The D.C. Circuit Got it Wrong. Congressional Intent on Exchange Subsidies Is Clear, If You Know Where to Look

By Robert I. Field

Why would Congress have limited Affordable Care Act subsidies to residents of only some states – those that establish their own insurance exchanges? The law authorizes credits for the purchase of insurance “through an Exchange established by the State under section 1311.” The D.C. Circuit found that this wording excludes federally established exchanges and that Congress might have intended this to induce states to establish their own exchanges rather than letting the federal government take over.

But the Court acknowledged that there is no evidence of such intent in the legislative history. And such a purpose would conflict with the ACA’s overall goal of extending health insurance access to all Americans.

With no legislative history as a guide, is there another plausible explanation of Congressional intent? Is the best answer to the D.C. Circuit’s opinion that the phrase was a drafting error, as the dissent seems to imply? Why else would it have found its way into the law?

Inartful though it may be, the wording can be seen to serve a different purpose that is consistent with the rest of the ACA. It can be understood not as a way to distinguish exchanges established by a state from those established by the federal government but to distinguish those established publicly from those created privately.

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#BELHP2014 Panel 2, Potential Problems and Limits of Nudges in Health Care

[Ed. Note: On Friday, May 2 and Saturday, May 3, 2014, the Petrie-Flom Center hosted its 2014 annual conference: “Behavioral Economics, Law, and Health Policy.”  This is an installment in our series of live blog posts from the event; video will be available later in the summer on our website.]

By Matthew L Baum

In this next installment of today’s live-blogging of the conference (and with all of the caveats of live-blogging mentioned by my colleagues and my apologies for any errors or misrepresentations) we have Professors David Hyman (DH), Mark White (MW) and Andrea Freeman (AF) in a panel moderated by Glenn Cohen (GC) on the “Potential Problems and Limits of Nudges in Health Care”.

The panel began with DH, H. Ross & Helen Workman Chair in Law and Director of the Epstein Program in Health Law and Policy, University of Illinois College of Law, and a talk entitled, “what can PPACA teach us about behavioral law and economics” (Patient Protection and Affordable Care Act). DH began with the observation that nudges often work quite well… “unless they don’t”. While many nudges are “sticky”, i.e. they influence behavior in the way they were intended, others are “slippery”, i.e. they fail to influence behavior in the way they were intended. His talk set out to illustrate the phenomenon, and to pose two questions. The first was an empirical question: what makes a nudge sticky vs slippery? The second was philosophical: is it meaningful to talk about a “failed nudge” or when we do, do we really just mean failed marketing? He focused on an analysis of PPACA as a case study.

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Individual Mandate Not Postponed for Anyone, Yet

Yesterday the CMS issued a document, Options Available for Consumers with Cancelled Policies, that describes four options available to people who received notice that their healthcare plans were cancelled.  (I blogged about the cancellations here.)

The first three options aren’t newsworthy: you can buy a new plan from your insurer, buy a plan through the marketplace, or shop outside the marketplace.  The fourth option is newsworthy, because the CMS has for the first time announced that people whose plans were cancelled may qualify for a hardship exemption allowing them to enroll in (cheaper) catastrophic coverage.

Not surprisingly the announcement is receiving lots of attention.  Seth Chandler has a roundup of some of the early news coverage.  Since he posted, Nicholas Bagley blogged here and Jonathan Adler noted the change here.

I am still digesting this interesting news, but have one contribution to the discussion so far.  Many people are saying that those in cancelled plans are now “exempt” from the individual mandate, that having a plan cancelled is now itself a “hardship.”  That is not quite right in a way that obscures an important aspect of this announcement.  The CMS has not exempted anyone with a cancelled plan yet.  Read More

Action of Ohio Controlling Board on Medicaid Expansion

According to Professor Wilson R. Huhn of the University of Akron School of Law, the Ohio governor’s action expanding Medicaid in Ohio is valid. He writes:

On Monday, October 22, at the urging of Governor Kasich, the  Controlling Board of the Ohio Legislature voted 5-2 to accept $2.5  billion in federal funding to expand Medicaid in the State of Ohio.  Under the laws of Ohio this action was valid.

The Controlling Board is a state agency created by statute. The agency  has two principal powers: it can transfer funds and authorize purchases  by state agencies, and it can decide to accept federal funding on behalf of these agencies. Section 131.35(A)(5) of the Ohio Revised Code  states: “Controlling board authorization for a state agency to make an expenditure of  federal funds constitutes authority for the agency to participate in the federal program providing the funds ….”

