The Potential Effects of a Supreme Court Decision to Overturn the Affordable Care Act: Updated Estimates

Brief

The Potential Effects of a Supreme Court Decision to Overturn the Affordable Care Act: Updated Estimates

Abstract

The Supreme Court will hear oral arguments in California v. Texas (called Texas v. US when heard by the lower courts) on November 10, 2020. In the case, a group of state attorneys general, led by the Texas attorney general, argue the entire Affordable Care Act (ACA) should be found unconstitutional and overturned, given that a 2017 tax law set the ACA’s individual mandate penalties to $0 but did not eliminate the now-unenforced individual mandate language along with them. Here, we update previous analyses of the implications for insurance coverage, federal spending, and health care providers at the national and state levels if the ACA is overturned. These estimates, computed using the Urban Institute’s Health Insurance Policy Simulation Model (HIPSM), are based on a newly developed projection of coverage and spending in 2022 that accounts for an anticipated partial economic recovery from the COVID-19 recession. Among other findings, we estimate that overturning the ACA would have the following effects in 2022: 

  • An additional 21.1 million people will be uninsured, a 69 percent increase nationally.
  • As the marketplace, premium tax credits, and cost-sharing reductions are eliminated, 9.3 million people will lose income-related subsidies for marketplace insurance.
  • Medicaid/CHIP coverage (acute care for the nonelderly) will decline by 22 percent nationally, or 15.5 million people.
  • Low-income states that expanded Medicaid eligibility under the ACA will see the largest percent increases in uninsurance, such as Maine (197 percent increase, from 5 percent to 15 percent), Kentucky (184 percent increase, from 8 percent to 22 percent), and West Virginia (181 percent increase, from 8 percent to 21 percent). Iowa’s uninsurance rate will climb more than 150 percent (from 6 percent to 14 percent), as will Michigan’s (from 7 percent to 18 percent). The uninsured population will increase by at least 90 percent in 25 states and the District of Columbia.
  • Federal government spending on health care will fall by $152 billion per year, a 35 percent drop relative to current spending on marketplace subsidies and Medicaid acute care for the nonelderly population.
  • States that will experience the largest percent decreases in federal funding include Nebraska (56 percent, from $2.1 billion to $1.2 billion), Virginia (56 percent, from $9.5 billion to $4.2 billion), Montana (51 percent, from $2.3 billion to $1.1 billion), and Colorado (47 percent, from $6.3 billion to $3.3 billion).
  • Nationally, health care spending by and for nonelderly Americans will fall by $135billion. This spending decline will be spread across hospitals ($56 billion), pharmaceutical manufacturers ($30 billion), physicians ($17 billion), and other services ($33 billion).
  • Because of the 69 percent increase in uninsurance, the demand for uncompensated care will rise by 74 percent, or $58 billion. The demand for uncompensated care from hospitals alone will increase by $17.4 billion in 2022.

This brief was corrected October 16, 2020, and October 23, 2020. On page 2, the estimated decrease in Florida’s hospital revenue under repeal of the Affordable Care Act is $3.8 billion, not million. On page 8, the fourth set of columns in table 4 shows the change in health care spending for prescription drugs.

Research Area: 

Centers

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