As the legal challenges over Obamacare’s fate mount, advisors are understandably concerned that the outcome could have a significant impact on clients and even their own health insurance coverage and cost.
A federal judge in Fort Worth, Texas, lobbed the first legal salvo December 14, ruling that the Affordable Care Act (ACA) is unconstitutional. In his sweeping decision, Judge Reed O’Connor held that a provision at the heart of the ACA— a requirement for most Americans to have health insurance known as the individual mandate — was unconstitutional and “can no longer be sustained as an exercise of Congress’s tax power.” He also said other provisions of the law could not survive because they were inextricably linked to the coverage mandate. The case was brought by 20 states, including Texas. The sprawling law includes not only health insurance exchanges and an expansion of Medicaid, but also protections for people with pre-existing conditions.
In a sharp rebuke, 15 states led by California are appealing O’Connor’s decision and are asking him to let the current health care coverage for millions of Americans stand while courts sort out the implications of his ruling.
“If the ACA is invalidated, nearly 12 million Americans who gained coverage through the Medicaid expansion would become uninsured,” the coalition of 15 states said. “An additional eight million low-income residents will lose access to billions of dollars in tax credits” that help them pay premiums for private insurance.
To mitigate the chaos while the legal battle drags on, the Department of Health and Human Services said that the department “will continue administering and enforcing all aspects of the ACA as it had before the court issued its decision.”
Since investment advisors are on the front lines of creating financial plans that allow clients to make decisions far into the future, they are tracking the legal challenge closely. Many advisors also worry what the impact of doing away with Obamacare will be on their own families and businesses.
Jude Boudreaux, a partner in the Financial Planning Center, New Orleans, called the legal decision declaring Obamacare unconstitutional “absolutely terrifying. Our daughter was diagnosed with leukemia just before her second birthday. Obamacare’s protections of pre-existing conditions and no lifetime maximums are the only reason we are here today,” he said.
His insurer paid $1.2 million to treat his daughter’s leukemia, Boudreaux said. She’s now a happy second grader. Without Obamacare’s prohibition on insurer lifetime coverage caps, Boudreaux said, he would have expected his health insurance to cease paying when his daughter’s treatment bill hit the $500,000 mark, forcing him into bankruptcy.
“As an advisor, we hear about people losing sleep about investments, but what I hear clients losing sleep about is whether or not they’ll have health insurance coverage to be able to take care of their medical needs, especially in retirement or if they want to start a business,” said Boudreaux.
The senior financial planner doesn’t believe that insurance companies will step up to the plate to provide coverage to families like his if Obamacare is dismantled.