The Takeaway: The ACA is Here to Stay…
… (At least until 2017)
This week the Supreme Court issued a strong decision upholding the availability of federal tax credits in all states regardless of whether health insurance is purchased on a state or federally-operated insurance marketplace. The six-justice majority opined in part: “We cannot interpret federal statutes to negate their own stated purposes…Congress passed the Affordable Care Act to improve health insurance markets, not destroy them. If at all possible we must interpret the Act in a way that is consistent with the former and avoids the latter.”
The ruling not only commanded a strong majority, but also clarified that the decision to make tax credits available in all states was not subject to possible reinterpretation by a future administration, leaving the ACA on stronger legal footing than it was before the case was heard.
In truth, the burden on plaintiffs was always very high – requiring them to argue persuasively that their interpretation of the statute was the only one possible. We should perhaps be less surprised that they failed than that the case made it to the Supreme Court at all.
In the wake of the decision, political opponents of the ACA ramped up their rhetorical attacks. You would never guess that at least some of them must be secretly pleased. The decision spared them from having to unite disparate factions around an alternative that would shield them from blame for the human tragedies, unraveling insurance markets and economic losses that would have flowed in the wake of an adverse decision while not seeming to be “soft on ACA repeal”. The task was made even more difficult by a recent CBO report reconfirming that repealing the ACA would add to the federal budget deficit. In other words, opponents would have had to undo the ACA without undoing its benefits—either to people or the federal budget. The ruling in favor of Burwell allows opponents to continue to call for “repeal” (something on which they are united) without having to really figure out “replace” (something which divides them) at least until the outcome of the 2016 election is clear.
About that CBO report
ACA supporters cheered the CBO report that showed repealing the law would add to the budget deficit, but there was a nugget for opponents, too. The agency asserted that while repeal would add to the deficit, it would spur economic growth. This is a somewhat curious assumption, although to be fair to CBO, they are just being consistent. The argument is the flip side of the agency’s past finding that the ACA would shrink the total number of work hours, a finding ACA opponents widely mischaracterized by saying that the law would cause layoffs.
The basis of the CBO analysis, in both cases, has to do with the effect of the ACA on the labor market. CBO estimated that a certain number of people who were working only so they could receive health benefits, would leave the workforce once the ACA was implemented, causing a small contraction in the labor force and hence in economic output. The recent report assumes the reverse—that the loss of ACA supported insurance would cause people to reenter the workforce.
OK, I’m not an economist so maybe I am missing something, but this seems like a pretty weak argument to me on two grounds. First, it seems to suggest that the number of job-seekers determines the number of workers. Certainly at full employment, a reduction in labor force participation would be expected to reduce output and an increase would raise it. But we are not at full employment. Counting discouraged workers, we still have more than 10 percent of the workforce unemployed. It’s not clear that more job-seekers would translate into more workers at least until we’ve recouped the job losses created by the financial collapse. We are still more than 2 million jobs short of that mark. Secondly, there would be some significant economic adverse effects to repeal, including reduced purchasing power and more bankruptcies for the newly (re-)uninsured, job losses in the health sector and rising uncompensated care costs. It’s not so clear all that nets out to an economic positive regardless of what the CBO report might say.
In other ACA related legal news, Governor Rick Scott of FL has dropped his suit against the federal government claiming that they were trying to coerce him into expanding Medicaid by withholding funds for the state’s Hospital Low-Income Pool (LIP). The suit was a meritless political maneuver. Scott consistently misrepresented the federal government’s statement that they would not continue LIP in its current form or at its current funding level, as being in some way contingent on the state’s decision on Medicaid. The bigger question is why coercion would even be needed to persuade the governor of a state with one of the highest uninsurance rates in the country to accept available federal funds to reduce the number of uninsured by as many as 800,000 people. One would think that common sense, not to mention basic decency, would be enough to do the trick given the proven benefits that have flowed to states that have closed the coverage gap.