Category: Insurance

The Supreme Court and Contraceptive Coverage—Take 2

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Supreme Court
Flickr/Creative Commons – Andrew Raff

By Gregory M. Lipper

Today the Supreme Court granted review in seven challenges to the accommodation offered to those with religious objections to the Affordable Care Act’s contraceptive coverage regulations. I won’t rehash my earlier posts about why I (and seven of eight federal appeals courts) think that these challenges, brought under the Religious Freedom Restoration Act, are bunk. For now, a few observations about the cases and today’s cert grants:

1. These cases involve challenges to a religious accommodation, not the coverage requirement itself. In Burwell v. Hobby Lobby Stores, the Supreme Court said that the government couldn’t enforce the contraceptive coverage regulations against for-profit corporations with religious objections. The Court pointed to a less-restrictive alternative: the accommodation, offered to nonprofit organizations, through which the organization submits a written objection and government arranges for the objector’s insurance company or plan administrator to provide the coverage at no cost to either the objector or its employees. The plaintiffs in these cases are challenging the accommodation itself. By analogy, this is like a conscientious objector challenging the process for opting out of the draft.

2. Oddly enough, Hobby Lobby didn’t officially resolve RFRA challenges to the accommodation. You might think that since the Supreme Court’s decision in Hobby Lobby pointed to the accommodation as the less-restrictive alternative, then the Court must have also made clear that the accommodation itself complied with RFRA. But the majority opinion did not do so. Instead, after pointing to the accommodation as a less-restrictive alternative, the majority said, “We do not decide today whether an approach of this type complies with RFRA for purposes of all religious claims.”

3. And/But: Justice Kennedy, the deciding vote in Hobby Lobby, suggested more clearly that the accommodation complies with RFRA. Although he joined the majority opinion, Justice Kennedy also wrote separately and appeared to bless the accommodation. Here’s what he said:

  • “That accommodation equally furthers the Government’s interest but does not impinge on the plaintiffs’ religious beliefs.”
  • “Yet neither may that same [free exercise] unduly restrict other persons, such as employees, in protecting their own interests, interests the law deems compelling. In these cases the means to reconcile those two priorities are at hand in the existing accommodation the Government has designed, identified, and used for circumstances closely parallel to those presented here.”

If Justice Kennedy holds to his view in Hobby Lobby, then the plaintiffs in these cases will probably lose.

4. Although the plaintiffs in these cases are nonprofit organizations, the result will affect employees of for-profit corporations. As instructed by the Supreme Court in Hobby Lobby, the government extended the accommodation to closely held for-profit corporations such as Hobby Lobby. But neither Hobby Lobby nor the other for-profit plaintiffs have said that they will accept the accommodation, and most of them are represented by the same organizations representing the nonprofit challengers to the accommodation. So if the Supreme Court doesn’t uphold the accommodation as applied to nonprofit organizations, employees of objecting for-profit corporations will almost certainly go entirely without contraceptive coverage as well.

5. “[Y]ou are not entitled to your own facts….” Today the Becket Fund, which represents Little Sisters of the Poor and several other plaintiffs, issued a press release entitled “High Court to decide if Government can force nuns to provide contraceptives.” This is false—full stop. Under the accommodation, contraceptives are provided by the employer’s insurance company or plan administrator; employers aren’t paying for the insurance coverage, let alone handing out the insurance coverage, let alone handing out contraceptives themselves. Whether or not you think that the accommodation resolves employers’ religious objections, it is simply not true that—as a matter of fact—objecting nuns are required “to provide contraceptives.” (This is not, I should add, the first time that the Becket Fund has made this claim in a press release.) I will be curious to see whether Becket Fund repeats this claim in its briefs to the Court.

Greg Lipper is Senior Litigation Counsel at Americans United for Separation of Church and State. You can follow him on Twitter at @theglipper.

The Good, the Bad, and the Ugly: Physician Coverage under the ACA

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By Elizabeth Guo

A recent study in JAMA by Dorner, Jacobs, and Sommers released some good and bad news about provider coverage under the Affordable Care Act (ACA). The study examined whether health plans offered on the federal marketplace in 34 states offered a sufficient number of physicians in nine specialties. For each plan, the authors searched for the number of providers covered under each specialty in each state’s most populous county. Plans without specialist physicians were labeled specialist-deficient plans. The good: roughly 90% of the plans covered more than five providers in each specialty. The bad: 19 plans were specialist-deficient and 9 of 34 states had at least one specialty deficient plan. Endocrinology, psychiatry, and rheumatology were the most commonly excluded specialties.

