In a 7-2 decision, the Supreme Court upheld the Affordable Care Act. State and individual challenges to the ACA were dismissed by the court, noting that they lacked standing to challenge it.
Despite the fact that many states have enacted laws designed to protect consumers in the event of a repeal of the Affordable Care Act, they rely heavily on federal funding. It is unlikely that most states could have maintained Medicaid expansion or affordability provisions for self-purchased health insurance without that funding.
ACA consumer protections are no longer threatened, which might encourage states to push forward with them. Medicaid expansion is one of the most obvious implications of the Affordable Care Act in the 13 states that have not yet accepted federal funds to expand Medicaid eligibility.
Two years of additional federal funding are provided by the American Rescue Plan for states that expand Medicaid in the last two years. As of now, Oklahoma is the only state using that provision, and last year Oklahoma voters approved a ballot measure that called for Medicaid expansion this year.
Even during the global pandemic in 2020 and 2021, the other 13 states rejected Medicaid expansion year after year. Most of them will likely do so as long as their legislatures don’t change. Due to the court’s ruling, state Medicaid expansion programs can now expand without the worry that federal funding might be eliminated, now that the ACA has been upheld yet again.
There is also a possibility that more states might use the ACA’s 1332 waiver provisions to implement reinsurance programs. The American Rescue Plan’s subsidy enhancements would also depend on whether they are extended beyond 2022. Those without subsidy who do not qualify for reinsurance get coverage at a lower cost through reinsurance programs. It was a very real problem before the ARP eliminated the subsidies cliff for 2021 and 2022 that households earning over 400% of poverty level were unable to afford housing.
However, this is not currently an issue for those households because they qualify for subsidies if their benchmark plan would otherwise exceed 8.5% of their income. The extension of that provision would benefit very few enrollees and could even harm subsidized enrollees in some areas, since they reduce premium subsidies. We can expect more states to pursue 1332 waivers for reinsurance programs over the next few years if ARP’s subsidy structure is not extended at the federal level.