avilez, nathaly aca paper

The Affordable Care Act

Nathaly Avilez

Florida International University

BUL6810: Legal Environment of Business

April 10, 2015

Running head: THE AFFORDABLE CARE ACT

The Affordable Care Act

The Affordable Care Act is composed of two statutes that were enacted in March 2010,

the Patient Protection and Affordable Care Act and the Health Care and Education

Reconciliation Act. The ACA is used as a mechanism to reform, amend, and create healthcare

provisions under Title 42, Public Health and Welfare, of the United States Code. The new law

brought perhaps one of the biggest healthcare reforms in the history of the United States. It opens

up the channels to equal and affordable healthcare to millions of Americans by regulating the

health insurance market through the Federal, and the State-run Exchange. Despite the opposition,

resistance, and challenges it faces everyday, the ACA has proven to be a far-from-perfect model

to establish a universal access to healthcare that is equal and affordable to all consumers.

The following text will take the reader through several provisions of the Affordable Care

Act followed by a personal take of the Act. The reading will then discuss three existing

regulations issued by several agencies such as the Department of Health and Human Services

and the Internal Revenue Services, followed by a personal take of such regulations. Furthermore,

the reading will then discuss the decisions of the Supreme Court regarding the constitutionality

features of the ACA in two cases; National Federation of Business v. Sebelious, and Burwell v.

Hobby Lobby. Both cases will then be followed by a personal analysis regarding the strength of


each decision. In Conclusion, the last case will discuss, not the constitutionality of the law, but

the interpretation of the law of a specific statute under the ACA in King v. Burwell.

Five Provisions of the ACA

The provisions to be further discussed in this section include the Medicaid expansion, the

individual mandate, coverage for preventive health services, lifetime maximums, and quality

affordable healthcare. These provisions have great importance because they all aim towards

providing assistance and protections to the American people. Being employed by a major

Bahamian health insurer has given me the opportunity to witness some of these scenarios play

out in real life. For instance, telling a patient’s loved ones that the chemotherapy could not be

approved because the patient had exhausted the policy’s lifetime maximum. In other scenarios,

patients decline to receive preventive and screening services, such as colonoscopies, because of

the limitations and cost sharing their health plans impose on them. Furthermore, the cost of

healthcare is a constant hot topic in Congress; therefore it is imperative to address those

provisions that will provide a cost-containment alternative.

Provision 1. The expansion of Medicaid coverage for the lowest income populations.

Overall, this section of the Affordable Care Act entails states to expand their Medicaid state

programs by providing coverage to those individuals that could not qualify for Medicaid before

the implementation of the ACA. These individuals consist of low-income adults whom are


younger than 65 years of age and do not have children. The coverage is to be expanded to those

individuals whose income is minimally 100% of Federal Poverty Level, but do not exceed 133%

of the Federal Poverty Level. The Medicaid expansion provision is the ultimate tool to provide

coverage to those low-income individuals whom did not qualify for assistance due to their age or

simply because they did not have a child. This provision ensures the equality of healthcare access

amongst individuals!

Affordable Care Act, 42 U.S.C § 2001

Provision 2. Coverage of preventive health services. This section dictates that all health

insurance plans must provide coverage, and not inflict an out of pocket cost for preventive

evidence-based services that have been recommended by the United States’ Preventive Services

Task Force. It requires insurance carriers to provide coverage for preventive and screening

services for infants, children, adolescents, and women that are deemed necessary and supported

by the Health Resource and Services Administration. Providing full access to preventive

medicine, at no cost sharing, can be an approach to take in an attempt to cost-contain healthcare

costs. Preventive medicine is used more as a precaution to prevent or help identify at a very early

stage long term chronic conditions such malignancies, diabetes, and hypertension. These

conditions are considered to drive the cost of healthcare in the long run.



