HealthLawProf Blog

Editor: Katharine Van Tassel
Creighton University School of Law

Friday, November 13, 2015

KY Governor-Elect Bevin and Health Care Federalism Post-ACA

Matt Bevin will soon become Kentucky's Republican Governor, which has created consternation regarding his plans for discontinuing Kentucky's successful implementation of the Affordable Care Act (ACA).  While on the campaign trail, Governor-Elect Bevin first promised to end the Medicaid expansion; then he promised to cap new Medicaid enrollment; and then he promised to reject "Obamacare" but keep Medicaid expansion on Kentucky's terms.  Governor-Elect Bevin also promised to dismantle Kynect, widely considered a model state-run health insurance exchange.  Each of these promises leads to a complex realm of statutory provisions, governance choices, and inter-governmental dynamics.  Each also has real implications for the neediest in our health care system as well as the ongoing negotiations between the federal government and the states in a post-ACA, post-NFIB federalism world.  

First, could Governor-elect Bevin completely end the Medicaid expansion in Kentucky?  Yes, but not instantaneously.  The Medicaid Act creates a right for any person who meets its eligibility requirements to be enrolled upon approval of her application. The Medicaid Act has mandatory eligibility categories and optional eligibility categories, and the federal government must match state funding by at least 50 cents on each Medicaid dollar.  As enacted, the ACA built on this design by expanding eligibility to anyone under age 65 earning less than 133% of the federal poverty level, and the expansion was mandatory.  States would have been required to enroll the newly eligible population and could not alter the expansion without a waiver from the Department of Health and Human Services (HHS).  The ACA funded 100% of the cost for newly eligible beneficiaries until 2017, then decreases the match gradually to 90% over the next several years.

States that complied with the ACA submitted State Plan Amendments to HHS to expand eligibility; Kentucky was one of them.  But, NFIB v. Sebelius made the ACA's Medicaid expansion unenforceable by HHS, or "optional."  HHS issued guidance after NFIB explaining that states could opt-in to expansion at any time and that they could subsequently opt-out. Although HHS opined that post-expansion opt-out (my phrase) is consistent with NFIB, it has not clarified how such an opt-out would work.  Because Governor Beshear expanded Medicaid by executive order, Governor-Elect Bevin would be able to reverse expansion at the state level with another executive order.  But, Kentucky would also need to submit a State Plan Amendment to HHS for approval, which can take 2-3 months when non-controversial.  The state would also need to determine whether the newly eligible beneficiaries (approximately 400,000 people) are eligible for Medicaid through another category of eligibility, such as pregnancy or disability.  Some would qualify for tax credits to purchase insurance in the exchange, but many would not qualify for Medicaid or tax credits at that point.  Beneficiaries have a right to appeal dis-enrollment, but for most that appeal will not lead anywhere.  So, post-expansion opt-out would not occur immediately or without cost, but it is possible.

Second, could Bevin cap enrollment?  No.  States cannot limit enrollment of Medicaid beneficiaries under the Medicaid Act; they may only do so if they have a specific waiver granted by the Department of Health and Human Services (HHS).  HHS has explained that capped enrollment will not be approved because it is inconsistent with the universal coverage goals of the ACA.   

Third, could Kentucky amend Medicaid expansion like Indiana, which Bevin has admired in public remarks?  A waiver from HHS is necessary to expand Medicaid differently than the ACA required.  So far, such waivers have been granted to seven states, underlining states' empowerment after NFIB to negotiate a version of health care reform that Congress never envisioned.  In addition to that vertical cooperative federalism, states are experiencing noticeable horizontal federalism, learning from one another what concessions can be won from HHS. Republican governors of waiver states have touted that they expanded Medicaid their way, spinning the waivers as a win for red state values.  And, many of the concessions granted by HHS have reflected a more typically conservative agenda.  For example, Arkansas, Michigan, Iowa, Indiana, Pennsylvania, New Hampshire, and Montana have negotiated compromises such as placing the newly eligible population in the exchanges with federal Medicaid dollars supporting their purchase of private plans ("premium assistance"); required premiums and co-payments, especially for people earning more than 100% of the federal poverty level; wellness requirements; limiting payment for non-emergency use of ambulances and imposing co-payments for ER use; private third-party administration; and other adjustments.  Notably, HHS rejected work requirements, which reflect "able-bodied" rhetoric that is so politically prevalent.  (In a forthcoming paper with Jessica Roberts, I debunk the myth of self-reliance in health care, which underlies the work linkage proposals.)  

Some of these waiver concessions may improve insurance coverage; for example, a person who earns close to 133% of the federal poverty level is likely to "churn" between Medicaid coverage and private insurance coverage, and the premium assistance model may make that movement smoother and less likely to result in loss of coverage (time will tell).  But, some concessions have harmful effects, such as enforceable premiums that drop coverage for anyone who does not pay, as studies have shown that cost sharing is a barrier to care for low-income Americans. Further, Indiana's waiver is arguably the most complex, raising questions as to why a complicated system should replace one that is relatively simple and working well (other than ideology).  Bevin says it's economics, but a Deloitte study performed for Kentucky showed that is not true.

If one thing is clear from states' negotiations with HHS, the agency is strongly motivated by increasing enrollment and by universal coverage policy entrenchment.  This could cut both ways for Kentucky, which would be in uncharted waters as a waiver-seeking state that could be the first post-expansion opt-out.  Kentucky's Medicaid expansion covers nearly 10% of the state's population, and HHS surely would take a very hard look at any waiver application that makes the already-insured lose coverage.  HHS would also be aware that timing is tricky, and Medicaid enrollment could disappear and then reappear for the newly eligible in Kentucky, leaving needy people with gaps in coverage (and thus gaps in care).  

