Webinar: Delay, Deregulate, Derail — Health Care Roiled by Actions of Trump and Congress

Since January, both President Trump and Republican leaders in Congress have talked about a three-step process for repealing and replacing the Patient Protection and Affordable Care Act (ACA). While the first six months of the Trump administration has seen mixed results, its efforts to reign in or hold back regulations, combined with its delay in filling lower-level agency roles, has impacted regulatory review and issuance of new regulations. So, despite Congress’ inability to pass legislation to change parts of the ACA, there is still plenty for providers to be concerned about.

Join Associate Managing Editor Kathryn Beard, JD, on Wednesday, August 2, for this half-hour live webinar covering attempts by the Trump Administration and Congress to delay, deregulate, and derail significant parts of federal health policy. She will discuss the two “repeal and replace” bills, FDARA, and significant executive and regulatory actions taken by the Trump administration which directly impact ACA provisions.

Registration Link:

To Expand or Not to Expand: Medicaid Under the Affordable Care Act

By Jaime Whitt, University of Kansas School of Law-

Famed US Supreme Court Justice Louis Brandeis wrote, in his dissent to the majority opinion in New State Ice Co v. Liebmann, 285 U.S. 262 (1932), that “It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.” With these words Justice Brandeis generated one of the most prominent analogies of US Federalism—one that still holds true today: the States as the “laboratories of democracy.” This concept has seemingly come to life with the implementation of the ACA (P.L. 111-148) and its provisions. Though it is federal health care reform, there is considerable leeway for each State to individualize the legislation’s impact. From the choice between utilizing www.HealthCare.gov or creating its own state-based health insurance Exchange, to regulation of the health care Navigators and other ACA outreach programs, to whether or not to expand Medicaid and how, each State has several opportunities to either fully roll out the ACA and its initiatives or stifle the bill’s impact.

One of the mostly hotly debated issues of the ACA has been Medicaid Expansion. With 2012’s National Federation of Independent Business v. Sebelius, 132 S.Ct. 2566, the Supreme Court invalidated the federal Medicaid Expansion mandate as unlawfully coercive and left the Medicaid decision to the states. Since then, contentious arguments in favor of and against expansion abound. To exhaust the minutia surrounding this hotbed topic would arguably be fruitless in this context, but even a cursory review of the myriad issues involved reveals that the expansion decision is a complicated one.

To Expand

On the side in favor of Medicaid Expansion, the arguments typically stem from the vantage point of viewing expansion as a moral and fiscal imperative. States who choose to expand Medicaid get considerable financial support from the federal government in the form of 100% funding for the cost of newly enrolled Medicaid beneficiaries. In a December 2013 study of how states stand to gain or lose under Medicaid Expansion, the Commonwealth Fund found that expansion dollars would represent a major source of federal revenue to state enterprises—nearly 2.5 times the value of highly sought-after federal highway funds in some cases. These dollars are necessary, the argument often goes, to strengthen and protect state health care providers against uncompensated care and to expand health coverage and financial protection to a state’s neediest constituents. The Oregon Health Insurance Experiment (OHIE), which conducted a randomized clinical trial of the effects of expanded Medicaid coverage, found that expansion resulted in improvements in mental and physical well-being as well as protection from catastrophic medical expenses for those who previously had no such resources.

Not to Expand

On the other hand, many states have been leery that the federal government, whose ACA expansion funds match the states at 100% until 2019 when the rate levels out at 90%, will take back that funding, leaving state budgets strapped and on-the-hook to find a way to continue coverage. Recently, this argument has come under fire, as more states consider expansion and research into the history of federal Medicaid funding has revealed that once such funds become entrenched, they are rarely reversed. To that same point, however, many economic and health policy analysts have expressed concern that this massive expansion of public funds will further contribute to the already currently unsustainable growth of national health care expenditures. In support of this argument, results from the aforementioned Oregon study, as well as trends seen in Massachusetts after its 2006 health care reform, indicate that an (expensive) increase in ER utilization is a likely consequence of status-quo Medicaid expansion.

Conclusion

It seems clear, even after just a merely skin-deep examination of this issue and its many interrelated and dependent corollaries, that this debate may indeed be appropriate. Our federal government has the right and responsibility, many argue, to ensure health coverage and financial protection for its citizens to the extent that it can. Likewise, the States each have the right and responsibility to be concerned about their financial welfare when state budgets directly impact state citizens. This is US Federalism at its core.

And the debate is far from over. Certainly, the Republican routing in the November mid-term elections, given that party’s distaste for all things Obamacare, does not forecast a favorable future for the initiative. Having said that, it is no secret that Medicaid funds are generated by and distributed from general federal tax revenues. This means that even states that choose not to expand Medicaid are paying for it. How long will citizens in states that choose not to expand, such as Texas, be complacent with the denial of additional federal revenue, all the while knowing that their federal tax dollars are paying for benefits enjoyed by other states? Only time will tell.