Here’s where it gets ugly.

Excluding certain specialists from coverage can be a way for insurers to discriminate against individuals with certain conditions by excluding them from their plans. By excluding rheumatologists, insurers may prevent enrolling individuals with rheumatoid arthritis; by excluding endocrinologists, insurers may prevent enrolling individuals with diabetes. Individuals with chronic conditions need to see specialists more frequently than healthier adults, and how easily a patient with chronic conditions can see a specialist can affect his health care outcomes.

The study adds to the growing body of empirical research showing that even after the ACA, insurers may be structuring their plans to potentially discriminate against individuals with significant chronic conditions. In January, Jacobs and Sommers published a study showing that some plans were discriminating against patients with HIV/AIDS through adverse tiering by placing all branded and generic HIV/AIDS drugs on the highest formulary tier. Another study found that 86% of plans place all medicines in at least one class on the highest cost-sharing tier. These studies show that despite being on a health plan, individuals with certain chronic conditions may still have trouble accessing essential treatments and services. Read More

How does the Bipartisan Budget Bill change Social Security Disability Benefits?

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By Emma Sandoe

On Tuesday, details of the new Bipartisan Budget Bill, a bill negotiated between Congress and the White House, were released. This bill funds the government for two years and extends the debt ceiling, two important budgetary moves Speaker Boehner promised to leave his successor with a clean slate. Less reported is that this bill makes some small but important changes to our nation’s two largest budgetary social programs, Medicare and Social Security. But the changes made to Social Security Disability Insurance eligibility extend beyond that program and will be important for state Medicaid agencies and for low-income people with disabilities.

What is the Social Security Disability Trust Fund?

Not part of the original Social Security Act, the Disability Insurance (SSDI) benefit was added in 1957. As of 2014 there were 10.9 million Americans receiving this benefit totaling $141 billion or 4% of the federal budget. In the last Trustees report for the projected future cost of the SSDI program, the trustees projected the exhaustion of the trust fund in 2016. This would mean that the nearly 11 million beneficiaries would see their benefits cut by 19% next year because incoming tax revenue would only be able to cover about 80% of the benefits.

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The Once and Future Cadillac Tax

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cadillacOver the last few weeks, health economists have been defending the often politically friendless “Cadillac Tax.” This policy, as part of the Affordable Care Act, will begin taxing certain generous health insurance plans starting in 2018. Since World War II, the IRS has held that employer-sponsored health insurance should not been taxed, costing the federal government $329 billion in lost federal revenue. But, the most pivotal decision in the tax exemption status of employer-sponsored health insurance took place in 1954, not during World War II.

In 1954, when Congress extended the World War II provisions into permanent tax law, Congress decided to do away with the limits imposed on the tax-free status of health insurance. In essence, Congress has already repealed the Cadillac tax back when you could buy a new Cadillac for $5,000.

The Introduction of the Tax:

As part of the World War II price and wage controls, President Roosevelt’s National War Labor Board first put limits on wage increases and would not allow wages to increase greater than 15 percent of 1941 rates. Enterprising employers began offering health insurance coverage to recruit workers, because enticing workers with higher wages was not permitted. This forced the hand of the Board to address the tax status of health insurance.

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Medicaid Is Not a Welfare Program

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By Michael Anne Kyle

Medicaid is often thought of as a welfare program because of the essential role it plays in providing health insurance for low-income people. However, looks can be deceiving. In terms of scale and scope, Medicaid is rapidly becoming a powerhouse player in health care.

Medicaid enrollment is booming as a result of the Affordable Care Act (ACA): nearly 72 million people are enrolled in Medicaid and the Children’s Health Insurance Program (CHIP). To put this in perspective, about 55 million people are enrolled in Medicare and about 64 million in the UK’s NHS. Medicaid enrollment is likely to continue rising as more states contemplate expansion. As of this month, 30 states and the District of Columbia have expanded Medicaid under the ACA.

