Insurance premium subsidies will continue to flow to Americans in all states under the Affordable Care Act, the U.S. Supreme Court decided 6-3 in King v. Burwell on Thursday.
The justices sided with the Obama administration in the historic decision, saying the healthcare law allows Americans in all states—not just those that established their own exchanges—to receive the subsidies.
Chief Justice John Roberts and Justice Anthony Kennedy were the swing votes in the case, siding with the more liberal justices.
“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” Roberts wrote in the opinion. “If at all possible, we must interpret the act in a way that is consistent with the former, and avoids the latter.”
An estimated 6.4 million Americans receive the subsidies in the 34 states that don’t have their own exchanges, in many cases relying on them to afford their health insurance, according to HHS.
Many had worried a decision in the opposite direction would lead to a dramatic spike in the nation’s uninsured and the disintegration of the healthcare law itself.
The challengers in the case pointed to one part of the law that says subsidies are available only to those who enroll through an “exchange established by the state.” The federal government, however, argued that the law’s purpose is clear in allowing Americans in every state to be eligible for subsidies and that other parts of the law indicate that.
In siding with the Obama administration Thursday, the justices refused to consider the phrase “exchange established by the state” in isolation. Instead, they looked at the broader context and structure of the law.
“In this instance, the context and structure of the act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase,” Roberts wrote in the opinion.
He wrote the subsidies “are necessary for the federal exchanges to function like their state exchange counterparts, and to avoid the type of calamitous result that Congress plainly meant to avoid.”
The Internal Revenue Service has interpreted the law to allow subsidies in all states, but the four individual plaintiffs in the case said that interpretation was wrong. The Supreme Court, however, refused to entertain that idea in their opinion.
The justices declined to apply what’s known as the Chevron doctrine, an oft-cited precedent that says federal agencies must follow the letter of the law where the law is clear. Under the doctrine, if a law is ambiguous, courts must defer to a government agency’s reasonable interpretation of it.
The justices said in their opinion it’s extremely unlikely Congress would have delegated interpretation of the law to the IRS, so the Chevron doctrine wasn’t appropriate for this case.
“Had Congress wished to assign that question to an agency, it surely would have done so expressly … It is especially unlikely that Congress would have delegated this decision to the IRS, which has no expertise in crafting health insurance policy of this sort,” Roberts wrote in the opinion.
Some had speculated that if the court had used the Chevron doctrine to decide the case—finding the language of the law ambiguous and allowing the IRS’ interpretation—future presidential administrations could have re-interpreted the statute and pulled the plug on subsidies.
Roberts didn’t seem to want to expose the law to that type of uncertainty by applying the Chevron doctrine, said Ankur Goel, a partner with McDermott Will & Emery who co-authored an amicus brief siding with the government on behalf of the American Public Health Association.
“Here, it’s really because of the magnitude of the issue, the magnitude of the dollars that are being expended,” Goel said. “To say different administrations could change the ruling didn’t seem to Justice Roberts like the right answer.”
Last summer, a 4th U.S. Circuit Court of Appeals panel in Virginia unanimously ruled in favor of the administration in King v. Burwell, saying subsidies should be allowed in all 50 states.
Dissenting on the decision were Justices Antonin Scalia, Samuel Alito and Clarence Thomas.
Chip Kahn, CEO of the Federation of American Hospitals, called the decision “welcome news” in a statement Thursday.
“The decision secures healthcare coverage for millions of Americans,” Kahn wrote. “Protecting patient coverage provides peace of mind to so many and helps ensure their access to the needed care at the right time.”
Rich Umbdenstock, CEO of the American Hospital Association, called the decision a “significant victory.”
“In the short time the subsidies have been available, hardworking people who are sick, need care for chronic conditions or want preventive care have been able to seek care more easily,” Umbdenstock said in the statement. “Most significantly, providing access to primary and preventive care helps improve the health and well-being of individuals, family and communities.”
The three dissenting justices, however, criticized the majority for performing “somersaults of statutory interpretation” in their dissent, written by Scalia.
Scalia said King v. Burwell, along with the last Supreme Court opinion over the ACA in 2012, “will publish forever the discouraging truth that the Supreme Court of the United States favors some laws over others, and is prepared to do whatever it takes to uphold and assist its favorites.”
Scalia argued that the phrase “established by the state” is clear. Context matters, he said, but should be used as a tool for understanding laws, “not an excuse for rewriting them.” He added that the context of the ACA actually undermines the majority’s reading.
“Words no longer have meaning if an exchange that is not established by a state is ‘established by the state,’ ” Scalia wrote. “It is hard to come up with a clearer way to limit tax credits to state exchanges than to use the words ‘established by the state.’ ”
But Tim Jost, law professor at Washington and Lee University and a prominent ACA proponent, countered that the majority made the only logical decision.
“It was obvious from the beginning that Congress intended the federally facilitated as well as state exchanges to grant premium tax credits, and if the court was willing to read the statute as a whole and not just focus on four words, it could not avoid that conclusion,” Jost said.