Finally, could Governor-Elect Bevin dismantle Kynect?  Yes, a state-based exchange can be disbanded, but not immediately.  The open enrollment for 2016 that is underway cannot be stopped, and HHS wants a year's notice before a state moves to the federally-run exchange.  Dismantling Kynect will cost tens of millions of dollars according to current estimates.  And, the state must ensure that privately insured people do not lose coverage in an exchange transition.  

Kentucky has experienced the largest drop in uninsurance in the nation due to Governor Beshear's implementation of the ACA, and modifications enacted without due care could result in hundreds of thousands of people losing health care coverage.  Change for the sake of change may be an interesting political experiment to some, but it has real world implications for the low income individuals relying on regulatory stability for their health insurance access.  



November 13, 2015 in Affordable Care Act, CMS, Health Reform, HHS, Medicaid, Politics, PPACA, Spending, State Initiatives, States, Uninsured | Permalink | Comments (0)

Thursday, June 25, 2015

Hobby Lobby Fall Out

For those who feared that the Supreme Court’s Hobby Lobby decision would open the door for employers to block contraceptive access for women in the workplace, welcome reassurance has come this week from the U.S. Court of Appeals for the Fifth Circuit. According to the Fifth Circuit, when the Affordable Care Act requires that contraception coverage be available for workers at religiously-affiliated institutions, the Act also accommodates the scruples of employers who have religiously-based objections to contraceptive use.

As the Fifth Circuit observed, employers with religious objections to contraception can shift the responsibility for coverage to their insurers or the federal government. Hence, there is no unlawful burden on those employers from the mandate that health care plans cover the costs of contraception.

Of course, the decision was rendered by a panel of three judges rather than the full court, and the panel included two judges appointed by Democratic presidents. But the third judge, Jerry Smith, who wrote the opinion and was appointed by President Reagan, is a staunch conservative who has not been sympathetic to reproductive rights in other cases.

If this case is an accurate guide, it may well turn out that the Hobby Lobby Court was correct when it observed that its decision recognized the interests of both employers and employees.

[cross-posted Bill of Health,]

June 25, 2015 in Affordable Care Act, Employer-Sponsored Insurance | Permalink | Comments (0)

Wednesday, June 24, 2015

Affordable Care, the Supreme Court, and the Wisdom of Crowds

How will the Supreme Court rule on the challenge to the Affordable Care Act’s subsidies that help millions of lower- and middle-income Americans afford their health care coverage? According to FantasySCOTUS’s court watchers, who have correctly predicted more than 70 percent of Supreme Court decisions so far this year, Obamacare should remain intact.

This result is not surprising. The arguments in favor of the government are much stronger than are those for the challenger. To be sure, the challengers cite to two lines in the Affordable Care Act (ACA) that authorize subsidies for insurance bought on state-operated health insurance exchanges, without mentioning federally-operated state exchanges. Hence, argue the challengers, subsidies should be provided only for insurance purchased on state-operated exchanges, which means in only about 1/3 of states. But other language in ACA indicates that the subsidies are available for insurance purchased on all exchanges. When a statute’s language is ambiguous and there are reasonable alternative interpretations, courts are supposed to defer to the executive branch’s interpretation, not substitute their own interpretation.

And if one looks beyond the specific references to the subsidies to the broader context of ACA and the intent of Congress, it becomes even clearer that the subsidies should stand. Several other sections of ACA assume that subsidies are available on all exchanges, as did members of Congress when they passed the law. Indeed, it wasn’t until nine months after ACA was passed that anyone noticed the language in the bill suggesting that subsidies might be available only on state-operated exchanges.

Of course, these arguments have not persuaded all federal judges, and they are not expected to have persuaded at least three Supreme Court justices. But if precedent prevails, ACA will survive its latest challenge.

[cross-posted Bill of Health and]

June 24, 2015 in Affordable Care Act, Health Care Reform, Health Reform, PPACA, Public Opinion | Permalink | Comments (0)

Tuesday, June 23, 2015

Congress, too, is mystified by long-delayed Equal Access regs

Members of the House Committee on Energy and Commerce and the Senate Committee on Finance sent a letter today to Secretary Burwell, urging HHS to issue the Equal Access regulations that have been in limbo since 2011.  This is an important and much-needed call for action in the wake of Armstrong v. Exceptional Child Center, which shut down private rights of action for Medicaid providers seeking fair reimbursement from states in federal courts.  The letter explicitly recognizes the harm that the Court's recent decision will inflict on the Medicaid program, which I've written about on this blog (most recently here) in the context of both Armstrong and Douglas v. Independent Living Center.  

Though the draft regulations were not perfect, and in fact would benefit from putting some real teeth into HHS's review of states' payment decisions on equal access to care for Medicaid beneficiaries, they would at least ensure that HHS is actively overseeing states' payment rate decisions.  Currently, states are able to change rates with very little intervention from HHS, which often involves decreasing payment rates to balance state budgets.  Now that the Court has tasked HHS with enforcing the equal access provision, rather than the providers who HHS admittedly relied on to raise flags about states' low payment rates, HHS must complete the draft regulations.  Perhaps this direct plea from members of key committees will refocus HHS's attention on these important regulations.

June 23, 2015 in Affordable Care Act, End-of-Life Care, Health Care Reform, HHS, Medicaid, Payment, Politics, PPACA, Spending | Permalink | Comments (0)

Monday, March 9, 2015

Replacing the Affordable Care Act?

With the future of the Affordable Care Act in doubt after last week’s hearing before the U.S. Supreme Court, Republican lawmakers are busily preparing back-up legislation. New options should not be necessary—the government should prevail against those challenging its interpretation of the Act’s premium subsidy provisions. But it is prudent to consider alternatives in the event that the Court rules against the government.