Size isn’t the only way Medicaid is changing. Unlike Medicare, Medicaid is a joint state and federal program, which means that states have a lot of latitude to innovate with both delivery and payment. The ACA has enhanced opportunity for reform through planned initiatives like the Center for Medicare and Medicaid Innovation (CMMI), and unexpected pathways, like negotiations around Medicaid expansion – these have yielded some of the most radical departures from the traditional public program paradigm, even in states that have not sought a “private option”

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Consolidation vs. Competition

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By Michael Anne Kyle

This summer, four of the five largest national health insurance companies proposed mergers – with each other. The acquisition of Cigna by Anthem and Humana by Aetna would reduce the “big five” to three. Provider groups, including the American Hospital Association and American Medical Association are alarmed, citing the potentially anticompetitive nature of these mergers.

It is true that many aspects of the health insurance market are already highly concentrated. In 2013, there were states where the individual and small group markets were dominated by companies with upwards of 70, 80, and even 90 percent market share. The Affordable Care Act introduced health insurance exchanges in an effort to stimulate competition – and it seems to be working. On the Medicare side, a new report by the Commonwealth Fund found that only one (!) of the nation’s 2,933 counties had a competitive Medicare Advantage market. Medicaid has so much going on that it is the subject for another post entirely – but worth noting here that Medicaid managed care is on the rise and projected to cover more than 75 percent of enrollees within the coming year, so the role of private insurers in Medicaid is growing rapidly.

The insurance companies argue that the upside of consolidation is increased bargaining power with providers, enabling them to negotiate better rates and value-based contracts. It’s important at this point to note that while some provider groups are decrying insurance mergers as anticompetitive, there is a tremendous amount of consolidation underway on the provider side, too. A recent analysis finds that half (150/306) of hospital referral regions (HRR) are highly concentrated, and none are highly competitive. There is evidence that concentrated markets reduce price competition, and may also have implications for quality.

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HHS’ Proposed Anti-Discrimination Regulations: Protective But Not Protective Enough

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By Elizabeth Guo

Last week, the Department of Health and Human Services (HHS) Office of Civil Rights (OCR) released a proposed rule implementing section 1557 of the Affordable Care Act (ACA). Section 1557 applies the Rehabilitation Act of 1973 to the ACA so that a covered entity cannot discriminate against an individual on the basis of a disability in any health program or activity. The proposed rule clarified how OCR intended to enforce and interpret section 1557’s nondiscrimination provision.

As Timothy Jost and other commentators have noted, the government’s proposed interpretation of section 1557 significantly expands the number of health entities that need to meet the Rehabilitation Act’s nondiscrimination requirements. The regulation proposes to encompass all entities that operate a health program or activity, any part of which receives federal financial assistance. The regulation then broadly interprets “federal financial assistance” to include “subsidies and contracts of insurance.” Thus, an insurer receiving premium tax credits or cost-sharing reduction payments through participating in a health insurance Marketplace would need to ensure that all its health plans meet the Rehabilitation Act’s nondiscrimination requirements, regardless of whether the plans are sold through the Marketplace, outside the Marketplace, or through an employee benefit plan. This broad interpretation means that the Rehabilitation Act’s nondiscrimination provisions will now apply to a number of previously excluded plans.

Expanding the number of plans needing to meet section 1557’s nondiscrimination requirements will provide greater protection to more individuals with disabilities. In the United States, the Rehabilitation Act and the Americans with Disabilities Act (ADA) prohibit discrimination against individuals with disabilities. Both acts protect disabled individuals, but courts have consistently interpreted only the Rehabilitation Act as prohibiting insurers from designing their health plans to discriminate against individuals with disabilities. On the other hand, courts have held that the ADA provides a safe harbor for insurers when designing their benefit plans. Thus, some insurers under the ADA may be able to exclude all drugs treating HIV/AIDS from their formulary or place all drugs treating HIV/AIDS on the highest cost-sharing tier, benefit designs that the Rehabilitation Act would likely prohibit. See also Kelsey Berry’s post on this topic.  Read More

King v. Burwell And A Right To Health Care

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By Gregory Curfman

Bill of Health contributor Gregory Curfman has a new piece up at the Health Affairs Blog discussing the Supreme Court’s decision in King v. Burwell in the broader context of Americans’ right to care. From the piece:

Do Americans have a fundamental right to health care? This oft-debated question is timely given the Supreme Court’s stunning ruling yesterday in King v. Burwell, in which health insurance subsidies on the federal exchange were upheld in a 6-3 decision.

Here I will place the King v. Burwell opinion in the larger context of to what extent Americans are provided a right to care. The Constitution itself does not stipulate a general right to health care, but a patchwork of rights to certain aspects of health care have emerged over time from both constitutional and statutory law.