Provision 3. No lifetime or annual limits. This provision prohibits all insurance health

plans and insurance issuers to place a lifetime or annual dollar maximum on a health policy. It

provides protection to the sick individuals whom require a long-term care treatment such as

radiation therapy, chemotherapy, and cardiac surgeries. The provision guarantees a patient’s

rights to receive the necessary medical treatment he or she requires without placing a monetary

limitation on the plan.


Provision 4. The requirement to maintain minimum essential coverage. This section calls

for individuals to share an obligation of maintaining minimum essential coverage. Failure to

comply with the requirement will result in a tax penalty paid through the individual’s tax returns

for the taxable year. The penalty cannot exceed the amount of 300% of the applicable dollar

determined for that taxable year. The mandate identifies those individuals whom are exempted

from this requirement. It emphasizes on several important aspects of the necessity to maintain

coverage, such as the U.S economy and the accessibility to health services. Most significantly,

the mandate substantiates the Federal government’s right and power to regulate interstate

commerce. The requirement for all individuals to hold minimum essential coverage can only do

well for the rest of the American people. The requirement will open the doors for millions of

Americans to have the ability to purchase health premiums. As more Americans purchase the


premium (to avoid the tax penalty) the risk starts to spread, resulting in larger risk pools mixed

with healthy and sick people. Larger risk pools are just what we need in order to make health

premiums affordable to everyone.


Provision 5. Bringing down the cost of healthcare. To determine a clear accounting for

costs, insurance companies must submit a report to the Secretary on a yearly basis regarding the

total premium revenues such as provider reimbursement, activities to improve the quality of

healthcare, and other non-claims costs, but excluding state taxes and other licensing and

regulatory fees. Furthermore, to ensure that consumers receive value for their premium

payments, health insurance companies must provide an annual rebate to those individuals whose

plan spending does not meet the Minimum Loss Ratio standards for that year, 20% or less n the

group market and 25% or less for individual markets. In other words, consumers get a refund of

the difference between what the premium cost and what it actually spent if the minimum loss

ratio (MLR) is less than 20-25%. This provision offers an individual protection against the shady

practices of health plans. Too often consumers find themselves overpaying for services that they

have never utilized through their plans. This section ensures the transparency between health

plan reimbursements versus the health plan premiums by providing a refund to all consumers

whose plan spending falls bellow the minimum loss ratio.



Regulations of the ACA

The following text will discuss three current and existing regulations from Federal

Agencies. These agencies include the Internal Revenue Service, the Department of Labor, and

Department of Health and Human Services. The regulations discussed will pertain to the

exemption of groups when providing certain preventive coverage for women, the calculation of

the Medical Loss Ration (MLR), and the omission of pre-existing exclusion periods. These

regulations have enacted important details within a provision that Congress did not legislate.

Existing Regulation 1. The coverage of certain preventive services. Section 2713 of the

Affordable Care Act requires employer group health plans to provide preventive services for

women’s preventive health, including FDA approved contraceptives. In 2011, there was an

amendment added to this section that gave the Health Resources and Services Administration the

ability to exempt certain group health plans maintained by religious employers or organizations

that had objections towards contraceptives. They identified a religious employer as an

organization that has religious values, employs and serves those persons who share the same

religious values, and is a non-profit organization. I am in accordance with a portion of the

regulation as I feel it is correct to separate religion from healthcare. Religious believes are

protected under the US Constitution, and therefore should be preserved under the law. I am in


opposition with the regulation’s classification of a religious employer only as a non-profit

organization as this regulation needs to separate religion from healthcare. This technicality

creates an inequality between groups that ultimately share the same religious values.

