July 23, 2015 | Issue Brief on Health Care
When the Supreme Court handed down its decision in King v. Burwell upholding the Obama Administration’s interpretation of the law, some concluded that the intense debate over the Affordable Care Act (ACA or Obamacare) was coming to an end. Not surprisingly, President Barack Obama encouraged that interpretation in his response to the Court’s decision, saying that “the Affordable Care Act is here to stay.”[1 ]
In truth, the practical effect of the Court’s ruling is merely to prolong the status quo. This means not only that the law’s existing problems will continue, but that additional problems will arise as delayed provisions of the ACA take effect in coming years. Because many of the ACA’s operational and political problems flow from basic design flaws in the legislation, state lawmakers can expect that Congress will, sooner or later, repeal and replace the ACA with simpler and more workable alternatives. Those alternatives will likely involve returning to states authority that the ACA expropriated such as the authority to regulate insurance, removing the costly Medicaid expansion, and giving states more flexibility in restructuring and managing public coverage programs.
Given that the ACA is both operationally and politically unstable, state lawmakers would be advised to avoid assuming that it will continue as constituted. Rather, in the interim, they should minimize risks and costs by limiting their states’ exposure and involvement. For instance, states should:
A top priority for states should be to develop a package of alternative insurance reforms that would take effect upon repeal. As the regulation of health insurance would devolve back to the states, some states could default back to their pre-ACA markets. However, now is the time for states to reevaluate their previous insurance market rules and refine those rules to ensure the market will be more affordable, offer better choices, and provide greater access. States should start by establishing commissions or legislative working groups to identify and prepare for this devolution. Broadly, states should:
While the ACA expropriated long-standing state authority over some aspects of insurance regulation, it left state authority to regulate health care providers largely untouched. Thus, states can still independently implement policies that encourage the kinds of competition and innovation that can lower the cost and improve the quality of health care. For instance, states should:
Regardless of the Supreme Court ruling and the President’s proclamation that the ACA is “woven into the fabric of America,” the ACA remains unworkable, unaffordable, and unfair, which is why it also remains unpopular. Thus, Congress will likely, sooner or later, repeal and replace the ACA’s major components. State lawmakers should start planning now for another big shift in federal health care policy in the coming years.—Edmund F. Haislmaier is Senior Research Fellow in the Center for Health Policy Studies, of the Institute for Family, Community, and Opportunity, at The Heritage Foundation. Nina Owcharenko is Director of the Center for Health Policy Studies and Preston A. Wells Jr., Fellow, of the Institute for Family, Community, and Opportunity, at The Heritage Foundation.
 Barack Obama, “Remarks by the President on the Supreme Court’s Ruling of the Affordable Care Act,” The White House, June 25, 2015, https://www.whitehouse.gov/the-press-office/2015/06/25/remarks-president-supreme-courts-ruling-affordable-care-act (accessed July 22, 2015).
 Edmund F. Haislmaier, “Impact of King v. Burwell: The ACA’s Key Design Flaws,” Heritage Foundation Issue Brief No. 4350, February 20, 2015, http://www.heritage.org/research/reports/2015/02/impact-of-king-v-burwell-the-acas-key-design-flaws.
 Several states that previously attempted to create their own exchanges are exiting what has proven to be a costly and problem-plagued arrangement. Others are likely to follow. Alyene Senger, “Nevada Gives Up on $91 Million Obamacare Exchange,” The Daily Signal, May 28, 2014, http://dailysignal.com/2014/05/28/nevada-gives-91-million-obamacare-exchange/.
 The Administration has yet to release its proposed rules and regulations relating to Section 1332. Moreover, it is likely that the flexibility will be narrowed, not expanded.
 Maine offers an example of such pre-emptive legislation. An Act to Modify Rating Practices for Individual and Small Group Health Plans and to Encourage Value-based Purchasing of Health Care Services, H.P. 979 and L.D. 1333 Maine Legislature, May 17, 2011, http://www.mainelegislature.org/legis/bills/getPDF.asp?paper=HP0979&item=24&snum=125 (accessed July 22, 2015), and Tarren Bragdon and Joel Allumbaugh, “Health Care Reform in Maine: Reversing ‘Obamacare Lite,’” Heritage Foundation Backgrounder No. 2582, July 19, 2011, http://www.heritage.org/research/reports/2011/07/health-care-reform-in-maine-reversing-obamacare-lite.
 James T. O’Connor, “Comprehensive Assessment of ACA Factors That Will Affect Individual Market Premiums in 2014,” Milliman, Inc., April 25, 2013, http://www.ahip.org/MillimanReportACA2013/ (accessed July 22, 2015).
 Dale H. Yamamoto, “Health Care Costs—From Birth to Death,” Society of Actuaries, Health Care Cost Institute Independent Report Series No. 2013-1, June 2013, http://www.healthcostinstitute.org/files/Age-Curve-Study_0.pdf (accessed July 22, 2015).
 For a discussion of the Idaho model, see Bragdon and Allumbaugh, “Health Care Reform in Maine: Reversing ‘Obamacare Lite.’”
 For a discussion of insurance market rules and states, see Edmund F. Haislmaier, “Saving the American Dream: The U.S. Needs Commonsense Health Insurance Reforms,” Heritage Foundation Backgrounder No. 2703, June 22, 2012, http://www.heritage.org/research/reports/2012/06/saving-the-american-dream-the-us-needs-commonsense-health-insurance-reforms.
 For instance, as part of its 2011 reform law, Maine allowed its residents to buy coverage that is regulated by Connecticut, Massachusetts, New Hampshire, or Rhode Island. See An Act to Modify Rating Practices, Maine Legislature, and Bragdon and Allumbaugh, “Health Care Reform in Maine: Reversing ‘Obamacare Lite.’”
 Robert E. Moffit, “Private Insurance Exchanges: How New York Employers and Policymakers Can Leverage New Reimbursement and Delivery Reforms,” chap. 5, in Paul Howard and David Goldhill, eds., New York’s Health Care Revolution: How Employers Can Empower Patients and Consumers, Manhattan Institute for Policy Research, [May 2015], http://www.manhattan-institute.org/pdf/NYHCR.pdf (accessed July 22, 2015).
 Daniel McCorry, “Direct Primary Care: An Innovative Alternative to Conventional Health Insurance,” Heritage Foundation Backgrounder No. 2939, August 6, 2014, http://www.heritage.org/research/reports/2014/08/direct-primary-care-an-innovative-alternative-to-conventional-health-insurance.
 Phyllis Berry Myers et al., “Why It’s Time for Faith-Based Health Plans,” Heritage Foundation Lecture No. 850, August 24, 2004, http://www.heritage.org/research/lecture/why-its-time-for-faith-based-health-plans.
 Randolph W. Pate, “President Obama’s Medical Liability Reform Proposal: No Silver Bullet,” Heritage Foundation Issue Brief No. 2614, September 15, 2009, http://www.heritage.org/research/reports/2009/09/president-obamas-medical-liability-reform-proposal-no-silver-bullet.
 Obama, “Remarks by the President.”