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Health care coverage for more than a half-million Coloradans at stake in Obamacare fight at Supreme Court

State law is a backstop to many of the most popular consumer protections in the Affordable Care Act

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When the U.S. Supreme Court hears arguments on Tuesday over the future of the Affordable Care Act, billions of dollars a year and coverage for hundreds of thousands of people in Colorado will hang in the balance.

But some of the law’s most famous and popular consumer protections — such as protections for people with preexisting medical conditions — will not be at imminent risk for many in Colorado because they are also enshrined in state law. The nuances show just how ingrained the Affordable Care Act, the 2010 law also known as Obamacare, has become in the state’s health system, making conservative efforts to vanquish it all the more complicated and consequential.

The case before the Supreme Court was brought by 20 states seeking to have the entire law tossed out following the passage of a GOP-championed federal tax law in 2017. That law reduced the ACA’s penalty for not buying health insurance to $0. The lawsuit argues that the $0 penalty makes the mandate unconstitutional and that the mandate is so tied up in every other part of the law that the whole thing should tumble. The Trump administration has also signed onto the argument.

There are 21 states, including Colorado, that have lined up to defend the law.

Legal experts are generally skeptical that the Supreme Court’s decision will produce the kind of sweeping elimination of the ACA that the plaintiff states are seeking. There are a lot of off-ramps the court could choose to take, including flat-out dismissing the case without making a single change to the law.

But should the law fall in its entirety, it would have enormous consequences for nearly everyone in Colorado. Here’s a look at what some of those might be.

The Supreme Court Building is the seat of the Supreme Court of the United States. (Provided by U.S. Department of State)

Nearly 500,000 people could lose Medicaid coverage

Medicaid is a joint state and federal program to provide health coverage to people who are low-income or disabled. The ACA gives states the option to expand Medicaid coverage to include people who earn slightly above the poverty line — 138% of the federal poverty level, in technical terms, which is about $17,600 a year for a single person or $36,200 for a family of four.

Colorado was one of the first states to expand Medicaid under the ACA, and now 38 states and the District of Columbia have done so. The people newly eligible for Medicaid in these states as a result of the ACA are known as the “expansion population.”

In Colorado, 467,397 people were in the Medicaid expansion population as of September, said Kim Bimestefer, the executive director of the state Department of Health Care Policy and Financing, which runs Medicaid in Colorado. She said her department’s projections are that the expansion population will grow to more than 480,000 people next year. That is roughly 8% of the state’s total population.

The federal government pays 90% of the costs for people in the expansion population. The other 10% in Colorado is paid through the hospital provider fee, meaning Medicaid expansion does not eat into the state’s larger budget. Bimestefer said the state expects to receive about $2.1 billion this year in federal funding just related to the expansion population.

If the ACA falls in its entirety, Colorado would almost certainly be unable to find the money to continue Medicaid expansion, said Joe Hanel, a spokesman for the Colorado Health Institute, a nonpartisan think tank.

“I just don’t see any way the state could do that,” he said. “So most likely most of those 400,000-plus people would become uninsured.”

Coverage for preexisting conditions and other protections would remain for many

As indicated by Colorado’s quick expansion of Medicaid under the ACA, the state has generally been one of the law’s most enthusiastic adopters. Another example of this came in 2013, when, in a bipartisan vote, Colorado lawmakers passed an “alignment” bill that put a bunch of the ACA’s provisions into state law.

That means some of the ACA’s most well-known and popular provisions for people with private health insurance (i.e. not government insurance like Medicare or Medicaid) are backstopped in Colorado law. These include:

  • Protections that prevent insurers from charging people more based on their preexisting conditions;
  • Rules that require insurers to sell plans to everybody, regardless of health status, and prevent insurers from canceling coverage after a person has reached an annual or lifetime cap;
  • Requirements that insurers must cover a wide range of benefits, such as maternity care or cancer treatment;
  • A provision that allows people to stay on their parents’ health insurance plans up to age 26;
  • And limits on how much insurance companies can make in profits.

But there’s a caveat. The state’s law applies only to what the state has the authority to regulate. People who buy coverage on their own or whose employers buy coverage in the small or large-group market are covered by these state laws. Large companies with self-insured health plans are not subject to the state’s regulatory authority. (Whether your employer has a group plan or is self-insured might not be obvious to an employee, so best to ask.)

