It was a Once In a Lifetime Opportunity!

To be on the front lines watching a gigantic piece of highly controversial federal legislation get created, debated, and ultimately passed. But the ACA/Obamacare has been under constant assault since it's creation on March 23, 2010. Could the process that created it be the reason it is so controversial?

Judge for yourself. This is what I saw and heard.

On Friday, Dec. 14, 2018, a district court judge in Texas, in a decision on a very large lawsuit (Texas v U.S., or formerly, Texas v Azar), said that the Affordable Care Act is over. Done. Completely unconstitutional and unenforceable. He basically did everything in his power to wipe the ACA from the earth, short of shutting it off immediately.

How Did We Get Here?

So, Mike, does this mean a whole bunch of people just got kicked off of their health insurance?

Not yet. Maybe not ever. Still got some work to do before we get to that – the case is being appealed, and until a final decision is made, health coverage you bought for 2019 will take effect as planned.

So Mike, hasn’t Obamacare been sued, brought up in court before? Haven’t people been trying to kill it for years now?

Absolutely. The ACA has proven remarkably resilient both politically and legally up to now.

So Mike, why on earth do people keep trying to shut it off? And how do they keep finding these legal loopholes to force the ACA back into Court?

Now THAT is a quality question. If you really want to understand why this law seems to be constantly under assault, why its legal existence seems constantly in jeopardy, why people just can’t seem to “get over it,” then you’ve come to the right place.

The ACA’s Beginning

I had the good fortune (misfortune?) to be boots-on-the ground on behalf of Blue Cross and Blue Shield of Louisiana in Washington, D.C. from 2008-2010. My boss at the time assigned me to predict what the Patient Protection and Affordable Care Act (the formal name for the law we call ACA, others call it Obamacare; it’s all the same thing), combined with the Health Care Education and Reconciliation Act (Obamacare Part 2), would change about health insurance.

If you really want to know what I heard, saw and anguished over during those years, you shall wait no longer! I’m going to do a short series in these pages to explain the reasons why the ACA remains such a hot-button item that politicians simply cannot leave alone.

It’s a fascinating story of good intentions, legislative misconceptions, errors, temporary triumphs, hubris and hideous setbacks – all done while trying to manipulate 18 percent of our entire economy, some $3 trillion a year, and redirect those funds into paths one political party thought were more acceptable. It’s a story of a great trial, myopia, weakness, bad judgement and sometimes just plain bad luck.

But most of all, it’s a human story. About some true believers who, wanting to change the world and help people, got in over their heads and didn’t know how to back out. That determination and short-sightedness in many ways is why we are still at war over the ACA.

First up, let’s discuss why the ACA was legislated into existence in the first place.

What Problem Was the ACA Built to Solve?

Since 1996, Americans have watched as the price of healthcare has grown more rapidly than the rest of our economy, sometimes two or three times as fast. Today, it’s fair to say that no one can afford to pay for an illness out of pocket. Most of us are entirely dependent on a third-party payer to cover our medical expenses if we get seriously sick. Medicaid, Medicare, private insurance through work, the VA, private individual insurance, union-based plans — these are all entities we contribute money to BEFORE we get sick in the hopes of payment for our treatments AFTER we get sick. It’s all insurance of one form or another.

In 2008, some 46 million out of 310 million of us did not belong to ANY third-party payer organization. That means those 46 million folks had no one to cover expenses when they became seriously ill. Another nearly 10 million had a third-party payer that we might call “unreliable” when something bad happened.

So Mike, what happened when they got really sick, since they couldn’t afford the treatment they needed and didn’t have anybody else to cover the bill?

Back in the 1980s, Congress passed a little-noticed law called the Emergency Medical Treatment and Labor Act (EMTALA). Astoundingly, this law ORDERED hospitals with emergency rooms to give away their capital, labor, supplies and time for FREE to anyone who showed up there in a health crisis and had no insurance or ability to pay. EMTALA meant that anyone could access healthcare treatments in the ER for free anytime they were sick enough.

And hospitals and their legal staffs were very quick to realize that if they didn’t step-to when these patients showed up, they’d quickly find themselves on the wrong end of millions in lawsuits. So, they treated everyone who showed up in the ER. Where the money came from to do that is a key component in health insurance prices today.

Fast forward to 2008, and you’ve got 46 million people without the ability to pay, some by choice and some by circumstance, but all 46 million lacking a third-party payer to cover their costs.

Why Were People Uninsured Before the ACA?

Hold on Mike, how do you know the number of uninsured was 46 million? Seems kind of random.

