“We used to be a nation where people were one bad gene or one bad traffic accident away from bankruptcy. That’s not true anymore.” -Jonathan Gruber
It’s been 10 years since President Barack Obama signed the Affordable Care Act into law. Some of its most popular provisions included protections for people with pre-existing conditions, allowing children to stay on their family’s health insurance until they turn 26, and expanding prescription drug coverage for Medicare recipients. But the law remains controversial. On Nov. 10, 2020, the Supreme Court will hear oral arguments in the latest constitutional challenge to the law. In this bonus episode of American Diagnosis, we look back at the surprising origins of the Affordable Care Act, see why it’s become so controversial, and what the latest legal challenge to the ACA would mean for the millions of Americans who depend on the law for their health insurance.
Jonathan Gruber: America was the only nation in the world where it was totally legal for insurers to discriminate against the sick. It happened nowhere else in the world.
Nicholas Bagely: And it’s really the affordable care act that stepped in and said, no, it doesn’t matter how sick you are. You’re allowed to get insurance at the same rate as everybody else. Um, those would go away overnight.
Celine Gounder: Hi, everyone. Dr. Celine Gounder, here. I’m the host of American Diagnosis, the podcast about health and social justice.
The Affordable Care Act was passed ten years ago, in the summer of 2010. The law fundamentally changed the U.S. healthcare system. Some of its most popular provisions included protections for people with pre-existing conditions… allowing children to stay on their family’s health insurance until they turn 26… and expanding prescription drug coverage for Medicare recipients.
But the law has faced dozens of legal challenges… including two that have made it to the Supreme Court… and oral arguments for a third are set to start on the day we release this podcast, November 10th. And the latest addition to court has many supporters of the law worried.
Donald Trump: In a few moments we will proudly swear in the newest member of the United States Supreme Court, Justice Amy Coney Barrett.
Celine Gounder: Amy Coney Barrett was confirmed as the newest Supreme Court Justice on October 26th… weeks after Ruth Bader Ginsburg’s death and ten days before the general election.
Justice Barrett’s confirmation has made the Supreme Court more conservative than its been in generations. And plaintiffs in this latest case hope that the 6 to 3 conservative majority will strike down the Affordable Care Act in its entirety.
In this bonus episode of American Diagnosis, we’re going to look at the surprising origins of the Affordable Care Act… why it’s become so controversial… and what the latest legal challenge to the ACA would mean for the millions of Americans who depend on the law for their health insurance.
After the Affordable Care Act passed, critics of the law attacked it as socialism and government overreach. Mitt Romney opposed it in an interview with Larry King in 2010.
Mitt Romney: The truth is that some elements in the bill are good and many are bad. And the democrats want to talk about the couple of maraschino cherries that are on top of the pile of dirt.
Celine Gounder: Today, Mitt Romney is a U.S. Senator for the state of Utah. But back then, he was a one-term governor of Massachusetts, ramping up his campaign to become the Republican nominee for president. But what many don’t know is that the precursor to the Affordable Care Act was first implemented in 2006 in the state of Massachusetts by Governor Mitt Romney.
Mitt Romney: I think it’s because of what this bill can lead to. Every citizen with affordable, comprehensive health insurance – Small businesses able to conveniently buy insurance for their employees at a cost that’s competitive with big businesses… medical transparency, bringing marketplace dynamics to healthcare, really for the first time. And finally, beginning to reign in healthcare inflation.
Celine Gounder: Of all the people Governor Romney thanked in that signing ceremony, one of them was an economist named Jonathan Gruber.
Jonathan Gruber: My name is Jonathan Gruber, and I’m a professor of economics at MIT.
Celine Gounder: In 2006, Jonathan worked with then-Governor Romney to develop sweeping healthcare reform under the name — and it’s a doozy — “An Act Providing Access To Affordable, Quality, Accountable Health Care.” See, Romney thought the U.S. healthcare system back then just didn’t make sense.
