 for families, or 2.5 percent of income, whichever is greater; after that, the amount will rise with the cost of living.
Five other key provisions of the law that could be altered or revoked, which are described below, have been in place since September 2010. You and your family may already be beneficiaries of those.
Of course, it’s impossible to know how the high court will rule on the health care reform law. The judges could say they must wait to make a decision until the mandate takes effect. Or they could eliminate the mandate, but let other provisions stand. Or they could strike down the entire law. Even without a judicial order, the coming presidential and congressional elections may have a huge impact on health reform. A new Congress could repeal or alter the law in 2013, or withhold funds that would enforce it.
In light of this uncertainty, Next Avenue asked Paul Fronstin, director of the Health Research and Education Program at the Employee Benefit Research Institute
, what impact a Supreme Court reversal of health reform might have on the five parts of the law already in effect. Here's a breakdown based on his answers:
Coverage for Young Adults
Under the Affordable Care Act, almost all young adults under the age of 26 can remain on (or rejoin) their parents’ health insurance plan even if they’re not in college, living at home or financially dependent. Since the law passed, an estimated 1.2 million adult kids have been added to their parents' plans.
If this provision is struck down: Fronstin says that health insurers would probably continue offering this benefit, at least for those currently covered, since revoking it would likely displease their customers.
Preventive Care Costs
Health insurers can no longer impose deductibles and co-pays for preventive services from providers within your plan’s network (out-of-network services may incur a co-pay). Depending on your age, preventive services may include flu shots, routine vaccinations, and screenings for cancer, glaucoma, cholesterol, diabetes and other health threats.
If this provision is struck down: “These are ‘high-value’ services,” says Fronstin, meaning they often save insurers more in future expenditures than they currently cost. “So they may remain free.” Still, Fronstin adds, some insurers may decide to impose deductibles and co-pays on beneficiaries, rather than absorb the expense.
Coverage Cancellation and Limits
The health care reform law prohibits insurers from cancelling your coverage just because they find a minor mistake on your application and they can’t impose lifetime limits on the amount of your covered benefits (annual limits are being phased out). As a result, the U.S. Department of Health and Human Services estimates that 105 million Americans whose health insurance previously had lifetime benefit caps no longer do.
If these provisions are struck down: “If the federal law is overturned, regulation of consumer protections will probably revert back to the control of the states,” says Fronstin. That means whether your insurer could cancel your coverage due to an application mistake or limit your annual or lifetime benefits would depend on where you live. Some states might be restrictive; others might adhere to the original federal law's provisions.
Exclusions for Pre-existing Conditions
Insurers can no longer limit or deny coverage to children under 19 with pre-existing medical conditions. In 2014, the rule will be broadened to apply to everyone. At that point, there will be government subsidies to make coverage more affordable for the sickest and poorest Americans.
If this provision is struck down: This provision may not last, says Fronstin, even with a mandate, because the law's penalty for not buying insurance isn't painful enough.
“If the fine is lower than the cost of insurance and there’s no barrier to buying insurance once you get sick, a lot of healthy people may choose to pay the fine, at least until they get sick,” he says. “If so, there will be too many sick people collecting benefits and not enough healthy ones to pay for those benefits.”
Larger penalties for not buying insurance or other disincentives might help solve this problem, says Fronstin, but they're ot in the law now.
The Medicare Donut Hole
People over 65 whose prescription drug bills exceed $2,930 in 2012 face a loss of Medicare Part D drug coverage until their bills reach $4,700. The $1,770 difference is called the “donut hole.” Under the Affordable Care Act, Medicare beneficiaries get a 50 percent discount on brand-name drugs and a 14 percent discount on generic drugs bought within the donut hole. Those discounts grow until 2020, when a single discount of 75 percent applies to all prescription drugs. In 2011, 3.6 million Medicare beneficiaries caught in the donut hole saved an average of $604 each on their prescription drugs, according to the U.S. Department of Health and Human Services.
If this provision is struck down: “Some Advantage plans — the private, managed-care network plans that compete with traditional Medicare — already cover a lot of the donut hole, sometimes all of it,” says Fronstin. “If the donut hole opens back up, I’d expect those plans to attract more applicants.” Medicare Advantage plans, however, have restrictions on out-of-network care.
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