Which brings me back to Justice Brandeis’ historic dissenting admonition. The States are the laboratories of democracy. No one would or could legitimately argue that either the Federal or State governments do not want to provide for and protect their citizens. The question comes down to who should do it and how. Overall, whether states choose new innovations designed to privatize and control Medicaid Expansion funds or choose to use increased funding to focus locally on educating beneficiaries on what resources are available and how to more efficiently use the system, choosing not to participate at all seems like a loser here. The States know their citizens and circumstances better than the Federal government and changes need to be made to the status-quo. The fallout is certainly not clear, but the “courageous” state that Brandeis highlighted will take the money and see what positive progress it can make.

Jaime Whitt is her fourth and final year of a joint-degree program at KU.  She will graduate in May 2015 with a Masters in Health Services Administration from the University of Kansas School of Medicine and a J.D. from the University of Kansas School of Law, with a focus in Healthcare and Health Law.  When she is not in school, Jaime is a Law Clerk at Simpson Logback Lynch Norris, P.A. in Overland Park, KS and is a Graduate Research Assistant in the Department of Health Policy & Management at the University of Kansas School of Medicine studying health policy and health reform.

Chief Justice Robert’s PPACA Opinion: Conservative and True To Form

Despite allegations of the opposite, the PPACA-related opinion of Chief Justice Roberts is a very conservative opinion, even though the effect of it is to join with the liberal justice who voted to uphold the individual mandate and the rest of the Patient Protection and Affordable Care Act. Chief Justice Roberts, by applying a strict constructionist interpretation of the U.S. Constitution and a strict adherence to previous court opinions found that the individual mandate was a tax, and that as a tax it was not beyond the powers of Congress.

The end result of Chief Justice Robert’s opinion was that he was the crucial vote in upholding a law that many of his strict constructionist supporters did not like, but despite their frustration he stayed true to his strict constructionist philosophy. In so doing, he established two precedent’s; limiting the power of Congress to use the Commerce Clause and the Reasonable and Necessary Clause that will help greatly limit future Congressional actions.

Chief Justice Roberts begins and ends his opinion in the very first and very last paragraph of his opinion with a civics course refresher.  He says that the purpose of the court is not to decide if a particular policy is a good one, or one he personally likes.  The purpose of the Court is to determine if Congress acted within its power when establishing that policy; the exact definition of strict constructionist interpretation. “The Framers created a Federal Government of limited powers, and assigned to this Court the duty of enforcing those limits. The Court does so today. But the Court does not express any opinion on the wisdom of the Affordable Care Act.”  Chief Justice Roberts continues, “In this case we must again determine whether the Constitution grants Congress powers it now asserts,” and Chief Justice Roberts finds that Congress is legitimately asserting a power to tax.  

He than reminds us that the most important part of the process in determining whether a policy is a good one or not, is the vote cast by the citizens who elect the policy makers, “Under the Constitution, that judgment is re­served to the people,” and not appointed magistrates.

Chief Justice Roberts uses a tried and true court practice of deferring to previous rulings to determine that the enforcement provision of the individual mandate is an acceptable tax. In those previous opinions, Chief Justice Roberts states, that every time a statute can be seen as either constitutional or unconstitutional, the court properly deferred to the constitutional interpretation; a very conservative opinion.  He is not breaking with court precedent, but following it. Chief Justice Roberts quotes Justice Story from a 180 year old opinion “It is well established that if a statute has two possible meanings, one of which violates the Constitution, courts should adopt the meaning that does not do so.”  Justice Story continued “No court ought, unless the terms of an act rendered it una­voidable, to give a construction to it which should involve a violation, however unintentional, of the constitution.” Parsons v. Bedford, 3 Pet. 433, 448449 (1830).  Chief Justice Roberts then finds the same line of reasoning in the opinion Justice Holmes a century later, “[T]he rule is settled that as between two possible interpretations of a statute, by one of which it would be unconstitutional and by the other valid, our plain duty is to adopt that which will save the Act.” Blodgett v. Holden, 275U. S. 142, 148 (1927).

Earlier in his opinion Chief Justice Roberts set an important precedent by stating that Congress cannot use the Commerce Clause to force an individual into a particular line of commerce in which they do not want to be. He succinctly ends the portion of his opinion on the Commerce Clause by saying, “the individual mandate forces individuals into commerce precisely because they elected to refrain from commercial activity. Such a law cannot be sustained under a clause authorizing Congress to ‘regulate Commerce.’”  This is a very conservative thought; limiting Congress’ power to force a person into a commercial transaction, and a precedent that could have large implications for future legislative endeavors of Congress.

Chief Justice Roberts then writes that the Reasonable and Necessary Clause of the Constitution is limited as well; again another conservative precedent that preserves a strict constructionist interpretation of the Constitution.  He says, “Rather, such a conception of the Necessary and Proper Clause would work a substantial expansion of federal authority…. Instead Congress could reach beyond the natural limit of its authority and draw within its regulatory scope those who otherwise would be outside of it. Even if the individual mandate is ‘necessary’ to the Act’s insurance reforms, such an expansion of federal power is not a ‘proper’ means for making those reforms effective.”

