‘Death spiral’: What happens in California if the Supreme Court invalidates Obamacare?
Nearly 17 million Californians with pre-existing conditions could face higher health costs or loss of benefits.
Five million Californians could lose health insurance coverage completely.
California would lose $27 billion to cover health care costs for low-income families.
That’s what California Democrats Sens. Dianne Feinstein and Kamala Harris say is at stake if the U.S. Supreme Court invalidates the Affordable Care Act.
“Now, the bottom line is this: There have been 70 attempts to repeal the ACA,” Feinstein said in the hearings on the nomination of Amy Coney Barrett to the court. “But clearly the effort to dismantle the law continues, and they are asking the Supreme Court to strike down the Affordable Care Act.”
California health care experts say the senators are actually understating what repeal would mean, capturing the “immediate” effects – not the long-term effects that would affect even some Californians who have health insurance covered by their employers.
The state has passed some of its own state-level protections, including an individual mandate that requires everyone to have health insurance or pay a penalty.
Yet those changes are mostly tied to the the federal law, health care advocates say, meaning they become useless if the Supreme Court repeals the ACA. While state officials could pass additional protections of its own, such as requiring coverage of pre-existing conditions, they say there’s little the state could do to make up for the loss of $27 billion a year in federal funding for health care.
“About 4 to 5 million people would lose their coverage in an instant, but the impacts go far beyond that,” said Anthony Wright, executive director of Health Access, a consumer advocacy organization in California. “If anything, Sen. Feinstein is understating the impact, because this would not just be a shock to the system, but will create a death spiral in our insurance market of raising premiums and pressure to reduce access to care.”
Amy Coney Barrett and the ACA
The Supreme Court will hear a case on Nov. 10 in which President Donald Trump’s administration is arguing to repeal the entirety of the ACA, so if Barrett is on the court by then she’ll be in place to rule on the future of the health care law.
Feinstein and other Democrats repeatedly argued at Senate Judiciary Committee hearings this week that Barrett would help to repeal the ACA if she, as expected, is confirmed to the court.
That’s an assumption, not a fact. Barrett, following typical procedure for Supreme Court nominees, declined to say how she would act on the ACA case if confirmed.
In the case, Texas v. California, the Department of Justice and certain Republican-controlled states are asking the Supreme Court to invalidate the entirety of the ACA. To make that ruling, the Supreme Court will have to decide first if the individual mandate is constitutional, and then whether the rest of the law can stand without the individual mandate. It’s unclear how Barrett would rule on that question.
Abbe Gluck, professor and faculty director of the Yale Law School Solomon Center for Health Law and Policy, said though Barrett has not shown how she would rule in the future case, she has made past comments.
In one essay, she wrote that a previous Supreme Court ruling had worked too hard to save the statute, pushing the ACA “beyond its plausible meaning.”
“She made two comments in the past that aligned herself with the views of the dissenting justices, in the two previous ACA challenges,” Gluck said. “And those opinions would have either eliminated the ACA entirely, or significantly changed its financial structure.”
Gluck said from her time watching ACA lawsuits, she’s learned it’s “impossible” to predict how the Supreme Court will rule. But “the fact that the case was admitted to the Court was cause for concern before Justice Ginsburg died, and that concern is magnified now.”
What can California do?
California Attorney General Xavier Becerra said in a press call Thursday that if the Supreme Court did invalidate the ACA, the state’s leaders would take action to preserve health care.
“We have progressive leaders that, regardless of where we end up, we’re going to act,” Becerra said.
But California officials could do little to sew up what will become a gaping financial wound, according to Wright and Peter Lee, executive director of Covered California.
“Many of the actions that California has taken, such as outlawing short term health plans or having a robust marketplace like Covered California, which makes sure people know to sign up and have options, would become meaningless without federal dollars, which is an essential element of making affordable coverage real,” Lee said.
The expansion of Medicaid only worked because the federal government provides $20 billion per year to California cover those extra people, so expanding MediCal, California’s version of Medicaid, without those extra funds would be next to impossible.
Laws to protect coverage for those with pre-existing conditions aren’t effective without subsidies to drive the costs of their health care down — if insurance companies have to cover people with pre-existing conditions but can simply price them out of plans, it’s not an effective mandate, Lee said. To provide subsidies without the ACA, California would have to make up a loss of $7 billion per year.
“If we were to lose it, that is almost the amount of money as the state of California spends on all of higher education and prisons combined,” Wright said. Raising taxes enough to cover that loss would also be next to impossible — California recently raised the tobacco tax by $2, which only raised $1 billion for MediCal, Wright said.
Five million Californians is about 12 percent of the state’s population, but Wright said it’s naive to think repealing the ACA would not also affect those on employer-sponsored plans or other coverage such as Medicare.
In Fresno, for example, 51 percent of the population is on MediCal. If a significant portion of those people lost health care coverage, current demand for health care services in the area shoots down, possibly causing hospitals and doctors’ offices in the area to shut down.
“There’s a chaos to this,” Wright said. “It’s hard, after a decade, to imagine how the health system of California would fare if it just suddenly lost $27 billion. Hospitals and clinics have beefed up operations to meet real needs that were out there, employ more people, and to lose $27 billion, it’s almost impossible to imagine how that would not impact the health system we all rely on.”
This story was originally published October 16, 2020 at 8:00 AM with the headline "‘Death spiral’: What happens in California if the Supreme Court invalidates Obamacare?."
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