Because of the state’s limited authority, Hanel said the state protections are ultimately not as robust as the ACA’s.

“There are things the state can do,” he said. “But for everything in health policy, the federal government has to be involved or it’s going to be an incomplete solution.”

The website for Connect for Health Colorado, the state’s health insurance exchange, shown in October 2018. (Eric Lubbers, The Colorado Sun)

Health insurance would get a lot more expensive for at least some

The trade-off for having insurance that is guaranteed to cover more is that it also costs more.

The ACA addresses this by offering tax credits to help people who buy coverage on their own without a contribution from an employer. This group of people is known as the “individual market.”

Last year, about 130,000 of the 170,000 people who bought coverage through the state’s insurance exchange, Connect for Health Colorado, qualified for subsidies. Those credits were worth more than $720 million in total, according to Connect for Health. If the ACA goes away, so do those subsidies, meaning people who buy their own insurance could pay dozens or hundreds of dollars more per month for the same coverage.

But the state’s underlying coverage prices would also likely take a big jump upward. Using a process allowed under the ACA, the state has implemented a reinsurance program. Essentially, the program helps insurance companies cover their highest-cost claims, allowing them to reduce prices for everybody.

The majority of money for reinsurance comes from the federal government — about $169 million this year. But the reinsurance program falls if the ACA does, meaning insurers would have to raise their prices to make up for the lost support. The state estimates that reinsurance will create an average 20% savings for people in the individual market next year.

Hanel said that without subsidies and reinsurance, a big chunk of people in the individual market might choose to go without insurance. Michael Conway, the state’s insurance commissioner, agreed that that is a risk.

“If those subsidies went away, then we’re going to be faced with trying to figure out how we keep the individual market together,” he said.

A prescription bottle beside pills. (Photo by the U.S. Department of Agriculture, via CreativeCommons)

A whole bunch of less obvious things would happen

The ACA is famously — even infamously — long. Clocking in at nearly 1,000 pages, the bill produced more than 10,000 pages of regulations to buttress it. And contained within those pages is a lot more than just its most well-known components.

Take, for instance, restaurant menus. You may have noticed that large restaurant chains have in recent years begun making the calorie counts of their menu items easier to find. That’s because of the ACA.

The ACA is what requires large companies to provide health insurance for their employees. It is the law that requires offices to provide lactation rooms and breaks for breast-feeding mothers. It provides grants to help states implement background check programs for workers at nursing homes. It created new requirements for doctors to use electronic medical records and created new programs to promote innovation in health care payments. It imposed new transparency requirements surrounding payments that pharmaceutical companies make to doctors and hospitals.

And, significantly, it gradually closed the Medicare “donut hole” — a provision that previously created a coverage gap in Medicare enrollees’ prescription drug costs. Conway said that may be one of the most overlooked potential impacts of a vanquished ACA.

“Folks on Medicare will see their pharmaceutical costs jump quite a bit,” he said.

There are a lot of unknowns

If the Supreme Court does strike down the entire ACA, exactly how it would all shake out is unknown. Bimestefer, the head of the Department of Health Care Policy and Financing, said there could be a “trickle-down effect.” If companies choose to drop health coverage for their employees or if coverage in the individual market is too expensive, she said, people may make decisions that make them eligible for Medicaid, raising state spending in that area. If hospitals begin to see larger numbers of people coming in without insurance, their finances could begin to falter. And all of this would potentially happen during both a pandemic and a historic economic downturn.

These potential ripples mean Congress may not wait long to replace a struck-down ACA with something new, Bimestefer said.

“They would have an intense motivation to act and act thoughtfully and intentionally,” she said.

And the state wouldn’t sit on its hands, either. Bimestefer said there has already been a discussion among Colorado health leaders about what next steps the state should take, whether the ACA is struck down in part or in whole or if it stands. A lot of it is preliminary. But she said the election results are bringing clarity to what the next steps by the federal government might look like.

“Regardless of how the Supreme Court decides, across the country we’ve all got to be part of the solution,” she said. “In Colorado, we intend to lead.”

Rising Sun