I agree. Turns out as part of my job, in the summer of 2009, I was on a nationwide conference call hosted by the U.S. Census Bureau and Kaiser Family Foundation to release national research they had completed over a year’s time. That’s where the 46 million people uninsuredcame from. Even more interesting, during this call they revealed who these uninsured folks were and WHY they were uninsured. Keep in mind, the number is a time-bound snapshot of the uninsured. Who was actually uninsured and when fluctuated throughout the year.

But, back to the “why?” It’s entirely natural to assume that the 46 million were just some amorphous mass of poor people. I did, until this research was released. The results actually divided the uninsured pretty cleanly into four different groups who all lacked a third-party payer, but for VERY different reasons.

So let’s tackle who the uninsured were, and why they were uninsured. Why is this background important? Well, the uninsured were held up as the PRIMARY PROBLEM the ACA was supposed to solve. The 2008-2009 research showed the common reasons why people lacked insurance, and the ACA proposed a solution for each.

These were:

1.  The Uninformed: This group of about 11 million people was eligible to get healthcare coverage through a government program, like Medicaid or the VA, but they never bothered to sign up.
2. ACA solution: Make them aware of their eligibility and perform outreach to get them enrolled.
3. The No-Barrier Crowd: This group of about 12 million people were uninsured by choice. They were mostly younger, healthier and had high incomes. It appears that they simply saw no value in having health insurance and chose to use their money on something else.
4. ACA Solution: Create a mandate that everyone has to buy health insurance or pay a fine (ultimately a tax) for not doing so.
5. The In-Betweeners: These were 14 million mostly low-income, working folks who either were not offered coverage through their jobs, or could not afford coverage, or were too sick to buy coverage in the individual market, where their health status could be used to deny them coverage. Or, they made too much money for Medicaid but not enough to buy private insurance.
6. ACA Solution: Expand Medicaid to include much higher incomes and bring large federal subsidies to private health insurance premiums and deductibles for lower-income folks. (Most of the ACA was written to solve this one problem because policymakers projected that almost all of the 46 million uninsured fit into this category. Even after it became obvious that was not the case, they went forward anyway.)
7. Illegal Immigrants: The survey acknowledged at least 9 million adults in the country illegally were uninsured, and there was much controversy about counting them in the total at all.
8. ACA Solution: None offered. In fact, page one of what became the ACA says in no uncertain terms that only U.S. Citizens or Candidate Citizens (those whose citizenship is in progress) may benefit from Obamacare.

So, for about 20 years prior to 2008, study groups had combed the earth and lauded the way other “developed” countries provided healthcare to folks. Coalitions formed to demand the government do more to “solve” the uninsured problem. The Single-Payer coalition in the U.S. House of Representatives had 71 members (all Democrats) by the 2008 election. Heading into that election, it was becoming clear that if the Democrats got big enough margins in the House and Senate and the White House simultaneously, they were going to “do something about healthcare.”

How about a riddle?

What do you need to impose your will on 18 percent of the entire U.S. economy, worth $3 trillion in every year? What kind of power do you need to make that happen?

The answer: the kind the Democrats received from voters in the 2008 election.

After the 2008 election, in which the Democratic party won the White House and majorities in both the Senate and House of Representatives, it became clear that the nation as a whole had embraced what they were offering. It was the most lopsided result for any one party since 1975, the election right after Watergate. By January 2009, the Democrats had:

• 257 Seats in the House (compared to 178 Republican Seats)
• 60 Seats in the Senate (including one independent Senator who always voted with Democrats)
• The White House/presidency (by a wide margin, a true mandate in electoral votes)

With that kind of power, you can really do whatever you want in Congress as long as the president agrees it is a priority for you, and there is NOTHING the minority party can do to stop you. With their newfound power, the Democrats began writing the Affordable Care Act in February 2009, knowing that they simply had to hold their own caucus together to get it passed.

Make Way for the ACA!

Mike, what were the Democrats really trying to accomplish?

Different party members might answer that different ways, but the “mission statement” underlying the ACA really read like this:

To Expand Meaningful Health Insurance Coverage to the Entire Nation and Do It in a Revenue-Neutral Way

To avoid confusion, I want to point out that the ACA’s authors only used the words “health insurance” in private meetings and within Congress itself. When they were speaking to anyone outside of Congress, they all agreed to use the words “health CARE.” Thus became the conflation between healthcare itself and paying for healthcare, a confusion which exists to this very day. Democrats (and often Republicans, too) use the words healthcare and health insurance interchangeably, even though they are VERY different things.

Ok, Mike, so they had a goal. Didn’t they have a plan to get that done?