Two advocacy organizations (the Buckeye Institute and the 1851 Center  for Constitutional Law) as well as several Ohio lawmakers have announced that they intend to challenge the legality of the action of the  Controlling Board. They contend that the action of the Board violates  Section 127.17 of the Ohio Revised Code, which provides that the Board  is bound by the intent of the Ohio General Assembly. The challengers  quite correctly point out that both houses of the General Assembly voted not to accept federal funding to expand Medicaid. Governor Kasich  vetoed this bill, but the challengers argue that despite the Governor’s  veto it’s clear that the General Assembly did not want the Controlling  Board to accept federal funding to expand Medicaid.

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Medical Malpractice, the Affordable Care Act and State Provider Shield Laws: More Myth than Necessity?

By Mary Ann Chirba and Alice A. Noble

Given the ambitions and reach of the Affordable Care Act, confusion about its intended and inadvertent impact is inevitable. Since its enactment in 2010, the ACA has raised legitimate and less grounded concerns among various stakeholders ranging from individuals and employers facing coverage mandates to States deciding whether and how to implement the Act’s Medicaid expansions. One item has received far less attention even though it weighs heavily on any provider engaged in the clinical practice of medicine: the ACA’s impact on medical malpractice liability. The Act does little to address medical malpractice head on. Nevertheless, physicians and other providers, the states and even some members of Congress have expressed concern that the Act will increase a provider’s exposure to medical malpractice liability.

In response, the American Medical Association has drafted model legislation to shield providers from newly created malpractice claims resulting from the ACA. It would prevent malpractice claimants from using federal or state practice guidelines, quality measures, reimbursement criteria and the like to establish or define the standard of care without expert testimony. In Congress, a version of this model, H.R. 1473, was introduced in the House of Representatives in 2012, and again in April of 2013 [link: http://beta.congress.gov/bill/113th-congress/house-bill/1473/cosponsors].

In April, the governor of Georgia signed H.B. 499 [link: http://www.legis.ga.gov/legislation/en-US/display/20132014/HB/499] into law, becoming the first state to pass legislation based on the AMA model act.

This came on the heels of a Medical Association of Georgia Advocacy Brief [link: http://www.mag.org/sites/default/files/downloads/issue-brief-provider-shield2-2013.pdf] stating that the ACA’s “guidelines” concerning health care quality measures; payment adjustments; hospital value-based purchasing; and value-based payment modifiers “will raise [the medical malpractice] standard to unreasonable levels by exposing physicians to a number of new liabilities….” [Emphasis added]

It is too early to tell whether states will follow Georgia’s lead and enact similar measures. What is clear is that such “standard of care protection” or “provider liability shield” legislation raises interesting questions about the ACA’s impact on state medical malpractice law.

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The Salience of Numbers: W-2s Now List Cost of Employer-Sponsored Health Insurance

By: Katie Booth

Beginning in 2013, W-2s for firms who file at least 250 W-2 forms will list the amount of money that employers and employees spend on health insurance premiums. As the New York Times reports, “[t]o some, it will be a surprise, perhaps even a shock.” Many people insured through their employer have no idea how much health insurance actually costs. The W-2 provision will change this, providing a yearly reminder about how much employer compensation goes into health insurance rather than wages. This gives employees exactly one salient number about health care: the yearly cost of their employer-provided health insurance.

More information for consumers about the cost of health care is a good thing, but making the cost of health insurance more salient may have some unintended consequences. Employees will be better able to compare the benefits of jobs with higher salaries but no health insurance to jobs with lower salaries and health insurance. This may lead employees to opt for lower salary jobs with health insurance, which could help decrease the number of employees who seek government-subsidized health insurance. The W-2 provision could, however, have the opposite effect. Now that employees can easily compare the cost of employer-sponsored insurance to government-subsidized insurance, employees eligible for government-subsidized health insurance may buy insurance through an exchange and then opt for a higher-paying job that does not offer insurance. Employers may be willing to pay the tax penalty, which is much less than the cost of insurance.

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Maintenance of Effort in Maine

After the NFIB decision in June, Maine tried to expand Justice Roberts’ remedy to also make the “maintenance of effort” provision optional for states. Maine was unsuccessful in the First Circuit with the argument, for procedural reasons.  Prior coverage here.

The Obama Administration is sticking to the letter of the law, and announced Tuesday that it is refusing to allow cuts for Medicaid beneficiaries at or below 133% (138% after the 5% income disregard) of FPL in Maine.