While most of the ideas being floated would do little to bring health care insurance to the uninsured, there is an option that really could expand access to coverage while also containing health care spending. And it could be attractive to Republicans and Democrats alike on Capitol Hill.

Continue reading

March 9, 2015 in Access, Affordable Care Act, Health Care, Health Care Costs, Health Care Reform, Health Reform, Policy, Politics, PPACA, Reform, Spending | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 4, 2015

Oral Arguments in King v. Burwell, and thoughts about additional implications for the case

Oral arguments ran over an hour in King v. Burwell today (transcript available here). As many are aware, the question in this case involves whether the IRS appropriately interpreted the ACA to authorize tax credits for insurance policies purchased on both state-based and federally-based health insurance exchanges.  The plaintiffs claimed that the IRS has acted illegally in providing tax credits through federally-run exchanges, and if they are successful, the IRS will immediately cease offering subsidies to individuals who have purchased health insurance in federally-run exchanges.  

Reading oral arguments is always less satisfying than hearing or witnessing them, but reading the tea leaves is still irresistible when justices appear to reveal their positions.  For example,  Justices Kagan, Sotomayor, Ginsburg, and Breyer appeared to agree with the arguments put forth by the United States. Justices Scalia and Alito appeared to agree with Mr. Carvin and the plaintiffs, though Justice Alito appeared open to some of statutory answers being provided by Solicitor General Verrilli toward the end of his argument.  The Chief Justice was almost silent during the oral arguments, and Justice Kennedy raised his favorite topic, federalism, and whether Carvin's interpretation of the ACA can lead to unprecedented coercion of the states, raising a fatal constitutional consequence for what should otherwise be an exercise in legislative interpretation.

This line of questioning is worth considering for a moment.  Readers are probably aware that the doctrine of coercion was merely a theory until the Court breathed life into it in NFIB v. Sebelius.  In that decision, the Court held that the ACA's Medicaid expansion was unconstitutionally coercive because states, in the plurality's view, had to choose between expanding Medicaid to childless, non-elderly adults or losing all of their Medicaid funding.  But, the structure of Medicaid is quite different from the structure of the exchanges.  If a state rejects Medicaid funding, then that state has no Medicaid program within its borders - this form of cooperative federalism facilitated the coercion analysis in NFIB, because the states successfully argued that they could not realistically leave the program.  The exchanges, on the other hand, epitomize 'backstop federalism' - if a state rejected funding to create a state-based exchange, then the federal government would step in (and it did).  

Initially, it was unclear what Justice Kennedy was pursuing in his federalism questioning, because he seemed to indicate that he perceived the Medicaid-style federalism at work in the exchanges.  He later clarified, however, that he was concerned about the ramifications of the challengers' theory, that Congress intended to deny subsidies in states that refused to establish exchanges, thereby obliquely and opaquely threatening states by refusing to offer tax credits to their citizens.  Not only is this interpretation of the ACA plainly wrong, but it would also create a bizarre conditional spending situation where the states did not know they were being threatened until long after they decided to reject federal policy.  Justice Kennedy indicated that this reading of the statute would result in a "serious constitutional problem" that should be avoided, and he is right.  But, he was also skeptical about the actual language of the statute, so the U.S. cannot yet breathe easy.

 One additional observation for now - the impact on health insurance access will be even greater than the parties discussed.  If the IRS ends subsidies for insurance policies purchased through the federal exchange, the current tally indicates that approximately 8 million people will lose the subsidies that make insurance affordable for them.  While they will not be subject to a tax penalty for failure to carry health insurance, they also will not be able to afford health insurance.  That is immediately clear.  But, the ripples will be greater than the 8 million, because some states that have obtained waivers to expand Medicaid are placing their newly eligible Medicaid populations into the exchanges.  If the exchanges experience a death spiral due to increased premiums and loss of covered lives in the risk pool, then the exchanges become a very unstable way to provide Medicaid coverage and likely become unaffordable for states.  Demonstration waivers are supposed to be budget neutral, which would become impossible in plans like Arkansas' if the plaintiffs win this case.  Further, low-income individuals tend to churn between Medicaid and private insurance coverage - but if the insurance offered through federal exchanges is not subsidized, then they will churn into uninsured status, thereby increasing dramatically the number of lives affected by this decision.  

Of course, if the Court upholds the IRS interpretation of the ACA, then we can all go back to waiting for the next challenge to come along.

March 4, 2015 in Affordable Care Act, Health Care Reform, Health Reform, Medicaid, Obama Administration, PPACA, Spending | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 28, 2015

Health Care Policy by Common Sense?

In announcing the federal government’s approval of Indiana’s Medicaid expansion, Governor Mike Pence invoked common sense in defending his insistence that beneficiaries shoulder a share of their health care premiums. According to Pence, “It’s just common sense that when people take greater ownership of their health care, they make better choices.”

But relying on common sense is not a good way to make health policy. Common sense leads people to incorrectly believe that they are more likely to catch a cold by going out in cold weather or to take megadoses of vitamins that provide no additional health benefit and can be toxic. Common sense also leads physicians down the wrong path. Because lowering blood sugar has been good for the health of diabetics, medical experts recommended tight control of blood sugar levels. But that resulted in an increased risk of death for many patients.

It turns out that our intuitions often lead us astray, making it important that we rely on data from scientific studies to distinguish between good and bad policies. And we know from the data to date that when the poor are required to pay for their health care, they may choose to forgo it, not only when care is not needed but also when it is needed.