Oh my, yes! And it was a strong, formidable, sensible plan that had a pretty good chance of success, in my opinion. I can’t tell you how many conversations I had during 2009 that went like this:

“But Mike, they’ve been threatening to do healthcare reform for years! But nothing ever happens!”

Me: “So with the majorities and people in charge right now, what’s going to stop them?” And I kept preaching that the Democrats were going to pass a bill no matter what. You could just see it in their eyes.

How Was the ACA Going to Become a Law?

Here are the steps to the Democratic plan, which we saw evolve:

1. Use the Senate as the controlling force for the creation of the ACA.
2. Focus specifically on the Senate HELP (Health, Education, Labor, Pensions) Committee, but let the Finance Committee drive the bus. (Sen. Max Baucus, D-Montana, was chairman).
3. Create a bill in the Senate and vote its passage. Then, send it to the House for modifications.
4. Let the House pass the amended bill and send it back to the Senate for final changes.
5. Approve the marked-up bill in the Senate once more.
6. Go off to a quiet place for a conference committee so House and Senate members can work out the inevitable language problems, structure problems and contradictions sure to be present in such a sweeping piece of legislation – then, check, check and re-check the language.
7. Add a document giving then-President Obama a clean list of what regulatory support the ACA would require to be successful.
8. Have it ready for president’s signature by Labor Day 2010.

You can see the kind of structure and elegance of the plan. It gave the Democrats a full year or more to get comments from all their sympathetic stakeholders, to work out the bugs, to make sure the bill was air-tight and ready to launch when they voted it through. It would even include a punch list of things the president would need the relevant federal agencies to get done (Center for Medicare & Medicaid Services, Department of Labor, Department of the Treasury/IRS). With a well-written and well-vetted bill, that punch list would be pretty short.

It really was a good plan. Plus, it got everything done BEFORE the 2010 mid-term elections, when the Democrats figured they would lose a few seats and not be able to pass anything so sweeping. Once I saw the plan, it was clear it could make major changes to the health insurance marketplace.

A part of that plan was to warn off lobbying groups that might oppose what the ACA would do. That part of the plan was made manifest when the leadership in the House and Senate started making public appearances to shred the reputations of health insurance companies at every turn. Even the president joined this effort. They signaled strongly, telling carriers that if they opposed the ACA, they would be shut out of the program and any money that came through it.

Where Things Started to Go Wrong

Mike, what went wrong? IS the ACA today what the Democrats wanted?

Well, not exactly. Several things happened that no one could have anticipated, including me.

First, the Senate Finance Committee, which really controlled the content of the final bill to be voted upon, began to gradually, quietly, without fanfare, shut out the Republican members of the committee. Typically, it is quite common for the opposition/minority party to offer amendments to pieces of legislation that they don’t like and have it shot down. But, the ACA negotiation in Senate Finance was (or at least, should have been) different. We weren’t talking about a couple billion for a weapons program, or a few interstate highway miles or Medicare adjustments. The ACA literally affected EVERY facet of the healthcare industry, including the 160+ million people who were getting health insurance from their jobs. It was arguably the most sweeping piece of legislation, in financial terms, EVER passed by the U.S. government.

For the Democrats to ignore every Republican idea, amendment, suggestion and technical adjustment without a single addition during the entire process, which is what happened in the House (as expected) and in the Senate (less expected), was, I would argue, a major reason we are still fighting over the ACA today. Centrist Republicans like Sen. Susan Collins and Sen. Olympia Snowe even had their simple suggestions about the ACA shot down.

“Elections have consequences,” we heard again and again from the Democrats during the ACA formation process. I would argue that passing a bill on a straight party-line vote without taking any input from a single minority party suggestion or amendment, especially a bill that essentially rerouted $3 trillion a year and reformed every facet of healthcare in the United States would guarantee endless warfare. Hubris squared. And today, we can see that it has.

But, the Democrats’ plan was about to go awry, thanks to a monkey wrench that no one saw coming, not even me…

So, what went wrong with the ACA’s creation that caused the “cracks in the foundation”?

You might recall I said the Democrats effectively controlled 60 seats  in the Senate starting in January 2009. To get big bills like the ACA through the U.S. Senate, you have to get 60 people to vote for it.

In August 2009, Democratic Sen. Ted Kennedy of Massachusetts died. He had held his Senate seat for 47 years, since 1962. The Massachusetts governor appointed Democrat Paul G. Kirk to hold Sen. Kennedy’s seat until a January 2010 special election could be held. Kirk voted YES on the Affordable Care Act, and the Senate version of the ACA was quickly finished. The Democrats voted it through with their 60 votes on Dec. 24, 2009, at about 10 p.m. D.C. time.