Maine has not yet announced whether it will take the case back to the First Circuit. With Huberfeld & Leonard, we’ve argued at length (see esp. pp. 75-83) that Maine does not have the winning argument, in an article to be published in the BU Law Review later this month. SSRN version here. The short version is that MOE is a common tool to lock-in states during transition to a new program, was discussed in the briefing, but was not part of the coercion analysis in Justice Roberts’ plurality. The key provision was 42 USC 1396c, the Secretary’s authority to reduce some or all of the funding to non-compliant states. But we will see if Maine wants to argue the substance of this point at the First Circuit.

@koutterson

This Week’s Edition of ACA Challenges

By Nicole Huberfeld

Earlier this week, Jonathan Adler wrote in the National Review Online that challenges to the individual mandate were just beginning.

And today, Oklahoma’s September challenge to the ACA is making headlines.  As I have described before, one of the new theories by which Jonathan Adler and the Cato Institute are seeking to thwart the ACA is by challenging the IRS rule that permits tax subsidies in exchanges created by the federal government, which Cato claims is not supported by the text of the ACA.  (State exchanges are supposedly the only avenue for obtaining tax subsidies for private insurance purchases.)  Oklahoma has brought this challenge to life in federal district court, and Cato’s interest in this and other challenges was apparently reiterated by Professor Adler during a Cato-organized panel on Wednesday. Read More

New “What Ifs”: Election Questions; Ongoing ACA Litigation

By Nicole Huberfeld

Two vaguely related thoughts on the future of the ACA.

First, when I present my co-authored Medicaid post-mortem paper forthcoming in B.U. L. Rev., I find I am frequently asked “what could a President Romney do to dismantle the ACA if he can’t repeal it?”  An incisive answer to this question was posted recently by Tim Jost over at the Health Affairs Blog.  While I generally agree with Tim that it is very hard for the President to change the law without some kind of joint action by Congress (because, of course, that’s our grand design), I feel less confident that the President can’t undermine a law by method of non-enforcement.  The President guides the priorities of the agencies responsible for enforcement of the various aspects of the law, and it would be possible to have atrophy by non-enforcement, especially for the federal spending program changes (Medicare, Medicaid expansion, funding of federally qualified health centers, family planning, etc.).  So, while I would be genuinely surprised if the law were repealed, that does not mean it could not be at least partially neutralized by other means.

Second, the big news in ongoing ACA litigation was the Court’s request for the opinion of the Solicitor General as to whether Liberty University’s challenge should be rendered moot by NFIB.  Lyle Denniston at SCOTUSblog summarized the questions thus:

The Supreme Court opened its new Term on Monday by asking the federal government to offer its views on whether the way should be cleared for new constitutional challenges to the federal health care law — including a new protest against the individual mandate that the Court had upheld last June.  The request for the government’s views came in response to a rehearing request by a religious-oriented institution, Liberty University in Lynchburg, Va.  The university’s earlier petition was simply denied in June, so it asked the Court to reconsider and wipe out a lower court ruling in order to revive the university’s religious challenges to both the individual mandate and the separate insurance coverage mandate for employers. Read More

Quality Control on the Back-End via the ACA and on the Front-End via Tort Litigation

By Vickie J. Williams

I am back after a brief hiatus for the Jewish holidays. L’Shanah Tova to all my readers who have just celebrated the Jewish New Year.

The first Monday in October is, of course, a special day for all of us legal eagles–the Supreme Court is back in session. The other significant thing about October 1 for those interested in health law is that hospitals will now be fined if too many of their Medicare patients are readmitted within 30 days of discharge due to complications. As reported by the Associated Press, this is part of the Affordable Care Act’s push to incentivize quality improvement while trying to save taxpayers money. Right now, admissions for only three medical conditions are subject to the penalty: heart attacks, heart failure and pneumonia. Penalties are held to a maximum of 1% of the hospital’s Medicare payments for now, but will rise to a maximum of 3% of Medicare payments over several years. This attempt to control quality of care on the back-end constitutes a marked contrast with the way reimbursement policy has worked over the last several decades to discourage hospitals from keeping patients in beds for “social” reasons, such as having nobody to care for them at home if they are discharged. Many Medicare hospital readmissions are due to non-compliant behavior by fragile patients with few resources to help them once they leave the hospital, something that is not really subject to the hospital’s control, and says nothing about the hospital’s quality of care for the patient. For decades, Medicare payment policy, which generally pays hospitals the same amount for caring for a patient regardless of how long he or she is in the hospital, has encouraged speedy discharges. This is touted as a way to save costs. Apparently, the new policy on payments for readmission is an acknowledgement that there is both a financial and a human cost to treating medically and socially fragile people in the express lanes of health care. It remains to be seen whether the penalties result in better quality care, or significant savings, but surely they will result in increased work for hospital social workers and discharge planners. Read More