Kudos to Governor Pence for bringing the Medicaid expansion to Indiana and for worrying about health care costs. It may turn out that Indiana's cost-sharing is low enough to avoid problems, but rather than trying to contain costs by discouraging patients from seeking too much care, we should try to discourage physicians from providing too much care. Physicians are better able than patients to distinguish between necessary care and unnecessary care.

[cross-posted at Bill of Health]

January 28, 2015 in Access, Affordable Care Act, Consumers, Health Care Costs, Health Care Reform, Medicaid, Policy | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 20, 2015

2012 All Over Again

In 2012, the Supreme Court heard two important Medicaid cases, one in January of 2012 pertaining to payment rates (Douglas v. ILC), and the other in March 2012 pertaining to the ACA's Medicaid expansion (NFIB v. Sebelius). In Douglas, the Court's majority deferred to HHS, allowing the agency to exercise primary jurisdiction over California's Medicaid payment rates and punting the question regarding Supremacy Clause actions by Medicaid providers against noncompliant states. And, in NFIB, the Court decided that Medicaid's modification under the ACA was not Medicaid enough for purposes of Spending Clause doctrine but was Medicaid enough for purposes of the remedy, which was to limit HHS's authority to terminate Medicaid funding for states that refused to expand Medicaid eligibility under the terms of the ACA.  Confused yet? So is the Court, and that's a potential problem. 

Fast forward to 2014, and the Court is once again hearing a Medicaid reimbursement rate case and an ACA case, in the same time frame as 2012, both of which could be very disruptive.  The Medicaid rate case is Armstrong v. Exceptional Child Center, and the weirdly confused oral arguments occurred today. The question the Court granted from the petition for certiorari was whether private parties can enforce the Medicaid Act's equal access provision ("30(a)") against a noncompliant state when HHS has not demanded compliance from the state through payment of adequate reimbursement rates. Armstrong may have far-reaching implications for the Medicaid program, for implied rights of action, and for federal courts' jurisdiction over Supremacy Clause actions, to name a few possible dimensions. Steve Vladeck, author of a very important amicus brief on behalf of former HHS officials, has posted about some of these issues.  Rather than re-hash his fine commentary, or Will Baude's pithy overview for SCOTUSblog this morning, I will quickly share some impressions of today's oral arguments.

First, the justices had no idea how Medicaid works, which matters quite a lot when it may be the vehicle for constitutional change. Justice Breyer, for example, did not appear to understand the difference between the state describing how it would set payment rates and the state actually setting the amount of money it would pay to reimburse health care providers for their services.  Here, Idaho created a methodology for rate setting that was approved by HHS, but then its legislature decided to use a different rate setting methodology tied to the state's budget. Breyer kept using the example of a doctor submitting a bill for $80 when all he could receive was $60, but the example was inapposite. Another minor example is that the prohibition against balance billing was news to the justices. Another example is Justice Alito's hypothetical about states that allow for medical marijuana being sued because feeral law does not permit possession of marijuana, which had no apparent relevance for the Medicaid preemption questions at hand.

James Piotrowski, on behalf of Exceptional Child Center tried to limit the conversation to whether the state actually followed the plan that CMS approved (which it appears Idaho did not). He also tried to explain why a broad-based Supremacy Clause/Spending Clause decision would be both unnecessary and dangerous, and he advocated for a limited ruling that would allow this set of plaintiffs to seek an injunction to force the state to abide by the reimbursement plan that HHS approved.  

The trouble is that the Solicitor General, as he did in 2012, promoted the view that no private rights of action should be permitted. Justices Sotomayor and Kagan quickly called out Mr. Kneedler on HHS’ deep disagreement with this position. Kneedler asserted that HHS does not want these private actions, even though HHS pointedly did not sign the SG's brief, and even though the amicus brief here and in Douglas on behalf of former HHS officials (of all political stripes) clearly explained that HHS both expects and needs private actions to occur. In both cases, the former HHS officials explained that the agency is so woefully understaffed and underfunded that it could never police all of the states' reimbursement rates on a claim by claim basis.

The four dissenters from Douglas were relatively quiet during oral arguments today. In 2012, the Chief Justice authored a dissent that would have denied private rights of action under 30(a) to force states to pay adequate payment rates for equal access to health care providers. I suspect that Roberts, Scalia, Alito, and Thomas remain in the same positions, unless they were convinced that Idaho should have just stuck to the plan and their legislature drove off the rails after CMS approved their rate setting methodology. The real question will be if Kennedy sees this action as some kind of affront to state sovereignty given his affinity for federalism resolutions. If so, then Supremacy Clause actions will be lost for 30(a) litigants, and states will run over Medicaid providers who cannot enforce the adequate payment language in the Medicaid Act. In the very moment that more and more states are negotiating Medicaid expansion under the power given to them by the Court in NFIB, this would be a dangerous precedent both theoretically and on the ground. More to come.


January 20, 2015 in Affordable Care Act, Constitutional, Health Care Costs, Health Care Reform, Health Law, Health Reform, HHS, Medicaid, Policy, State Initiatives, States | Permalink | Comments (0) | TrackBack (0)

Thursday, January 8, 2015

Cost Containment and Cost Shifting

With Harvard professors protesting their increased responsibility for health care costs, we are seeing just the most visible aspect of the recurring cycle described in “Tragic Choices.” As Guido Calabresi and Philip Bobbitt observed in that book, society tries to defuse societal conflict by hiding its rationing choices through implicit forms of rationing. Thus, for example, health care insurers relied on managed care organizations in the 1990’s to contain health care costs with the premise that managed care would preserve health care access and quality while squeezing the fat out of the health care system.