But then, the special election happened.

An Oops from Massachusetts

No one, including me, DREAMED the “Kennedy Seat’ was in any kind of danger from a Republican challenger. Certainly not in Massachusetts. Certainly not that seat whose last Republican occupant had been Henry Cabot Lodge in 1953! The Democrats ran Martha Coakley, then Attorney General of Massachusetts, and assumed she was a slam dunk.

Oops.

Elected as a Senator to Massachusetts’ vacant seat in January 2010 was Scott Brown, a Republican and current U.S. Ambassador to New Zealand and Samoa, who ran on “Killing Obamacare!” Turns out, not everyone in deep blue Massachusetts was enthralled with the Washington, D.C. version of healthcare reform because Massachusetts had passed its own state version of healthcare reform four years earlier, and it was working very well. The federal version undid some of their progress, which many saw as federal overreach.

By 2010, the Democrats had a huge problem. They no longer had 60 votes in the Senate they could count on to pass the ACA when it came back from the House of Representatives. So now the House gets its turn, but their movement is limited because no matter what the House does to the original ACA, they know the Senate can’t touch it again.

To make matters worse, because the Democrats didn’t expect this to happen, the bill they passed on Christmas Eve 2009 was essentially a rough draft of what they wanted to accomplish, nowhere near ready to be actually put into action in the U.S. healthcare space.

Were they really going to remake 18 percent of the economy using a rough draft of a bill?

The Act of Reconciliation

Creative legislative minds start turning: The Democrats COULD pass a bill through the Senate with just 51 votes, using an arcane process called “reconciliation,” but there are very strict limits about what you can adjust or change with only 51 votes. It’s almost entirely limited to financial things, budgetary things, but not sweeping policy and market changes like the rough-draft ACA had in it (and it had already passed the Senate.)

Under Senate guidance, the leadership in the House created a new bill: The Health Care and Education Reconciliation Act (HCERA), which was designed to specifically tidy up a few things left out of the ACA bill that the Senate passed, to put in firm authority most of the spending in the ACA (so that it couldn’t be tampered with by executive order of the president, but would require the full Congress to undo) and to try and clean up the inconsistencies in the bills that SHOULD have been taken to conference committee offsite and worked out between the House and Senate.

After much negotiation with the Senate Parliamentarian about what they could include in a bill and pass with 51 votes, the Democrats had to move quickly.

The House and Senate finished the supplemental bill, the HCERA, and had both it and the ACA on President Obama’s desk by March 2010 (not Labor Day). He signed both in a huge ceremony on March 23, 2010, making both the working document and the financial bill law. What went unnoticed in that signing ceremony were a couple of adjustments made because of the “new” process:

• First, the Punch List had to be massive to compensate for all the missing pieces in the final bill. In fact, at last count, it took 90,000+ pages of new federal regulations (Congress did not touch these) from the executive branch to make the ACA work. Certainly, that was not the original intent at all.
• Second, the start of the important parts of the ACA was pushed back to 2014, and in some cases, enforcement was pushed back to as late as 2016. Again, this was a direct result of having to “fix the bill in the regulatory process,” as Speaker Pelosi said several times.

But none of these issues slowed the celebration. The parades and triumphant declarations began immediately. It was a big day for them, delivering on a campaign promise many years in the making.

But… (don’t you hate it when there is a “but”?)

In all the haste and deal-making, the final drafters of the ACA/HCERA forgot “Bill Writing 101” and left something very important out of the ACA.

2010’s Omission, Today’s Lawsuit

You see, anytime you create a new bill/law/act, the best way to defend it against the opposition party taking it down en masse is to insert a bit of legislative language called a “severability clause.” This clause states simply that each section of the new law stands on its own, and, if challenged in court, unconstitutional parts can be removed without taking down the entire law.

The drafters of the ACA, in their haste, neglected to insert a severability clause into the bill. There has been rampant speculation as to why this happened but, whether it was an oversight or done deliberately, it’s not there. Meaning that, theoretically, if any single part of the ACA were ever declared unconstitutional, the entirety of the law was at risk.

This particular crack in the foundation is the root issue of the current lawsuit and pending future of the ACA. And it did earlier, in 2012. I’ll bring you up to speed on that soon.

Ultimately, all the arguments about Texas v U.S., or Texas v Azar that prompted the decision issued on Friday, Dec. 14, will track back to this omission. From today on, the argument is strictly going to be about severability.

More to come…