Teacher Pensions Blog

On November 11th, the Supreme Court is scheduled to hear oral arguments in the latest challenge to the Affordable Care Act (ACA). What would the case, known as California v. Texas, mean for teachers? 

If the Court votes to uphold the law, and thus overturn the lower court's ruling, nothing would change. 

If the Court votes in favor of the lower court's decision, the effect on teachers would depends on the reach of the Court's decison. 

At its heart, the case deals with the requirement under the ACA for individuals without health insurance to purchase coverage. In 2012, the Court ruled that the individual mandate was lawful because it was a tax, and Congress has the power to levy taxes. But Congress lowered the tax for the individual mandate to $0 as part of its 2017 tax bill, and Republican attorneys general from 18 states subsequently filed suit to claim that, since there's no longer a tax penalty, the individual mandate is unconstitutional.

The federal government, under the direction of the Trump Administration's Justice Department, is also joining the lawsuit in favor of overturning the individual mandate, but it differs slightly from the Republican attorneys general. Whereas the states would like the Court to deicde that throwing out the individual mandate invalidates the entire law, the Justice Department is asking the Supreme Court to send that issue back to the lower courts to decide. (See this explainer from the Kaiser Family Foundation for a longer explanation of the legal questions.)

Public-school teachers could be most affected in the event that the Court determines that the individual mandate is indeed unconstitutional and invalidates the entire law. In that scenario, federal law would no longer guarantee coverage for people with preexisting health conditions such as diabetes, heart conditions, asthma, or, potentially, people who have had COVID-19. In addition, invalidating the ACA would mean that federal law would no longer require health insurance plans to cover children under age 26, and women would no longer be guaranteed access to birth control with no out-of-pocket expenses. That does not mean that teachers would necessarily lose these benefits and protections--school districts could continue to offer them through their health insurance plans--but the federal guarantees would be gone. 

In a less extreme outcome, the Court could rule the individual mandate unconstitutional but allow the remainder of the law to stand. In that case, experts predict the individual health insurance market would be destabilized, driving up prices for individuals who must shop for their own plans and leading many more Americans to be uninsured. That may not directly affect workers who receive health insurance benefits through their employers, including 99 percent of public school teachers, but there are still many employees who work in schools who do not receive health insurance benefits from districts. Those employees, including some teaching assistants, substitute teachers, teacher's aides, food service workers, janitors, and bus drivers, could all face a much harder time of remaining insured.  

Finally, there's the issue of job lock. In general, older, veteran teachers have very low turnover rates--that is, right up until they become eligible for retiree health care and pension benefits. At that point, they become much more likely to retire. In other words, teachers seem to be aware of and react to their health insurance coverage. In Illinois, for instance, one study prior to the passage of the ACA found that teachers who are eligible for the state's retiree health benefit retire two years earlier than they otherwise would without it. The ACA made that decision less fraught by making it easier for individuals, even ones who might have preexisting conditions, to purchase health insurance on the private market. And, with the ACA's subsidies for individuals earning up to 400 percent of the federal poverty level--that's $69,000 for a household of two--the ACA also protected individuals who did not otherwise qualify for retiree health benefits at all. 

In fact, Republicans might rue the loss of the ACA for this exact purpose. As I've argued before, it would make sense for states to offload some of the responsibility for providing retiree health coverage onto the ACA exchanges. Right now, states have amassed $700 billion in unfunded liabilities related to their promises to pay for health benefits for retired public-sector workers like teachers. But states have hardly put aside any money to pay for those promises. So far they've mainly pursued cost-cutting strategies like limiting eligibility to workers who serve for 20 or 25 years, but using the ACA as a release valve could be seen as a win-win all around. States could get rid of their retiree health obligations by relying on the ACA marketplace, and the ACA subsidies would help all lower-income retirees afford coverage. At the same time, such a shift could also create millions of new customers for the individual healthcare plans, which would help stabilize those markets and potentially lower prices for everyone else. 

While it may not be obvious why the Supreme Court's decision would affect teachers at all, there are likely ramifications no matter which way the Court decides.