But after a time, the public realizes what’s going on and rebels against the implicit rationing policy. Hence, managed care’s effective cost containment strategies, such as limited networks of physicians or primary care gatekeeping, were dumped, and health care costs began to climb again.

What did health care insurers turn to after abandoning serious managed care? Shifting more of the costs of health care to patients through higher deductibles and higher copayments. Insurers didn’t need to identify limits on their coverage because individuals would respond to their higher out-of-pocket costs by hesitating to seek care. Costs would be contained by “market forces” rather than rationing. But the Harvard professors and other Americans are now rebelling against the shifting-of-costs policy, just as Calabresi and Bobbitt predicted in 1978. (Indeed, they even included the shifting of costs as an example of an implicit rationing strategy.)

Of course, cost shifting raises a number of concerns, including the fact that patients often do not distinguish well between necessary and unnecessary care when cutting back their doctor visits in response to cost shifting.

Where do we go from here? The Affordable Care Act includes many provisions designed to reward high quality care, and maybe we’ll see some meaningful cost containment out of them. But more likely, health care insurers will need to find another form of implicit rationing that will work for a while until the public rejects it.

For more discussion of the "Tragic Choices" cycle and the change from rationing through managed care to rationing through cost shifting, see here. For more discussion of the barriers to explicit rationing, see here.

[cross-posted at Bill of Health.]

January 8, 2015 in Affordable Care Act, Cost, Health Care Costs, Health Care Reform, Insurance, Spending | Permalink | Comments (0) | TrackBack (0)

Monday, October 27, 2014

Hot off the press!

In this article, published today at the Illinois Law Review online, Jessica Roberts and I argue why the Medicaid expansion is a matter of social justice that must be taken seriously in the upcoming gubernatorial elections.  Here's the blurb from the journal:

On the doorstep of its fiftieth anniversary, Medicaid at last could achieve the ambitious goals President Lyndon B. Johnson enunciated for the Great Society upon signing Medicare and Medicaid into law in 1965. Although the spotlight shone on Medicare at the time, Medicaid was the “sleeper program” that caught America’s neediest in its safety net—but only some of them. Medicaid’s exclusion of childless adults and other “undeserving poor” loaned an air of “otherness” to enrollees, contributing to its stigma and seeming political fragility. Now, Medicaid touches every American life. One in five Americans benefits from Medicaid’s healthcare coverage, and that number soon will increase to one in four due to the Patient Protection and Affordable Care Act. Medicaid’s universalization reveals that the program can now be best understood as a vehicle for civil rights. ...

October 27, 2014 in Affordable Care Act, Coverage, Disabilities, Health Care Reform, Medicaid, Obama Administration, Politics, PPACA, Public Health | Permalink | Comments (0) | TrackBack (0)

Friday, July 25, 2014

The Problematic Jurisprudence of Halbig v. Burwell

Like the recent Supreme Court decision in Hobby Lobby, the D.C. Circuit’s ruling earlier this week in Halbig v. Burwell is being hailed by conservatives and bemoaned by liberals as a death knell for Obamacare.  Unlike the decision in Hobby Lobby, however the D.C. Circuit’s ruling is not the end of the matter, and many liberals are finding hope in the ruling of the 4th Circuit the same day, the probability of an en banc hearing in the D.C. Circuit, and the ultimate possibility of a favorable Supreme Court decision.  In an earlier post in HealthLawProf, I decided to take seriously the possibility of damage control from a limited reading of Hobby Lobby.  It is pretty much universally agreed—and I believe correctly—that it is not possible to do similar damage control by giving a limited reading to Halbig v. Burwell.  If the ruling stands, that tax subsidies are not available to people purchasing coverage through the exchanges in the states that are letting the federal government do the work, many important other provisions of the ACA will be untenable, including the penalties for large employers not offering insurance whose employees receive subsidies and likely the individual mandate itself.  But I think it is possible to undermine Halbig in a way not generally recognized by the liberal critics who argue (correctly) that the statutory provision at issue is ambiguous:  argue that the jurisprudence of the majority opinion in Halbig is internally inconsistent.  Here’s how.

Under D.C. Circuit precedent, the court must “uphold an agency action unless we find it to be ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’”  So, the question for the court was whether the IRS rule permitting individuals purchasing insurance through federally-run exchanges was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.  In concluding that it was, Judge Griffith’s opinion for the court reasoned that it was not in accordance with law. That is, Judge Griffith found that there was no ambiguity in the relevant provision of ACA that permitted the IRS to interpret the statute as it did.   Here's where much of the criticism takes him on.  But there’s more to say.

In reaching the conclusion that the statutory language is not ambiguous, Judge Griffith purported to rely on a literalist approach to statutory interpretation.  But he did not in fact rely consistently on such an approach—nor could he have done so.  The problem is that in order to formulate the literalist question to answer, Judge Griffith had to resolve several issues in a manner that was not literalist at all.

Continue reading

July 25, 2014 in Affordable Care Act, Health Care Reform, Health Law, Obama Administration, PPACA | Permalink | Comments (0) | TrackBack (0)

Thursday, July 24, 2014

More on Halbig

Over at Balkinization, Abbe Gluck, Neil Siegel, and Joey Fishkin have excellent posts on what's wrong with the Halbig majority.  Abbe's is especially important given that the majority wrongly agreed with the complainants that the exchange is some kind of cooperative federlism program.  It's not.

July 24, 2014 in Affordable Care Act, Health Law, Politics, PPACA | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 23, 2014

Circuit Split in One Day: Tax Credits, Halbig and King (or, The Latest ACA Headache)

This has been cross-posted for a more general audience at ACSblog. Though it contains more background than most healthlawprof readers will need, analysis comes after the jump.

