Tomorrow, the Trump administration and 18 Republican governors and attorneys general will file their opening briefs with the Supreme Court in California v. Texas—the health care repeal lawsuit. The lawsuit, criticized across the political spectrum as a “badly flawed” case, threatens to upend the Affordable Care Act (ACA) and strip 23.3 million Americans of their health coverage, according to new CAP analysis—about 3 million (15 percent) more than was forecast before the coronavirus pandemic. The anti-ACA agitators who initiated the health care repeal lawsuit, backed by the Trump administration, continue their attempts to dismantle the ACA, including its coverage expansions and consumer protections, amid the pandemic, during which comprehensive health coverage has never been more important. Millions of Americans who have lost their jobs and job-based insurance due to the current economic crisis are relying on the insurance options made possible by the ACA to keep themselves and their families covered.
Background on the health care repeal lawsuit
From the beginning, the Trump administration and allied leaders in Congress and state governments have been committed to dismantling the ACA and the consumer protections it confers by any means possible. The Trump administration has repeatedly sabotaged key provisions of the landmark law by executive actions and other more covert tactics, including removing essential consumer information from federal websites and defunding outreach and enrollment programs intended to expand coverage. After several failed attempts by President Donald Trump’s legislative allies to “repeal and replace” the ACA, Congress passed a tax bill in late 2017 that zeroed out the individual mandate penalty.
After the tax bill became law, Texas and other states filed a federal lawsuit, claiming that because the mandate had no financial penalty, it made the rest of the law unconstitutional. U.S. District Court Judge Reed O’Connor accepted this reasoning and held that the entire law must be struck down in what one legal expert called a “partisan, activist ruling.” On appeal, a 5th U.S. Circuit Court of Appeals panel also ruled in December that, following the tax bill’s change to the law, the individual mandate is unconstitutional. The panel then remanded the case back to Judge O’Connor to determine which parts of the ACA, if any, can remain given their decision. Since that ruling, the Supreme Court has agreed to hear the case during its upcoming term, and, for now, the ACA remains the law of the land.
ACA repeal would have disastrous consequences for the American people. In addition to the roughly 23 million people who would lose coverage, repeal would eliminate essential consumer protections, including those for people with preexisting conditions; requirements for insurers to spend premium dollars on patient care; and mandates that insurers cover prescription drugs, mental health care, and other essential health benefits.
Impact of the coronavirus pandemic on coverage
As the Trump administration and 18 Republican state leaders double down on their push to strip millions of their health coverage and encourage predatory insurance practices, a pandemic that has killed nearly 120,000 Americans and infected over 2.2 million continues to sweep the nation.
Since the impact of the coronavirus pandemic began to unfold in mid-March, more than 44 million joblessness claims have been filed as of June 11. Millions of people have lost their employer-sponsored insurance (ESI)—millions of whom will be unable to replace it and will become uninsured. Thanks to the ACA, many of these newly unemployed Americans who previously were covered by employer-sponsored insurance are able to get health coverage, either through the ACA marketplaces, possibly with financial assistance to make their coverage more affordable, or via Medicaid expansion. The Urban Institute and the Kaiser Family Foundation have estimated that tens of millions of people could lose job-based coverage due to the economic crisis sparked by the pandemic and indicate that millions of people in this situation are eligible for the ACA coverage that is threatened by the health care repeal lawsuit.
National and state level coverage losses
Because the economic crisis stemming from the pandemic is driving millions of people onto coverage programs supported by the ACA, CAP estimates that approximately 3 million more people stand to lose coverage from the health care repeal lawsuit than the 20 million previously estimated. According to a March 2019 analysis by the Urban Institute, full repeal of the ACA would cause enrollment in Medicaid and the Children’s Health Insurance Program (CHIP) to fall by 22.4 percent and enrollment in individual market coverage, including for the ACA marketplaces and other insurance people purchase on their own, to drop by 35.4 percent.
The economic stress of the pandemic has pushed the United States into a recession. The Congressional Budget Office projects that the unemployment rate in the second and third quarters of this year will average 15 percent — higher than it was during the Great Recession. At an unemployment rate of 15 percent, 17.7 million people would lose employment-based health insurance coverage, according to a recent report by the Urban Institute. With access to ACA coverage options, most of these people would find new forms of insurance. Urban estimates that 8.2 million would end up with Medicaid/CHIP coverage, and 4.3 million would gain coverage through the ACA marketplaces or other private coverage. About 5.1 million would remain uninsured.
If the ACA is repealed, however, many more people who lose job-based coverage will be without insurance. CAP estimates that because of the pandemic, about 3.4 million additional people are at risk of losing coverage because of the lawsuit. Combining two previous projections by the Urban Institute, CAP’s estimate assumes that 35.4 percent of the 4.3 million people who gain individual market insurance and 22.4 percent of the 8.2 million people who gain Medicaid/CHIP coverage would become uninsured under repeal.
In total, 23.3 million people stand to lose coverage and become uninsured if the ACA is repealed during the pandemic. In Texas alone, the number of people without health coverage would rise by about 2 million. (see Table 1)
If the ACA is repealed, the actual number will depend on the extent of job loss during the recession as well as the geographic and demographic distribution of those who lose job-based coverage. CAP’s estimate assumes that the proportion of those newly enrolled in Medicaid/CHIP and nongroup insurance who lose coverage is similar across states, and it is based on a scenario in which the unemployment rate rises above what it is today. It also assumes that the degree of coverage loss among those who newly enroll in Medicaid/CHIP and the individual market during the pandemic is similar to that of those who were previously enrolled in those types of insurance.
The Trump administration and its allied state leaders are attempting to undermine health care in the midst of one of the worst public health disasters in U.S. history. The ACA is crucial to helping families regain coverage and maintain some financial security against health care costs. A Supreme Court ruling against the ACA would take away health coverage from millions of Americans whose lives are already being disrupted by the economic distress and concerns about their health and well-being.
Nicole Rapfogel is a research assistant for Health Policy at the Center for American Progress. Emily Gee is the health economist of Health Policy at the Center.