March 23rd marked the 15th birthday of the Affordable Care Act (ACA). At its genesis, and continuing today, the ACA is intended to make health coverage available to a broader swath of people. Further, it is intended to make health coverage more affordable. The degree to which either of these goals is achieved is a matter of continuing evolution. Looking back over 15 years, the ACA has been the target of significant litigation. So far, all of this litigation has continued to shape the law, but not defeat it. Attempts to improve access and address affordability have largely been directed toward the individual health insurance market, both publicly through the exchanges and privately, as well as through Medicaid.
About the ACA
As a brief reminder, the ACA allows states to expand Medicaid to individuals earning up to 133% of poverty. At this point, 40 states and the District of Columbia have expanded Medicaid. Current sentiment to cut federal funding for Medicaid could impact states' ability to continue to provide these benefits. Time will tell.
ACA-Provided Tax Subsidies
Further, the ACA provides certain tax subsidies for coverage purchased through the exchange. The subsidies are available to individuals who meet specific criteria. Having started during COVID and extended by the Inflation Reduction Act, these federal subsidies were expanded to a broader group of individuals. Due in large part to these subsidies, the number of people enrolling in the marketplace has increased significantly in recent years.
Absent congressional action, these subsidies will expire at the end of 2025. This could result in a significant reduction in the number of individuals who are able to afford marketplace coverage. We will keep an eye on this and review it as the law evolves, with a particular focus on the potential impact to employer plans. In summary, if fewer individuals are eligible for subsidized marketplace coverage, employers — particularly small employers — could see an increased interest in their health plan offerings.
Looking Ahead
What else can we expect in the years to come? During the first Trump administration, focus was placed on the so-called consumer-driven health format, such as Health Reimbursement Arrangements (HRAs). The Individual Coverage Health Reimbursement Arrangement (ICHRA) began on January 1, 2020, and it's certainly possible there will be expansion of this concept.
An additional aspect of the ACA that is under scrutiny is the first dollar coverage of preventive services. The Supreme Court will review this at the end of April with a decision likely being made in late June. We will keep an eye on this as well. These are just a few examples of ways in which the ACA may change in the years to come. In the meantime, employers should continue being diligent in their efforts to comply with the ACA and avail themselves of the benefit of offering benefits — it's a great way to attract and retain a competitive workforce.
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