The D.C. Circuit held in Halbig v. Burwell that the IRS cannot provide tax credits to individuals who purchase private health insurance in states with federally-run insurance exchanges, potentially depriving millions of middle and low income Americans access to affordable health insurance.  Improbably, while the blogosphere lit up, the Fourth Circuit held in King v. Burwell that the IRS properly interpreted the Affordable Care Act (ACA) to provide tax credits in all exchanges whether run by a state or the federal government. Members of the Obama Administration immediately declared they will seek rehearing by the D.C. Circuit en banc.  The standard of review for petitions for rehearing is rigorous, but given the importance of the case, and the new circuit split, rehearing is conceivable.  Further, it is not unreasonable to anticipate that the Supreme Court ultimately will grant a petition for certiorari in either or both of these cases. If it is upheld, Halbig could be the most damaging decision in the ACA litigation wars yet.  For those not mired in the details of the ACA and its ongoing legal challenges, here’s why.


The ACA attempts to create near-universal insurance coverage by making Americans insurable and by commanding insurers to play by uniform rules.  The ACA was created because, in 2008, one in five Americans did not have health insurance coverage.  To make this number tangible, imagine everyone you know with blue eyes… and now imagine they do not have health insurance.  That’s how many were uncovered, and the lack of coverage was just about that random too.  In the United States, if you don’t have health insurance, you don’t have access to consistent healthcare.  The ACA has clear goals, but it is a muddy scrum of legislative drafting that never underwent a conference committee process, and that imprecision has facilitated the litigation in these cases.

To avoid adverse selection (the problem of free riding), the ACA requires Americans to carry minimum essential coverage or face a tax penalty (upheld in NFIB v. Sebelius); however, if insurance premiums would cost more than 8% of an individual’s income, then no tax penalty will be assessed.  To facilitate health insurance coverage, the ACA created health insurance exchanges, also called marketplaces, where individuals and small groups can purchase health insurance that provides standardized benefits without exclusions for preexisting conditions and other disequalizing prohibitions.  People who earn 100-400% of the federal poverty level are eligible for federal tax credits that assist in paying premiums for private insurance on the exchanges (“premium assistance tax credits,” codified at 26 U.S.C. 36B), increasing substantially the number of people who can afford to purchase private health insurance. 

 States were given a choice to create exchanges with federal funding under ACA section 1311, and if they opted not to, then the federal government would create “such” exchange in the state under ACA section 1321.  Sixteen states and D.C. created their own exchanges before January 1, 2014, so currently two-thirds of states have federally-run exchanges.  This landscape is shifting slightly as some states’ exchanges fail and they move to federal mechanisms, while other states are still eyeballing the federal money available until 2015.  What matters here is that the majority of exchanges were federally-run on the day that Halbig was decided.

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July 23, 2014 in Affordable Care Act, Constitutional, Health Care Reform, HHS, Medicaid, Politics, PPACA, States | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 22, 2014

Health Insurance Exchange Subsidies and Partisan Politics

With two federal courts of appeals coming to different conclusions on the most recent challenge to the Affordable Care Act, we should not be surprised that the judges have split along partisan lines.

By a 2-1 vote, the U.S. Court of Appeals for the D.C. Circuit held that subsidies for the purchase of health care insurance are available only on state-run exchanges, while the U.S. Court of Appeals for the Fourth Circuit held 3-0 that subsidies for the purchase of health care insurance are available on both state-run and federally-operated exchanges.

The two judges ruling against the Obama administration were appointed by Republican presidents while the four judges ruling in favor of the Obama administration were appointed by Democratic presidents.

Abbe Gluck and Tim Jost have explained why the subsidies should be available on federal exchanges; Michael Cannon and Jonathan Adler take the opposite view.

July 22, 2014 in Affordable Care Act, Insurance | Permalink | Comments (0) | TrackBack (0)

Monday, July 21, 2014

Choice and Costs

The New York Times reports on complaints by consumers about limitations on their access to physicians and hospitals. According to the story, insurers have restricted their provider networks to contain costs, while misleading their customers about the extent of the restrictions.

Without more information, one cannot draw firm conclusions about the problems. We cannot tell the extent to which insurers are acting badly, nor can we tell how much we are seeing the same backlash as in the 1990's when managed care organizations tried to contain costs by limiting their provider networks.

But the reports are not surprising. Limiting patient choice can be an important way to reduce costs. However, it is a politically unpopular way to do so. Hence, we often are told by candidates and elected officials that their health care reform will promote the three C's--greater coverage, lower costs, and broad choice. 

It will be important to see how much the public tolerates restrictions on choice. It may make a big difference on whether the health insurance exchange premiums remain favorable.

July 21, 2014 in Affordable Care Act, Cost, Coverage, Health Care Costs | Permalink | Comments (0) | TrackBack (0)

Monday, July 7, 2014

Reading Hobby Lobby narrowly

I write this post with more than a little trepidation; I’m as unhappy as anyone about what the Court made of the Religious Freedom Restoration Act last week.  Nonetheless, given the current state of play, I’ve tried to see whether there are any ways to try to limit the damage. 

This Supreme Court term has featured a striking number of unanimous decisions.  What has drawn unanimity in these cases has been the narrow basis on which they were decided.  Commentators have praised Justice Roberts for his political skills in bringing the Court together—demonstrating that at least one branch of government remains functional and shoring up claims to judicial legitimacy.  Other observers note, however, that the unanimity is only skin deep—and point to the cases in which the Court divided 5-4 as symptomatic.  So suppose we perform a thought experiment on one of the most divisive decisions of this term, Hobby Lobby.  How could the decision have been narrowed?  How should it have been narrowed?  Such an examination is invited by Justice Alito’s statement that the Court’s holding is “very specific.”  It is also invited by Justice Kennedy’s concurrence, which opens with the assertion that the Court’s opinion “does not have the breadth and sweep ascribed to it by the respectful and powerful dissent.  Finally and disturbingly, it is also invited by the observation that the Court has quite quickly, in the case involving Wheaton College, opened wide one of the apparently narrow doors. 