Fed. Reg. 51092 29 CFR Parts 2510 & 2590

Existing Regulation 2. Relating to the computation of, and rules relating to, medical loss

ratio. The regulation under the ACA provides an organization a description on how to calculate

the Medical Loss Ratio (MLR). It establishes the MLR as the ratio, presented in a percentage

format, of the MLR numerator to the MLR denominator. Furthermore, the final regulations

defined what the MLR numerator and the MLR denominator will be composed of; the numerator

was established as the total amount that was spent on reimbursement for medical services to

those enrollees during the taxable year. In addition, the denominator was established as an

organization’s total premium revenue for the taxable year, but not including Federal, State, and

licensing taxes and fees. After December 31, 2013 the MLR will be calculated on a one-year

basis, and after December 31, 2014 the MLR will be calculated on a two-year basis. If a

company fails to have an MLR less than 85% then the company will have several consequences

such as losing the status of being a stock insurance company, forfeiting deductions, and taking

80%, rather than 100%, of its unearned premium reserves. Section 2718 of the ACA protects

consumers from the vicious practices of high cost health insurance. I am in accordance of this


regulation as it creates the general standard for all health insurance plans on how to calculate the

MLR, establishing a uniform system that will hold insurance companies accountable for costs.

Fed. Reg. 735 26 CFR Part 1

Regulation 3. The Patient Protection and Affordable Care Act: Exchange and insurance

market standards for 2015 and beyond. This regulation is composed of several rules regarding

the insurance market exchange. The area of concentration being discussed in this section is the

product discontinuance and uniform modification of coverage exceptions to guarantee

renewability requirements. Non-governmental health plans are no longer relieved from the

requirements under the PHS Act of the ACA. The requirements consist of placing a pre-existing

condition exclusion periods for enrollment, which is automatically classified as health status

discrimination. However, these groups could still be exempted from the requirements regarding

the coverage for mothers, newborns, mental health services, substance abuse, reconstructive

surgeries, and dependent students. I am not in accordance with this regulation as it places

discrimination, in my opinion, towards the groups mentioned above. I believe that health

insurance plans should not be exempted from these requirements whether they are covering a

newborn or a patient with congestive heart failure. If the ACA is going to prohibit pre-existing

exclusion periods then it should be applied to all individuals who are enrolled in a heath plan

despite their condition or age.


Fed. Reg. 30240 45 CFR Part 154

The Constitutionality of the ACA

The constitutionality of several provisions of the Affordable Care Act has been

challenged on several occasions. In Supreme Court Case, National Federation v. Sebelious

(2012), the constitutionality of the individual mandate and the Medicaid expansion provision was

being challenged. The individual mandate put forth by the ACA requires all citizens to purchase

health insurance, or be subject to a tax penalty; “If an applicable individual fails to meet the

requirement…there is hereby imposed a penalty with respect to the individual” (Affordable Care

Act, 2009). The second provision in question was the Medicaid Expansion, which required states

to expand their Medicaid programs by widening the eligibility for coverage, while concomitantly


being at risk of losing all federal Medicaid funding for failure to comply. Chief Justice Roberts

upheld the individual mandate, alongside with Justice Ginsburg, Breyer, Sotomayor, and Kagan,

as constitutional under the United States Commerce Clause. Furthermore, the penalty of losing

all federal funding for Medicaid state programs under the Medicaid expansion provision was

ruled unconstitutional under federal law by Chief Justice Roberts, alongside with Justice Breyer

and Kagan.

As a personal opinion, the individual mandate is constitutional, and therefore Chief

Justice Robert’s opinion is reasonable. It was a smart move for the government to argue that the

“penalty” could be seen as a “tax”. Personally, the individual mandate will bring down the cost

of insurance for all Americans. Requiring all individuals to maintain minimum essential

coverage will ensure the spreading of risk, resulting in a mix of healthy and sick people, which

will bring down the costs for affordable premiums. The Medicaid Expansion provision is a great

way to extend health coverage to those whom truly need it and do not qualify for it. Penalizing

states by taking away their federal funding for their state programs for non-compliance is too

extreme and coercive, and therefore Chief Justice Roberts’s opinion along with Justice Scalia,

Kennedy, Thomas, and Alito supersedes. This part of the provision goes completely against the

fundamental concept of federalism which is clearly specified under the tenth Amendment of the

U.S Constitution; “The powers not delegated to the United States by the Constitution, nor


prohibited by it to the States, are reserved to the States respectively, or the people” (U.S Const.

am. 10). In other words, the Constitution sets forth the principle of a State’s sovereignty when

certain powers have not been assigned to the federal government through the US Constitution. In

this case, the federal government did not have the power to force a State to comply with

regulations they were not in accordance with.

