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3-29-12 Affordable Care Act Update
March 30, 2012
Litigation Update
This was a blockbuster week at the Supreme Court, which hosted three days of arguments on the Affordable Care Act, an unprecedented amount of time in the modern era which underscores the critical nature of the challenges. Although the media coverage was extensive, we wanted to provide ACS CAN's perspective.
As you know, the Society and ACS CAN, along with the American Diabetes Association (ADA) and American Heart Association (AHA), jointly filed a friend-of-the-court brief with the Court arguing that the "individual responsibility" provision - the so-called individual mandate -- is critical to sustaining patient protections in the law that are so important to people with cancer and their families. The Society and ACS CAN hope that the individual responsibility requirement is upheld so provisions that are improving access to quality, affordable health care can be successfully implemented. Read the attached op ed http://www.cnn.com/2012/03/27/opinion/brown-hausner-seffrin-health/index.htmlby Society and ACS CAN CEO John Seffrin and his counterparts from ADA and AHA.
- CNN Op Ed.pdf
Day One - Anti-Injunction Act
On the first day, the justices listened to arguments about whether the Anti-Injunction Act, which bars lawsuits to invalidate taxes from being imposed before a tax is actually levied, would preclude the court from hearing arguments on the merits of the cases. This procedural issue was raised by the Court of Appeals for the Fourth Circuit, which had ruled that because the provision requiring individuals to purchase or obtain health insurance by 2014 (the so-called "individual mandate") is not yet in effect, lawsuits to invalidate the mandate should not be heard until that time. Despite 90 minutes of oral arguments, the justices seemed to agree with both challengers and defenders of the law that the case should be heard on the merits. Based on their questions, the justices are expected to dismiss the procedural problem so they can proceed to the other issues.
Day Two - Individual Mandate
The second day was more eventful, with the court debating whether the individual mandate is constitutional. The mandate has been challenged on the grounds that it exceeds Congress' authority under the Constitution to require people to purchase a good or service. Challengers say Congress has never required anyone to purchase anything as a condition of merely living in the US, as all other types of insurance (such as auto or property) are based on an individual's desire to engage in certain types of activity (such as driving a car or owning a home). The federal government defended the law, saying health care is a unique commodity because everyone will consume it at some point, but no one knows exactly when. The rationale for the individual mandate is that it spreads risk across the entire population, essentially acting as a financing scheme for emergency care, which hospitals are required to provide under federal law. Under the government's theory, Congress appropriately used its constitutional authority to regulate commerce in creating the mandate.
The justices asked tough questions of both sides. Of particular note, Chief Justice John Roberts and Justice Anthony Kennedy, thought to be swing votes on the issue, pressed the government's attorney particularly hard. Justices Antonin Scalia and Samuel Alito appeared opposed to the mandate. Although Justice Clarence Thomas did not ask any questions, experts believe he will oppose the mandate based on his previous rulings. Justices Ruth Bader Ginsburg, Stephen Breyer, Elena Kagan, Sonia Sotomayor appeared to defend the law as part of overall insurance reform.
Day 3 - Severability and Medicaid
The third and final day addressed two separate issues. The first was what would happen to the remainder of the law if the individual mandate is found unconstitutional. In legal terms, the question is whether the mandate can be "severed" from the law's other provisions. Challengers of the law maintain that the individual mandate cannot be severed effectively. In other words, if the individual mandate is struck down, the entire law must be struck down too. The government argued that if the individual mandate is struck down, much of the law should remain, although insurance reforms in the law could not be sustained, , such as the ban on denying insurance to people with pre-existing conditions. According to the government, the mandate is the means of spreading risk across populations and without it the health insurance market fails. Because neither challengers nor defenders of the law believe that the individual mandate can severed from the rest of the law, (as was held by the Court of Appeals for the 11th Circuit), the Supreme Court appointed an outside attorney to argue the other side. During this questioning, it was clear that certain justices, most notably Scalia and Alito, felt that the whole law must fail while Breyer and Ginsburg made it clear that unrelated provisions such as menu labeling and expansion of funding for the Indian Health Service should remain intact.