Jonathan Gruber: America was the only nation in the world where it was totally legal for insurers to discriminate against the sick. It’s bizarre concept that insurers could deny coverage to people because they’re sick or charge the sick many more times than the healthy for insurance, which denied pre-existing conditions and happened nowhere else in the world.
Celine Gounder: Some states tried to reform healthcare by banning insurance companies from discriminating against these people. Sounds great, right? Well, there was a snag.
Jonathan Gruber: The concern was, if we forced insurers to insure everybody at the same price, that this could lead to a death spiral.
Celine Gounder: The death spiral that Jonathan is talking about goes like this:
Jonathan Gruber: Insurers are like bookies. Okay. How does sports bookies work? They don’t want to take a particular risk that one team’s going to win or lose. They wanted a large number of bets on either side, equally each other. So they cancel out and they take the profits off the top. That’s all insurers wanted to do too.
Celine Gounder: Insurers need healthy people to pay into the system so that when someone gets sick, there’s money to pay for it. So, just like bookies, insurance companies need a big pool of people to even out the odds of someone getting sick and needing expensive care.
But when insurance companies have to charge everyone the same price, there’s a problem. A lot of healthy people say, hey, I’m not sick… why should I pay for health insurance? These people don’t buy into the system… only sick people do because they need healthcare right now.
Jonathan Gruber: And indeed, this isn’t just theory, seven states tried to do so in the 1990s and in all states the same thing happened. Insurers were worried if they couldn’t discriminate against the sick, they’d be swamped by sick enrollees and lose money. So they either exited the markets or raised their prices through the roof. One of those states was my home state of Massachusetts and then our governor Mitt Romney, um, had a really interesting idea. Romney thought it was unfair that the healthy could avoid paying for insurance, and yet they could get care for free from the emergency room when they were sick. So his idea was why don’t we mandate that everyone buy insurance so that the healthy have to pay their fair share and so insurers don’t just get stuck with the sick.
Celine Gounder: This way, the insurers would know there would be enough healthy people paying into the system because everyone would have an individual mandate to buy health insurance.
Jonathan Gruber: And this basic three-legged stool, banning insurer discrimination, the individual mandate and insurance subsidies became the basis for Massachusetts. First in the nation, universal healthcare coverage law.
Celine Gounder: The law was a success.
Jonathan Gruber: Our uninsurance rate fell to 3% compared to 18% nationwide. Premiums and our non-group insurance market fell by 50% compared to the national average and there were no negative effects on the vast majority of our state residents who had high quality health insurance.
Celine Gounder: And the law made an immediate change in many people’s lives. Jonathan remembers one woman who didn’t have health insurance before the law passed and who could finally get the care she needed.
Jonathan Gruber: And she’d been uninsured, she got diagnosed and she got screened and she had cancer and like, wow, like literally to hear the stories that to me was the high was like to hear the stories of actually helping people. That to me was the best.
Celine Gounder:. And Jonathan’s expertise was in demand. Lots of other moderate and conservative governors wanted to set up their own versions of Romneycare.
Jonathan Gruber: One of which, which was incredibly exciting for me. It was governor Schwartzenegger out in California. Now I grew up on his movies, so I was incredibly excited to go and get to meet him. In fact, in the ante-room, he has the sword from Conan the Barbarian which was super cool.
Celine Gounder: But after meeting with different governors and policy leaders it became clear that it wouldn’t be easy to repeat Massachusetts’ success with Romneycare.
Jonathan Gruber: All States ran into the same problem. In California we had an agreement with the governor, both houses of legislature on a plan to do it. And then they realized how much it would cost. And they said, well, we can’t, we don’t have that kind of money. See the thing is in Massachusetts is we had a low uninsurance rate to start, and we had a huge amount of federal funds already coming to the state. So we could do it without really raising taxes. California was going to be a huge tax increase to do this and that, like, we can’t do it. So it became clear if this was going to go to other States that had to involve federal funding.