In Burwell v. Hobby Lobby (2014), the constitutionality of the of the ACA was once

again challenged by a religious business group arguing that the requirement set forth by the ACA

to provide contraceptives to their employees under section 2713, violated the Religious Freedom

Restoration Act of 1993. After being denied a request for an exemption of these requirements to

avoid a tax penalty by the Supreme Court, an en banc hearing through the Court of Appeals

reversed the Supreme Court’s decision and held that corporations, such as Hobby Lobby, did

have protected rights under the RFRA of 1993, and indeed qualified for such exemption. As a

personal opinion, the Court was correct in exempting Hobby Lobby from the requirement to

provide such coverage. The status of an organization, whether it is for-profit or non-profit it,

should not serve as barrier to their religious believes. Organizations are composed of individuals

whose religious rights have been guarantee under the US Constitution. The nature of a business

or organization cannot be utilized to define, or dictate, the entity’s religious rights. In

conclusion, the following text will further discuss the constitutionality of these two federal cases.


National Federation of Business v. Sebelious

Chief Justice Roberts, along with Justice Ginsburg, Breyer, Sotomayor, and Kagan, found

the individual mandate to be constitutional under the United States Commerce Clause:

“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debs and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States…to regulate Commerce with foreign Nations, and among the several States, and within the Indian Tribes” (U.S. Const. art. I, § 8).

According to Chief Justice Roberts (2014), the United States Constitution does not give

Congress the ability to make individuals purchase a product, in this case a health insurance plan,

but it does give Congress the ability to collect taxes. The issue with this decision was that

through the ACA, Congress did not specify this responsibility as a tax but as a penalty. It was

determined that this “penalty” was collected and paid to the Internal Revenue Service (IRS)

through an individual’s Federal Tax returns, and could therefore be interpreted as a tax.

Additionally, this tax imposed would add to the general welfare of the United States by adding

new revenue as indicated in the Affordable Care Act under section 1501. In addition to the

Commerce Clause, Chief Justice Roberts held that under the Anti- Injunction Act, an individual

was required to pay the tax that was being imposed by the Federal government, and then he or

she can pursue a sue for the refund.


The second key provision of the ACA which calls for Medicaid expansion in all States in

order to avoid losing all federal funding for the program had a different outcome. Chief Justice

Roberts along with the other Justices, Breyer and Kagan, concluded that this provision was

severable, and was in violation of the U.S Constitution. Under Article I, Section 8, Clause I of

U.S Constitution, Congress is permitted to set forth specific requirements and conditions on

states to receive federal funding for programs, but only before the states agree to comply with

qualifications and requirements. This is in a way similar to a contract where one party cannot

threaten another party for non-compliance of new requirements, when the terms of the original

contract had already been agreed upon and established by both entities. Justice Scalia, Kennedy,

Thomas, and Alito all agreed that the penalty of forfeiting all of federal funding due to a state’s

non-compliance for Medicaid Expansion was considered to be coercive in nature as it left a the

States with no option but to accept the conditions. Lastly, two other Justices had a different take

on this provision. Justice Ginsburg and Justice Sotomayor concluded that the Medicaid

Expansion was indeed constitutional, but then joined Chief Justice Roberts in his views that the

ACA is forbidden to withhold federal program funding due to a state’s non-compliance with the

expansion.