The final issue was whether the Medicaid expansion contained in the Affordable Care Act, which would expand the program's current coverage to all adults earning up to 133 percent of the federal poverty level in 2014, was an unauthorized coercion of the states by the federal government. Under the theory posited by the states challenging the law, the federal government is forcing states to expand their rolls in a way that violates their rights event though the federal government will assume 100 percent of the Medicaid costs of covering newly eligible individuals for the first three years (2014-2016). (Federal support will phase down slightly over the following several years, so that for 2020 and all subsequent years, the federal government is responsible for 90 percent of the costs of covering these individuals.) None of the lower courts that have considered this argument have accepted it, but some justices voiced concerns about the program.
Next Steps
It is important to keep in mind that a justice's apparent position during oral argument is never a certain indicator of how he or she will vote in the final decision. With the oral arguments over, a conference will be held where the justices assign who will write the opinions. Multiple drafts of opinions will be circulated back and forth, and at any time justices can change their votes and opinions. A final ruling in the case is expected in June of this year, before the court adjourns for the summer.
There has been extensive media coverage of the arguments, and I thought the following New York Times article and column by EJ Dionne of The Washington Post were particularly insightful.
Federal Update
Final Rules Issued
The administration released three final regulations on March 16: 1) Medicaid eligibility under the Affordable Care Act; 2) the "three R's" (risk adjustment, reinsurance, and risk corridors); and 3) student health plans. The Medicaid and 3R's regulation are important complements to the final exchange regulation released March 19. The Policy Team will explain these regulations and their importance to our work during a teleconference scheduled for this Friday, March 30, at 3 pm Eastern (call in number: 1-866-846-3997; passcode: 225434).
The student health regulation is relatively strong. Student health plans today are often a poor value for consumers. They generally have limited benefits, low annual limits and low medical loss ratios. The final regulation will require student health plans to be generally consistent with the requirements for all other health plans by 2014.
Rate Reviews
HHS recently exercised its "rate review" authority, a provision in the Affordable Care Act that allows for greater state, federal and public scrutiny of premium hikes. Under the law, insurers must justify any premium hikes of 10 percent or more by providing information on where the money is going, including a breakdown of medical services, profits, and administrative expenses. Following an independent review, HHS determined that insurance premium increases proposed by two insurance companies serving nine states were unreasonable. However, HHS does not have the authority to force insurers to reduce their premiums; that power is left to the states to decide. Read the HHS press release and CQ story.
In a new report, HHS found that fewer health insurers are proposing double digit rate hikes since the rate review provision took effect in 2011. HHS also believes insurance companies are being more forthcoming with information for consumers regarding proposed increases. In addition, HHS credits several states for taking a more active role in reducing premium rates. Since the Affordable Care Act passed, the number of states with rate review authority has gone from 30 to 37.
ACS CAN believes the rate review provision, working in tandem with other consumer protections in the Affordable Care Act, will help ensure that consumers receive value for their premium dollars and that significant premium increases in all states are justified and transparent.
State Update
As mentioned in previous updates, states must decide by September 30 on a benchmark plan that will determine the essential health benefits for private insurance both inside and outside the health insurance exchange. Additionally, states need to decide on a Medicaid benchmark plan for newly eligible Medicaid enrollees that will take effect January 1, 2014. The deadline for that decision has not yet been finalized, but ACS CAN is concerned that the traditional Medicaid program may not provide an adequate essential benefits package for cancer patients.
Attached is a one-pager titled, "Medicaid, Essential Benefits and Benchmark Plans" that was developed by ACS CAN for use in the states that explains the issue in more detail.
3-29-12 Medicaid EHB FAQ concerns 2.12.docx
New Report: Few People Would Be Affected by Individual Mandate
A new report by the Urban Institute and Robert Wood Johnson Foundation found that if the Affordable Care Act were in effect today, few people would be subject to the provision requiring individuals to purchase health insurance or pay a fine -- the individual responsibility provision or individual mandate. In fact, 94 percent of the population would currently meet the requirement, either because they already have health insurance, they have incomes that fall below the tax filing threshold line, or premiums exceed 8 percent of household income. The report also finds that by bringing more people into the health insurance market, the individual responsibility provision would lead to lower premiums and more stable insurance markets
As always, thank you for all you do every day to support laws and policies that help cancer patients and their families
Chris Hansen | President
ACS Cancer Action Network | American Cancer Society Cancer Action Network, Inc.