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July 7, 2014 in Affordable Care Act, Coverage, Employer-Sponsored Insurance, Health Care Reform, Insurance, Obama Administration, PPACA | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 1, 2014

Hobby Lobby and Overreaction

Undoubtedly, the Supreme Court has been too solicitous of corporate rights in recent years. And without doubt, reproductive rights are under siege from many state legislatures and federal judges. But these concerns do not justify the dramatic characterizations of yesterday’s Hobby Lobby decision.

According to Emily’s List, the Court’s decision to “restrict women’s health care” is a “devastating setback.” According to the Democratic Legislative Campaign Committee, “millions of women must have their bosses’ permission to access birth control.” And according to Planned Parenthood of Indiana and Kentucky, “countless women, already struggling to make ends meet, will not have the benefit of the family planning coverage provided to all others under the Affordable Care Act.”

In fact, the Court's decision need not result in limits on women’s access to contraception. To be sure, the Court agreed with Hobby Lobby (and Conestoga Wood) that they should not have to pay for methods of birth control that violate their religious beliefs (morning after pills and IUDs in this case). But the Court also observed that the federal government could use other approaches to guarantee access for women to contraception.

Indeed, wrote the Court, the government can employ the same accommodation for companies such as Hobby Lobby that it employs for religiously-affiliated, non-profit institutions such as universities. Under that accommodation, the organization’s insurer provides a separate plan for contraceptive coverage and does not bill the organization or the employee. In other words, the female employees receive full coverage without imposing a burden on the employer’s religious practice.

There are plenty of reasons to criticize the erosion of reproductive rights in the United States. And it is possible that the narrow holding of Hobby Lobby will be expanded in the future. But the decision itself does not entail a compromise of reproductive health.

July 1, 2014 in Affordable Care Act, Coverage, PPACA | Permalink | Comments (0) | TrackBack (0)

Sunday, June 22, 2014

Waiting for Hobby Lobby

Since the likelihood is that many readers of this blog will be asked to comment about whatever opinion the Supreme Court issues this week, here’s a quick refresher.   The Hobby Lobby and Conestoga Wood Specialty cases are challenges to the Affordable Care Act's requirement that employers who choose to offer health insurance to their employees must provide policies that include ten essential benefits-including contraception.  The U.S. Supreme Court has heard oral arguments and read the briefs—it’s likely that whatever opinion is issued will reflect at least some of the arguments presented to the Court.    

This case is about the Affordable Care Act’s requirement that employers who offer their employees health insurance must  offer policies that provide ten essential benefits, including contraception.  Hobby Lobby and Conestoga Wood are privately held, for-profit companies whose owners have sincerely held religious objections to providing four specific kinds of contraception.  They believe these contraceptives terminate rather than prevent pregnancy.  Many religious organizations and companies have gotten exemptions to these requirements, but this case considers whether private, for-profit companies should qualify as well.

The cases raise (at least) three major issues:

1.Does the Religious Freedom Restoration Act apply to corporations even though it uses the word “person?” (Can companies have religious beliefs?)

2. Is providing insurance that covers birth control a “substantial burden?” on these two company’s' religious beliefs?

3. Does the government have a compelling reason for requiring companies that provide insurance to offer policies that cover all the forms of contraception specified in the ACA?

 It is likely that this decision will address (I almost said clarify, but who knows?) the limits of a law passed by Congress in 1993 to over-rule an earlier Supreme Court Decision, Employment Division v. Smith, holding that so long as a law passed by the federal government “applied to everyone” everyone was required to follow it even if it interfered with their sincerely held religious beliefs.  In that case, Native American employees of a drug rehabilitation clinic challenged their firing for the use of Peyote as unconstitutional since using the drug was part of their sincerely held religious belief.  At that time the Supreme Court held that so long as a law applied to everyone, everyone had to follow it even if it infringed on some people’s beliefs.

Until now, there has never been a case where a “company” had religious beliefs.     There are legal advantages to doing business as a company rather than as an individual or a partnership.  The main one is that the owners aren’t personally responsible for the company’s debts or actions.  If the company goes bankrupt, the owner’s personal assets aren’t at stake.  If the company gets sued, the owner won’t have to pay the judgment.

  A few reminders about how ACA works—no company in the United States has to provide health insurance to its employees.  If it chooses not to, the employees would be eligible to buy subsidized health insurance through the exchanges. Because it employees more than 50 people, Hobby Lobby would have to pay the government $2000 per employee to cover the cost of the subsidized insurance-this called the Employer Shared Responsibility Provision. These payments are postponed until 2015, i.e. they haven’t happened yet, but this how the Kaiser Foundation says they will work.

 Kaiser estimates that this is at least half of what it would cost employers to provide health insurance meeting the minimum ACA standards.  This led Justice Sotomayor to suggest that during the oral argument that Hobby Lobby simply drop all health insurance coverage. What the affordable care act did was set standards for insurance just like there are standards for food and drug products.    The effect is there are no “junk” plans.  Every health insurance plan has to cover 10 essential benefits including vaccinations, annual exams, contraception and pregnancy costs.  So the rule isn’t on the companies that buy insurance, it’s on the insurance available to buy.  It’s the same as not being able to buy a car without seatbelts.