National Federation of Independent Business v. Sebelious, 648 F. 3d 1235

Burwell v. Hobby Lobby


The Religious Freedom Restoration

Act (1993) provides protection, or a defense, to all individuals whose religious exercise have

been impeded upon by the federal or state government. This act clearly protects all individuals’

exercise of religion under Amendment I of the U. S Constitution. The only scenario where the

federal government is allowed to impede on religious rights is when there is a persuasive

government interest. Otherwise, these religious rights should at no point be susceptible without

compelling explanation. Justice Kennedy had indicated that the government failed to distinguish

the difference between non-profit religious institutions and for-profit corporations under the

Religious Freedom Restoration Act. Therefore the court held that the exemptions outlined by the

regulations under the Public Health Service Act should also apply to for-profit organizations.

The exemption of one group over another failed to show a legitimate proper cause.

Burwell v Hobby Lobby Stores, Inc., 573 U.S ____ (2014)


The Interpretation of the ACA

This case discussed below takes a different approach from the prior cases discussed. In

King v. Burwell the lawsuit comes from how the law is being interpreted. The plaintiffs argue

the tax credits being offered under the Affordable Care Act. The ACA grants the IRS the power

to grant tax credits to those individuals whom purchase a health insurance plan through an

exchange, whether offered by the state or offered by the Federal Government. The actual statute

states that the ACA only grants tax credits to those individuals that purchase a health insurance

plan through a state sponsored exchange. The decision has not been decided upon as the case is

still being argued at this time. The following text will further discuss why I believe the Courts

will be in favor of the tax credits through the federal and state exchange.

King V. Burwell

Yes, the ACA does specify that the tax credits will be for those who purchase insurance

through a state sponsored exchange. However, only 16 states have set up their own state-


sponsored exchanges leaving the remaining states to go through the federal exchange. The tax

credit lowers the number of individuals that get exempted from the individual mandate, and

increase the number of people that that are subject to the tax penalty. The IRS has made

regulations which specifically guarantees a tax credit to all individuals who purchased health

plans through both federal and state exchanges because, as per the Court of Appeals of 4th

Circuit, “legislative history doe not demonstrate that Congress intended to limit the premium tax

credit to State Exchanges” (King v. Burwell, 2014).

In personal opinion, the Supreme Court will hold that the IRS’s rule to provide tax credits

for all individuals who purchase insurance through a state or federal exchange. Congress had

already established what is known as the “Chevron test” from Chevron U.S.A v. Natural

Resources Defense Council. The test is a two-step process that would establish guidelines in

assessing an agency’s interpretation of statutes. The first step requires the courts to conclude

whether or not Congress addressed the issue at hand. Because Congress was not clear on this

statute and did not address the given issue, the courts will then determine if the agency’s (IRS)

interpretation is reasonable. The IRS implementing tax credits through federal and state

exchanges is reasonable; there has to be a subsidy provided through the federal exchange,

because how else can people afford insurance?

King v. Burwell, 759 F. 3d 358- Court of Appeals, 4th Circuit 2014.


Conclusion

In summary of this entire analysis of the Affordable Care Act I consider this law to be a

breakthrough in healthcare reform. The law has been challenged on numerous occasions; parts of

it have been declared in accordance of the United States laws, while other parts have been

amended as they have been recognized in being in violation of rights. The ACA has not been

created to intentionally cause burdens on Americans. On the contrary, the ACA was passed in

order to increase the accessibility of equal and affordable healthcare to everyone.

The expansion of Medicaid programs provides healthcare coverage to those low-income

individuals who did not qualify for assistance prior to the ACA being implemented; according to

the DHH (n.d), 28 states have expanded their Medicaid programs, enrolling more than 10 million

Americans. It prohibits insurance carriers to impose a dollar value limitation of lifetime or

annual maximums; the HHS (n.d) indicated between 2010- 2013 50,000 fewer people lost their

lives due to their improved access. Most importantly, the ACA protects consumers from

insurance high cost abuses, as consumers have saved a total of 9 billion dollars since 2011in

healthcare costs (HHS, n.d). Prior to 2009 there were millions of Americans that were not


insured through health plans putting an uncertainty of health. In my own personal opinion, I

believe the majority of Americans are ripping benefits from the Affordable Care Act, regardless

if they agree with it or not.