Celine Gounder: Fast forward to 2008. Barack Obama wins the presidency with a supermajority in the House and Senate. He decides to swing for the fences and pass healthcare reform.Obama didn’t initially support the individual mandate that Romney and Gruber’s plan used. But once in office, he decided it was the best option. In 2010, the bill was signed into law.
Barack Obama: Today after over a year of debate; today, after all the votes have been tallied — health insurance reform becomes law in the United States of America.
Jonathan Gruber: The first leg was banning insurance discrimination, and I want to come back to that because I cannot emphasize that enough. Okay. We used to be a nation where people were one bad gene or one bad traffic accident away from bankruptcy. That’s not true anymore. That is a fundamental accomplishment that isn’t measured in numbers, like the number of uninsured, but it’s probably more important. The second leg was the individual mandate and the third leg was a two-pronged approach to insurance affordability. First was an expansion of the public Medicaid program for our poorest citizens. And the second was generous tax credits to offset the cost of health insurance on the new ACA state exchanges for the lower middle-class.
Celine Gounder: The law gave lawmakers four years to implement the ACA. But in the interim, there was a swell of opposition from conservatives.
Bill Kristol: I’m sorry, people’s health is at stake here you know, Republican house members were elected to do their job and their job is trying to protect their constituents from this big government program.
Jonathan Gruber: When the bill was signed to Massachusetts on the stage was Mitt Romney, Ted Kennedy and a speaker from the very conservative Heritage Foundation, talking about what a great victory it was for conservative principles. So now you have Obama gets elected. He adopts it and suddenly it’s the devil’s work. I mean, there literally is no reason other than politics.
Celine Gounder: Even Mitt Romney came out against it when he was the Republican nominee for president in 2012.
And there was opposition from Republican state attorneys general. They argued that the individual mandate –the mechanism that was supposed to ensure the financial viability of the insurance marketplaces –was unconstitutional. The summer before the 2012 general election between Obama and Romney, the Supreme Court issued its first ruling on the constitutionality of the Affordable Care Act.
Reporter: A victory for President Obama as the Supreme court allows the healthcare law to largely stand
Barack Obama: Whatever the politics, today’s decision was a victory for people all over this country whose lives will be more secure because of this law and the supreme court’s decision to uphold it.
Celine Gounder: The majority opinion said the individual mandate could survive if it were seen as a tax. But the other big thing the Supreme Court’s decision had to do with was Medicaid expansion. The Court said it was optional for states to expand Medicaid.
Jonathan Guber: Now let’s be clear about how states should look at this option. States run Medicaid, so they choose whether to expand it or not. But under the ACA, the federal government agreed to pay 90 to 100 percent of the cost of covering all their pool. Incredibly good deal, okay? But some states turned this down due to political opposition. Let’s take, let’s take Florida. There are 1 million uninsured people below the poverty line in Florida. Okay. These are people the federal government said we’ll pay 90 to a hundred percent of the cost of covering. So we’re saying Florida. If you just sign here, you will get billions of dollars from other States and help your most vulnerable citizens. And they turned it down? I mean, this is literally political malpractice.
Celine Gounder: Jonathan says this feels like a turning point in U.S. politics.
Jonathan Gruber: Really, what’s striking about the Affordable Care Act is the way U.S. politics works usually you fight, fight, fight; the law passes; you move on to the next fight. The Affordable Care Act is really stunning in how the fight got more severe once the law passed. I think I haven’t seen that before. You know, we’re really, the fight got worse once the law passed.
Celine Gounder: When President Donald Trump took office in 2017, there was another major push to repeal the law. Ultimately, that effort failed. But that Congress did do one thing to the ACA. They eliminated the penalty for the individual mandate.
Jonathan Gruber: It’s basically gone, uh, the tax penalty set to zero. Technically there’s still a mandate, but it’s effectively toothless.
Celine Gounder: Maybe not. That little detail… that the tax penalty is set to zero… is the crux of the latest battle over the Affordable Care Act before the Supreme Court. The name of the case is California v. Texas.
Nicholas Bagely: This latest challenge is the kind of argument that only a lawyer could love. And to be honest, most lawyers don’t even love it.