Unlike the Affordable Care Act decision that once decided effectively resolved a dispute and faded away, it is likely that whatever the result the decision here will be the basis of considerable analysis and is likely to be an important addition to the body of precedent interpreting the First Amendment’s Free Exercise clause.

 The new law, a short one and worth reading in full, the Religious Freedom Restoration Act, essentially reverses Employment Division v. Smith by stating that even if a law applies to everyone, if it substantially burdens anyone’s sincerely held religious beliefs the government has to show a compelling reason for the law and has to show that the law is the least restrictive way of achieving the law’s goals.


Until now, there has never been a case where a “company” had religious beliefs.     There are legal advantages to doing business as a company rather than as an individual or a partnership.  The main one is that the individual’s owners aren’t personally responsible for the company’s debts or actions.  If the company goes bankrupt, the owner’s personal assets aren’t at stake.  If the company gets sued, the owner won’t have to pay the judgment.

 At this point, there isn't much more to do but wait.   It's hard to break the speculating habit since many of have spent the past three years spinning scenarios.

For example, it’s unclear how far a decision that a private company could be exempt from federal laws that go against its religious beliefs would go.  For example, a company with a religious belief that women shouldn’t work outside the home might claim that it would not have to follow laws prohibiting sex-discrimination.

 Within the health insurance field it’s also unclear how far a company could pick and choose—for example, could a company decline to cover immunizations or blood transfusions.

 It seems likely that a company could choose to cover contraception for married employees but not unmarried employees.   Stay tuned, we will probably know more tomorrow—or at least by June 30th.

June 22, 2014 in Affordable Care Act | Permalink | Comments (0) | TrackBack (0)

Saturday, May 3, 2014

Why Sen. Elizabeth Warren's Memoir is of Special Interest to Health Profs

I'm a guest over at prawfsblog this month--come visit-and my posting today was about why law professors should be interested in Sen. Elizabeth Warren's new memoir.  You can read the whole pitch below--it includes that it's a funny, warm, well-written and interesting account of a remarkably successful career.  I also noted how important her efforts at fixing student loan debt are as a platform on which to build needed change in higher education.  Finally, she has very interesting things to say about balancing work and family as well as going beyond the classroom to help the individuals affected by the law she studied.   At a recent executive board meeting of the AALS Section on Law, Medicine and Health Care, current chair Dr. Ani Satz noted that there are not many mechanisms for recognizing that kind of service.  (side note--consider yourself warmly invited to the terrific panels our chair elect, Dr. Thad Pope, has organized for us to present and co-sponsor, more information to come).

But for a health prof audience, I'd also point out that she discusses her empirical work (with a team of top social scientists--she didn't do the math herself) that finally demonstrated the major flaw in our employer based health insurance system.  Medical bills turned out to be the leading cause of bankruptcy--and very often among families already insured.  Either their insurance was inadequate (maybe we should get these folks together with the people who are upset they can't keep their "old" plans) or, worse, their illness meant they could no longer work.  Whether the debt came directly from medical bills or from using credit cards and home equity loans to pay the bills--the results were equally catastrophic.

That this actually happens--that medical bills are a leading cause of bankruptcy--is as far as I know not currently disputed.  But I'd be remiss in this context not to point out that as part of the opposition research arising from her running to Senate-the Breitbart blog has made available a series of angry accusations from the 1990's of misconduct about that study.

 It will be a while before we see if the Affordble Care Act is going to do much to fix this problem--and predictions are mixed.  See this as opposed to this.   There's a federal study finding bankruptcies down in Massachusetts following Romneycare.   Common sense suggests that changes like no exclusions for pre-existing conditions and the lift of lifetime caps will make things better (for people with plans bound by those provisions).

But although certainly not usually described as such, Sen. Warren is, if not a Health Law Prof, certainly one whose work is very important to us. 


May 3, 2014 in Affordable Care Act, Blog, Consumers, Coverage, Employer-Sponsored Insurance, Health Care Reform, Insurance, PPACA, Proposed Legislation, Reform, Research, Research Ethics, State Initiatives, Workforce | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 8, 2014

Will the Uninsured Become Healthier Once They Receive Health Care Coverage?

The Affordable Care Act might not bend the cost curve or improve the quality of health care, but it will save thousands of lives, as millions of uninsured persons receive the health care they need. At least that’s the conventional wisdom. But while observers assume that ACA will improve the health of the uninsured, the link between health insurance and health is not as clear as one may think. Partly because other factors have a bigger impact on health than does health care and partly because the uninsured can rely on the health care safety net, ACA’s impact on the health of the previously uninsured may be less than expected.

To be sure, the insured are healthier than the uninsured. According to one study, the uninsured have a mortality rate 40% higher than that of the insured. However, there are other differences between the insured and the uninsured besides their insurance status, including education, wealth, and other measures of socioeconomic status.

How much does health insurance improve the health of the uninsured? The empirical literature sends a mixed message. On one hand is an important Medicaid study. Researchers compared three states that had expanded their Medicaid programs to include childless adults with neighboring states that were similar demographically but had not undertaken similar expansions of their Medicaid programs. In the aggregate, the states with the expansions saw significant reductions in mortality rates compared to the neighboring states

On the other hand is another important Medicaid study. After Oregon added a limited number of slots to its Medicaid program and assigned the new slots by lottery, it effectively created a randomized controlled study of the benefits of Medicaid coverage. When researchers analyzed data from the first two years of the expansion, they found that the coverage resulted in greater utilization of the health care system. However, coverage did not lead to a reduction in levels of hypertension, high cholesterol or diabetes.

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April 8, 2014 in Affordable Care Act, Health Care, Health Care Reform, PPACA, Uninsured | Permalink | Comments (0) | TrackBack (0)