References

Affordable Care Act, 42 U.S.C § 1501-1396, 2009. Retrieved from http://www.hhs.gov/healthcare/rights/law/index.html

Burwell v Hobby Lobby Stores, Inc., 573 U.S ____ (2014). Retrieved from https://supreme.justia.com/cases/federal/us/573/13-354/concur4.html

King v. Burwell, 759 F. 3d 358- Court of Appeals, 4th Circuit 2014. Retrieved https://scholar.google.com/scholar_case?case=11611404083028602394&hl=en&as_sdt=6#p365

National Federation of Independent Business v. Sebelious, Secretary of Health and Human Services, 648 F. 3d 1235. Retrieved from https://supreme.justia.com/cases/federal/us/567/11-393/ and

National Federation of Independent Business v. Sebelious, Secretary of Health and Human Services, 648 F. 3d 1235 (2012). Retrieved from https://www.law.cornell.edu/supremecourt/text/11-393

Center for Effective Government. (n.d). Chevron Doctrine. Retrieved from http://www.foreffectivegov.org/node/2624

Coverage of Certain Preventive Services Under the Affordable Care Act, Fed. Reg. 51092 (Proposed August 1, 2011) Codified at 29 CFR Parts 2510 & 2590, 26 CFR Part 54, 45 CFR Parts 147. Retrieved from www.regulations.gov

Computation of, and Rules Relating to, Medical Loss Ratio, Fed. Reg. 735 (Proposed May 13, 2013) Codified at 26 CFR Part 1. Retrieved from www.regulations.gov

Patient Protection and Affordable Care Act: Exchange and Insurance Market Standards For 2015 and Beyond, Fed. Reg. 30240 (Proposed September 23, 2010) Codified at 45 CFR Part 154. Retrieved from www.regulations.gov

http://www.regulations.gov/



http://www.foreffectivegov.org/node/2624

https://www.law.cornell.edu/supremecourt/text/11-393

https://supreme.justia.com/cases/federal/us/567/11-393/


https://scholar.google.com/scholar_case?case=11611404083028602394&hl=en&as_sdt=6#p365

https://supreme.justia.com/cases/federal/us/573/13-354/concur4.html

http://www.hhs.gov/healthcare/rights/law/index.html


National Federation of Independent Business v. Sebelious, Secretary of Health and Human Services, 648 F. 3d 1235. Retrieved from https://supreme.justia.com/cases/federal/us/567/11-393/ and

National Federation of Independent Business v. Sebelious, Secretary of Health and Human Services, 648 F. 3d 1235 (2012). Retrieved from https://www.law.cornell.edu/supremecourt/text/11-393

Religious Freedom Restoration Act of 1993, 42 USC § 2000bb retrieved from https://www.law.cornell.edu/uscode/text/42/chapter-21B

United States Constitution, Article. I, § 8. Retrieved from http://www.archives.gov/exhibits/charters/constitution_transcript.html

United States Constitution, Amendment 10. Retrieved from http://www.archives.gov/exhibits/charters/bill_of_rights_transcript.html

United States Department of Health and Human Services. (n.d). The Affordable Care Act is Working. Retrieved form http://www.hhs.gov/healthcare/facts/factsheets/2014/10/affordable-care-act-is-working.html

http://www.archives.gov/exhibits/charters/bill_of_rights_transcript.html

http://www.archives.gov/exhibits/charters/constitution_transcript.html

https://www.law.cornell.edu/uscode/text/42/chapter-21B

https://www.law.cornell.edu/supremecourt/text/11-393



Running head: UPHOLDING THE SECOND AMENDMENT 22

avilez, nathaly aca paper

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