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James Capretta

AAOS Now

Published 11/1/2014
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Elizabeth Fassbender

The ACA in 2015: Where Does It Stand?

Implementation is proceeding, but not without problems

Elizabeth Fassbender

The passage of the Patient Protection and Affordable Care Act (ACA) in 2010 has led to sweeping changes in the U.S. healthcare system, yet many questions about its implementation remain. Where do things stand now? What can orthopaedic surgeons expect in the coming year? What about the legal challenges to the ACA? How might the upcoming elections impact implementation?

During the 2014 Board of Councilors/Board of Specialty Societies Fall Meeting, James Capretta, senior fellow at the Ethics and Public Policy Center and a visiting fellow at the American Enterprise Institute, addressed these concerns. In addition to his current positions, Mr. Capretta has held positions in the executive and legislative branches of the federal government, including serving as associate director at the White House Office of Management and Budget (OMB), where he was responsible for Medicare and Medicaid issues. 

ACA’s key elements
The ACA has four key elements, noted Mr. Capretta—coverage, exchanges, costs, and financing. A major aspect of the legislation was extending coverage to Americans without health insurance coverage. This was accomplished through new policies such as insurance regulation, the individual mandate, employer penalties, Medicaid expansion, and new insurance subsidies.

The establishment of health insurance exchanges, both federal and state, was necessary to achieve expanded coverage. The exchanges pooled individual and small group markets and provided subsidies to lower- and middle-income people. These insurance marketplaces opened on Oct. 1, 2013, with 15 states running their own exchanges, 7 states operating exchanges in partnership with the federal government, and 29 states defaulting to the federal government’s web-based exchange, Healthcare.gov

At a recent hearing held by the House Committee on Oversight and Government Reform, Marilyn Tavenner, the administrator of the Centers for Medicare and Medicaid Services (CMS), announced that 7.3 million people are currently enrolled in private insurance through the ACA.

To help control healthcare costs and finance the coverage expansions, the ACA created the Independent Payment Advisory Board (IPAB), implemented several different types of tax increases, and reduced payments to providers under some Medicare programs. The American Association of Orthopaedic Surgeons (AAOS) opposes the IPAB, a 15-member board that would be appointed by the President and not accountable to Congress, which would be charged with reducing the per capita rate of growth in Medicare spending.

ACA mandates
Mr. Capretta also reviewed the basics of the individual and employer mandates, arguably some of the ACA’s most significant and controversial provisions. The employer mandate, originally scheduled to go into effect this year, has been delayed and adjusted.

Originally, companies with 50 or more employees were required to start offering qualifying health insurance coverage to their workers beginning in 2014. With recent changes, small businesses—defined as companies with 50 to 99 full-time equivalent (FTE) employees—will need to start insuring workers by 2016. Companies with 100 or more FTEs will need to start providing health benefits to at least 70 percent of their FTEs by 2015 and to 95 percent of FTEs by 2016. “Small employers” (fewer than 50 FTEs) will not face an employer mandate.

Mr. Capretta noted that several groups are exempt from the individual mandate, including members of certain religious groups, prisoners, undocumented immigrants, and Native American tribes. Additionally, those who are enrolled in Medicare, Medicaid, Tricare, VA health care, or an employer plan, and those with individually purchased insurance or a “grandfathered” plan are not subject to the individual mandate penalty.

Medicaid expansion
Medicaid expansion, said Mr. Capretta, is “really a function of the politics around the whole law.” Since the Supreme Court ruling on June 28, 2012, limiting the Department of Health and Human Services’ (HHS) authority to enforce Medicaid expansion, states can choose not to implement expansion and HHS cannot withhold existing federal program funds. Thus, state action on the Medicaid expansion decision varies, and many states have opted out.

Neither Oklahoma or Indiana, for example, have expanded Medicaid, in part because both states have their own programs to cover low-income adults. However, these programs do not meet Medicaid expansion requirements that went into effect in 2014, so both states are trying to work out arrangements with the federal government that would keep their programs in place.

Moving forward
The next enrollment period begins Nov. 15 and will last for 3 months. This enrollment period will target a more difficult-to-reach population, although the Congressional Budget Office (CBO) is predicting that the number of people enrolled in the ACA insurance marketplaces will double, reducing the number of uninsured Americans by about 12 million.

“The experience will be better,” HHS Secretary Sylvia Mathews Burwell stated recently. “It will not be perfect. We know that, and we know that there will be issues that will be raised as we go on in the process.”

Still, Mr. Capretta stated, there remains concern about employers dropping individuals from commercial insurance plans and into exchange plans. He pointed out, however, that because high-wage workers will be worse off, many employers are likely to maintain their current plans.

Mr. Capretta also discussed the current legal challenges to the ACA (See “Halbig v. Burwell: An Update on Legal Challenges to the Affordable Care Act.”). According to Mr. Capretta, the outcome of Halbig and related cases could have “major ramifications” for the ACA, primarily around whether the law allows premium credits for coverage purchased on the federal exchange. Circuit courts have split on this issue and so “a Supreme Court ruling is likely,” he said.

However, Mr. Capretta does not believe that coverage mandate challenges will threaten the core of the ACA.

At the time of the Fall Meeting, elections were 6 weeks in the future. Mr. Capretta outlined the impact of Senate elections on the ACA, as follows:

  • Democrats maintain a majority in the Senate—If this occurs, the ACA “becomes even more entrenched,” said Mr. Capretta, and Medicaid could be expanded even more.
  • Republicans win a majority in the Senate—Under this scenario, Mr. Capretta believes the GOP will make some changes and “a lot of noise,” including pressure to vote on a full repeal. However, without a super-majority able to override a Presidential veto, Republicans may not be able to make many changes.

Although it would be very difficult to repeal core provisions of the ACA, even with a Republican-controlled Senate, some targeted changes could be made. These include repeal of the IPAB and certain tax provisions, delay or revision of the employer mandate, and passage of regulations that would enable people to keep their current plan or return to a plan they had in 2013. Mr. Capretta also insisted that the ACA will be an issue in the 2016 presidential campaign, but Republicans will have to develop a transition plan that addresses the millions enrolled in exchange plans and Medicaid.

Elizabeth Fassbender is the communications specialist in the AAOS office of government relations. She can be reached at fassbender@aaos.org

Bottom Line

  • Despite delays in implementing some provisions of the ACA, key elements of the legislation are having an impact on the U.S. healthcare system.
  • During second enrollment period, which begins this month, an additional 12 million Americans are expected to obtain health coverage.
  • Even if Republicans take control in the Senate, it will be difficult to repeal core provisions of the ACA, although targeted changes may be possible.
  • The ACA will remain an issue through the 2016 Presidential elections.