Celine Gounder: That’s Nicholas Bagely. He is a law professor at the University of Michigan.
Nicholas Bagely: The argument this time around is that the individual mandate, in 2012, when the Supreme court upheld it, was upheld only as a tax.
Celine Gounder: But like Jonathan said, when the Republican Congress couldn’t repeal the ACA in 2017, they dropped the penalty for not having insurance to zero.
Nicholas Bagely: Now when Congress did that, what it meant to do is make the whole Affordable Care Act less coercive. It meant to relieve people of a burden that they were suffering under. Um, but the challengers here say, aha, no, no, no. That can’t be interpreted no longer can the lobby have interpreted as imposing a tax. It says thou shalt buy insurance. And that can only be understood as a coercive command. And it’s the kind of coercive command that we know is beyond Congress’s power to adopt. Even describing the argument should underscore how goofy it is. The notion that Congress made the law more coercive by getting rid of the only mechanism to enforce the individual mandate has things backwards.
Celine Gounder: But the Republican attorneys general who brought the case say this detail… a tax with no penalty… shouldn’t just impact that part of the law… it should invalidate the entire Affordable Care Act.
Nicholas Bagely: Not just this, you know, remaining individual mandate, the toothless mandate that doesn’t do anything, but no, all the rest of the law, the Medicaid expansion, the exchanges, the rules on private insurance, every bit of it has to go.
Celine Gounder: So in other words, once you decouple the mandate and the tax, some people are arguing that is no longer constitutional because before you have the choice between a tax, um, or paying the penalty or not, whereas now you’re just being told you have to comply.
Nicholas Bagely: That’s exactly the argument. And it’s really weird because of course, like it doesn’t really matter if Congress says you shall buy insurance and imposes absolutely no penalty one way or the other. And more to the point, we all know what Congress meant to do at the end of 2017, when it got rid of the penalty for going without insurance, it meant to repeal the individual mandate to leave people more free to make the choice to go without insurance. And we know that because members of Congress repeatedly said it, we know it because president Trump repeatedly said it. And we know for damn sure that Congress didn’t mean to use that law as some kind of Trojan horse to eliminate the entire Affordable Care Act.
Celine Gounder: If the plaintiffs are successful, there’s a lot on the line, even for people who aren’t on Medicaid.
Nicholas Bagely: There’s also a bunch of provisions of the folk with employer sponsored coverage, um, take advantage of, so if you’ve got coverage through your employer and you’ve got a kid who’s 22 years old, your employer has to cover that kid of yours up until the age of 26. That’s a very popular provision of a law. The ACA prohibited annual and lifetime limits so that your insurance doesn’t run out when you need it most. And in addition to all that the Affordable Care Act also made some changes to the Medicare program to make it a little bit more sustainable for people. And most importantly, insignificantly it closed the so-called donut hole and made it easier for seniors, uh, to afford their prescription medications.
Celine Gounder: Not to mention access to free preventive services, like annual checkups and contraception… And let’s not forget… we’re still in the middle of a pandemic.
Nicholas Bagely: One of the things you’ve got to keep in mind is that when it comes to COVID, you want people going in to get tested. You want people to go to the hospital when they get into a tough spot with the course of the disease, um, because we can help them in those circumstances. So telling a bunch of people that they don’t have insurance is not only sort of immoral and unethical, and we’ll send a ton of people into bankruptcy who just happened to get sick. It’s also actually counterproductive from a public health standpoint.
Celine Gounder: When the Supreme Court hears the oral arguments in this case, it will be a very different court than the one that decided to uphold the law in 2012. President Donald Trump has named three conservative justices to the court… including the newly confirmed Justice Amy Coney Barrett.
Nicholas Bagely: Yeah. So before her appointment, the good money was that this lawsuit didn’t have, uh, much of a chance at all of success. And the reason for that is that there, you know, the court before her appointment was split five, four, and the chief justice had sided with the liberals and two prior cases to turn away much stronger challenges to the law.