Read the full piece at the Health Affairs Blog!

Some Thoughts from a Health Lawyer on King v. Burwell

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By Joan H. Krause

[Cross-posted from Hamilton and Griffin on Rights]

The long-awaited and much-debated opinion in King v. Burwell is here. In an opinion written by Chief Justice Roberts – who almost single-handedly saved the ACA with his 2012 opinion in N.F.I.B. v. Sebelius – and newly joined by N.F.I.B. dissenter Justice Kennedy as well as the more liberal Justices, the Court agreed with the Fourth Circuit that the ACA’s tax credits (or “subsidies”) are available to individuals who purchase insurance through both State and Federal health insurance Exchanges. The Petitioners, four Virginia residents who did not wish to purchase health insurance, had argued that Virginia’s Federally-run Exchange did not constitute “an Exchange established by the State” under the ACA tax credit provision; because unsubsidized coverage would cost more than 8% of the Petitioners’ incomes, they would be exempt from the Act’s individual mandate and would not be required to purchase health insurance. While acknowledging that the Petitioners’ arguments regarding the “plain meaning” of the phrase were strong, the majority nonetheless sided with the Government, holding that the context and structure of the overall statute led to the conclusion that the statute permitted tax credits for insurance purchased on “any Exchange created under the Act,” whether State or Federal (slip op. at 21). Justice Scalia penned a scathing yet witty dissent (“We should start calling this law SCOTUScare,” slip op., Scalia, J. dissenting, at 21), arguing that the plain meaning of the language made clear that tax credits were available only on State exchanges, and that any flaws in the Act’s design should be left to Congress to fix.

Despite the attention it received, King was something of a stealth ACA case. Lacking the Constitutional controversies of N.F.I.B., it was in many ways a run-of-the mill statutory interpretation case focusing on four words in a massive document containing, in the words of the Chief Justice, “more than a few examples of inartful drafting” (slip op. at 14).   And yet the potential effects of the decision were perhaps even more far-reaching, in large part because of the timing. N.F.I.B.’s Commerce Clause analysis may have more precedential value in the long-run, but far fewer of the Act’s provisions had gone into effect in June of 2012. With approximately 7 million individuals now receiving insurance through the Federal Exchange, and the majority of them (an estimated 87%) receiving subsidies, the decision in King could have led to the devastating loss of insurance for millions of Americans.

While commentators will no doubt parse every sentence of the opinion (including the Court’s refusal to defer to the IRS’s interpretation of the statute under Chevron), as a health lawyer I found two aspects of the opinion notable. First, the Chief Justice drafted a very nuanced (and mercifully succinct) description of the health insurance market flaws the ACA was designed to address. The Chief Justice understood the ACA’s “three key reforms” – guaranteed issue and community rating of insurance policies, the individual mandate, and tax credits – as well as the ways in which the three were “closely intertwined” (slip op. at 3-4). The first few pages cite multiple horror stories from states where some, but not all, of these reforms were enacted; for data, the opinion cites liberally to the Brief for Bipartisan Economic Scholars as Amici.   In its depth (not to mention brevity), the analysis is completely different from the tortured description of health insurance found just a few years ago in N.F.I.B., evincing a far more sophisticated understanding of both the legal issues and the legislation itself.

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Think Tanks on Prescription Drug Coverage – Missed Opportunity

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By Lydia Stewart Ferreira

Two Canadian think tanks – the C.D. Howe Institute and the Institute for Research on Public Policy – recently issued contradicting reports on whether prescription drug plans should be age-based or income-based.

As background, medications prescribed outside a Canadian hospital setting are not covered by Canada’s medicare system. They are financed through a patchwork of private and public drug insurance plans that only provide coverage for select populations. For example, up until the late 1990s, people 65 and older received universal, public drug coverage in most provinces. But with population aging, the public liability associated with age entitlements has become a major concern for governments. Four Canadian provinces have discontinued their age-based programs, which covered most of the cost of medications for seniors, and replaced them with income-based programs, which protect all residents against catastrophic drug costs. Other provinces have started to move or are considering moving in this direction.

The C.D. Howe Institute think tank concluded that provincial drug plan benefits based on age are ‘outdated’ and drug plan benefits should be based on income instead. “[I]ncome-based plans are a better alternative for cash-constrained provinces and offer more equitable access to public benefits.”

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