PPACA Medicaid Expansion Survives 7-2 Vote Against It

The Supreme Court’s rulings on the constitutionality of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) reflect both the ideological divisions on the Court and differing understandings of separation of powers and judicial restraint. They also show that the key to any decision is how the issue is framed.

PPACA amended Social Security Act sections 1902(a) and 1905 to add a mandatory eligibility group and specify the services available to them. Specifically, effective January 1, 2014, states must provide benchmark benefits to adults with incomes under 133 percent of the federal poverty level (FPL) who are not elderly (age 65), disabled, parents or pregnant. The benchmark benefit is coverage for essential services, not extension of existing Medicaid benefits to the new group. In fact, PPACA forbids federal funding for a Medicaid expansion that simply adds the newly eligible to the existing program.

The constitutional challenge to the Medicaid expansion is that the states are coerced into it—they risk losing federal funding for their existing Medicaid programs if they do not adopt the expansion. The federal government is entitled to place conditions on states’ receipt of grant funds, but the consequences of refusing to cover the new group are so dire that states have no choice but to accept the new conditions. Chief Justice Roberts described it as “holding a gun to the head” of state officials. The challengers argued that three factors made the expansion coercive:

  • Medicaid funds are the largest grants that states receive, comprising as much as 20 percent of state budgets;
  • There were no limits on the Secretary’s enforcement power, unlike some previous expansions;
  • There was no “fall-back” plan if states chose not to participate, unlike the provision for health insurance exchanges;
  • The addition of childless, nonpregnant, nondisabled adults, who had always been excluded from Medicaid eligibility, was really a new, completely different program, “a difference in kind, not in degree.” As we have discussed before, Medicaid and the cash assistance programs originally were directed at the “deserving” poor, that is, children deprived of parental support, the disabled and the elderly.

Justices Ginsburg and Sotomayor found the expansion not coercive:

  • The federal government would pay 100 percent of the states’ costs, gradually decreasing to a minimum of 90 percent in 2019. The unprecedented increase in the federal medical assistance percentage (FMAP) over the ordinary match rate is actually a generous gift.
  • From the very beginning, Congress has always reserved the right to change, amend or repeal the programs authorized under the Social Security Act. It has enacted major expansions before, at greater cost to the states. such as the addition of pregnant women and children up to age 6 with incomes up to 133 percent of FPL as mandatory beneficiaries.
  • The purpose of Medicaid, to provide the needy with access to health care, is unchanged.
  • States have the option to withdraw from the federal program and use their money to run their programs as they see fit. That the decision may be politically unpopular does not mean the conditions are coercive.

Nowhere does PPACA threaten states with the loss of all Medicaid funding if they fail to add the new eligibility group or the new benefit. The potential sanctions are found in Soc. Sec. Act Sec. 1904. That statute provides that if the HHS Secretary finds that a state plan, either as written or as administered, does not comply with title XIX of the Social Security Act, the Secretary must give notice and the opportunity for a hearing. If, after the hearing, the state is found to have violated the Act, the Secretary may decide to make no further payments to the state for Medicaid or, in his or her discretion, to limit the payments to the categories or parts of the state’s Medicaid plan that comply with the law until the noncompliance is corrected.

It doesn’t address the problem of a state’s noncompliance by failing to expand. But the statute has been unchanged since the enactment of Medicaid in 1965. No state has ever lost all its Medicaid funding or been expelled from the Medicaid program. Rather, the agency has pulled funding when a state agency refused to comply with the law that applied when the funds were granted, as it did with Texas. And CMS recently adopted regulations easing the requirements for states to repay disallowed expenditures. So the threat of pulling entire Medicaid programs is more remote than the “gun to the head.”

Seven justices—not only the conservative four, but also Chief Justice Roberts and Justices Breyer and Kagan— believed the threat rendered the Medicaid expansion unconstitutional. The four dissenters would have held the entire expansion invalid. Then, having removed two essential provisions of the law, they would have stricken all of PPACA, even the provisions that have little or nothing to do with either the individual mandate or Medicaid expansion, because there were so many items inserted in exchange for votes that Congress would not have enacted any of them without enacting them all. They did not address the principle that courts should strike down statutes as written only as a last resort, but accused the majority of rewriting the statute.

So why did it survive? In one word: severability, or, as Congress put it in 1935, “separability.” Soc. Sec. Act Sec. 1103 states, “If any provision of this chapter, or the application thereof to any person or circumstance, is held invalid, the remainder of the chapter, and the application of such provision to other persons or circumstances shall not be affected thereby.”  In other words, don’t apply the Act in ways that would be unconstitutional, but keep it for all of the situations where it’s valid. That’s exactly what Chief Justice Roberts did.

He and Justices Breyer and Kagan applied section 1103 Act to limit the coercion on states; they ruled that states may not lose federal funding for their existing Medicaid programs if they don’t meet the new conditions. Justices Ginsburg and Sotomayor agreed that if the law was unconstitutional, the solution was to limit its application not to strike it down.