Nicholas Bagely: But, of course, with Justice Ginsburg’s death, the center of gravity on the court has lurched to the right and justice, Chief Justice Roberts no longer holds the decisive vote. You got to pick up a fifth vote to turn this case away from among the other conservative justices. [00:16:15]
Celine Gounder: There’s a lot on the line… Nicholas thinks there’s a chance that that critical swing vote could come from an unexpected place.
Nicholas Bagely: The money is maybe that Justice Kavanaugh who has written about in the past about the importance of, of salvaging as much of Congress’s handiwork as possible. That he would side against the plaintiffs here. It’s also possible that Justice Barrett, would say that this lawsuit is kind of silly. Um, you know, I still think this lawsuit is a long shot. But it’s a lot closer than it once was. And, you know, the small risk of a very bad thing happening really are worth worrying about.
Celine Gounder: And this isn’t the last challenge to the Affordable Care Act. There’s already another case in the wings about work-requirements for people who are covered under Medicaid.
Nicholas Bagely: And what that means is that if you are part of one of those 13 million people, who’s gotten Medicaid coverage through the affordable care act, you’d be told to work something like 80 hours in a month and report those hours, worked to the state or lose your Medicaid coverage.
Celine Gounder: Nineteen states asked the Trump administration to grant them waivers to impose these work requirements. But that might not come to pass.
As we were working on this episode, Joe Biden won the presidential election. It’s too early to know where the Affordable Care Act will fall among his immediate priorities. And the control of the U.S. Senate is still undecided at this recording. But President-Elect Biden has previously said he wants to build on the law, not replace it. Jonathan Gruber has his own ideas on how the Affordable Care Act could be improved.
Jonathan Gruber: I think first of all, uh, the ACA as I said features has generous tax credits. But they’re basically not generous enough. So I think we can make that more generous. And it wouldn’t be that expensive.
Jonathan Gruber: Um, I would offer some reinsurance, the state exchanges to bring down the premiums and to make them more stable. And I think this idea of a public option is a good one. So basically the public option is let’s make private insurers compete with a new government-run plan, like expanded Medicare. No one’s forced into it, but it’s an option you can choose on the exchanges through which the States that didn’t expand Medicaid, their poor citizens can sign up for this new public option. So solve that problem. That’ll bring several million people into coverage, and it will provide robust competition for private insurers on the exchange, bringing down premiums.
Celine Gounder: So if you were to rewrite the affordable care act now, What would you do differently?
Jonathan Gruber: I would stop being so damn fiscally responsible.
Jonathan Gruber: If you were a a25-year-old in California, you get insurance like a hundred bucks a month. Why? Because the minute you got sick, they kicked you off. So it wasn’t really insurance. So when we fixed the markets, that meant that for that small set of people, things got more expensive and they were mad.
Jonathan Gruber: If I’d do it over again, I would have paid them off. I would have basically said for about a hundred billion dollars, which is peanuts in the scheme of things we could have made it to the premiums didn’t go up.
Celine Gounder: Jonathan says that while the bill may have cost more initially…the long term political benefits would have been worth it.
Jonathan Gruber: We tried to reform healthcare for a hundred years before the Affordable Care Act. Every 17 years we’d try and every single 17 years, we’d fail. Because we’re too ambitious. And then what would happen? The next round would be slightly less ambitious. The Affordable Care Act is the least ambitious attempt to reform healthcare in US history. But it’s the one that passed. Okay? And it covered 20 million people!
Celine Gounder: There are a lot of unknowns right now. How will the Supreme Court rule? Is there anything a Biden administration could get through Congress to shore up and improve the ACA? But one thing Jonathan is confident about is if the ACA is going to survive this fight and others… people need to break out of their bubbles and advocate for the protections in the law.
Jonathan Gruber: The way we fix our broken politics in America is by talking, not just to our friends who think the same way we do, but by explaining and trying to help people understand what makes good policy.
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I’m Dr. Celine Gounder. Thanks for listening to AMERICAN DIAGNOSIS