Others, however, agreed with Scalia.
“In the end, the court once again had to rewrite the plain text of Obamacare, in the words of Justice Scalia, to save the Affordable Care Act,” said Josh Blackman, an assistant professor at South Texas College of Law who filed an amicus brief in the case on behalf of the Cato Institute siding with the challengers.
Blackman added that it was curious that Roberts pointed out in his opinion that key parts of the law were written behind closed doors rather than through the traditional legislative process. Roberts also noted that much of the act was passed using a complex budgetary procedure known as reconciliation, which limited chances for debate and amendment.
“Basically this law was not passed in the manner that was appropriate for such a significant piece of legislation,” Blackman said. “The court said we’re not going to hold them to it.”
President Barack Obama remains optimistic that the Affordable Care Act will remain the law of the land for years to come despite a pending Supreme Court decision that could derail the legislation.
Before the end of June, the high court is expected to issue a ruling in King v. Burwell, in which ACA opponents claim that only states with their own exchanges are eligible to receive subsidies. If the court rules against the administration, an estimated 6.4 million Americans in states using the federal exchange would lose subsidies totaling $1.7 billion, according to the Kaiser Family Foundation.
President Obama didn’t explicitly address the pending case during his remarks at the closing of the Catholic Hospital Association Conference, but spoke about the law being around for years to come, to the point that his own daughters would have coverage options after they turned 26.
“There’s something deeply cynical about the ceaseless partisan attempts to roll back progress,” Obama said during the speech in Washington D.C. Tuesday. “I understand people being skeptical or worried before the law was passed and there was no reality to examine. But now that we can see millions of people having health care—and all the bad things that were predicted didn’t happen—you’d think it was time to move on.”
He went on to say that most people who have obtained coverage as the result of the law are generally happy with their care and the premiums they pay, and noted they would have been as much as $1,800 more today had trends over the decade before the ACA passed continued.
“In the years to come, countless Americans who can now buy plans that are portable and affordable on a competitive marketplace will be free to chase their own ideas, unleash new enterprises across the country, knowing they’ll be able to buy health insurance,” Obama said.
The CHA, which is celebrating it’s 100th anniversary during this week’s conference, was one of Obama’s most reliable allies in getting the Affordable Care Act passed. During his speech, Obama said he could not have gotten the law passed without CHA President and CEO Sister Carol Keehan. Keehan wrote in a 2013 Modern Healthcare op-ed that the law would help Catholic systems advance their mission of caring for the underserved.
Federal health officials are stepping up efforts to stop practices they’re call “data-blocking” with a new push to collect stories from patients, doctors and others whose health data requests were stymied.
The CMS has created a new e-mail address— email@example.com — for these reports and announced it during the Health Datapalooza conference in Washington Tuesday.
“I want to hear and understand information-blocking practices you’ve experienced,” acting CMS Administrator Andy Slavitt said at the conference. “Data blocking will not be tolerated.”
Officials plan to act on the reports e-mailed to them, Slavitt said. But the agency has few tools at its disposal to do so.
In April, HHS’ Office of the National Coordinator for Health Information Technology released a report indicating widespread business practices by providers and health information vendors that intentionally prevent the easy flow of electronic health records. Practices include charging exorbitant fees to access medical records and simply preventing one company from accessing lines of codes needed to talk to another system.
Karen DeSalvo, national coordinator for health IT, acknowledged during an address at Datapalooza Tuesday that the problem is complicated, so solving it will be complicated, too. “You can’t just point your finger at one part of the system,” DeSalvo said. “Everybody’s got a hand in it.”
One obstacle, for example, is that health IT vendors say they must protect proprietary standards. In response, the ONC issued an Interoperability Standards Advisory this year.
“We’re going to be calling on the private sector to commit to (openness) with us in a more public fashion—to say that (blocking is) not OK,” DeSalvo said.
Several health IT vendors have banded together to make their products interoperable with one another. The not-for-profit CommonWell Health Alliance has snagged every major EHR developer except Epic Systems Corp.
Still, getting a critical mass of the private sector on board will require the business community to give up an important competitive edge.
Craig Brammer previously served on the senior leadership team pushing for open and portable electronic heath records at the ONC, and he experienced plenty of pushback from the industry in that job. Brammer now works at the Health Collaborative in Cincinnati, where every major health system in the region collaborates and shares data to improve health outcomes in the community.
“If you’re a hospital CEO in the past, you didn’t think about how am I going to make it easier for my customers to go to my competitor,” he said. “It makes perfect economic sense to be where we are today.”
Este Geraghty understands the mindset of a corporation torn between openness and a need to protect proprietary data. Geraghty is chief medical officer at Esri, a company that develops geographic information-systems software.
Geraghty manned a booth this week at Datapalooza, showing off data-mapping tools her company has used to improve health outcomes. Her team used data from Children’s National Hospital in Washington and other publicly available information to help solve the mystery of patients coming to the hospital with scald burns.
Maps overlaid on patient admission data showed the scalds were coming from a particular part of the city with a high proportion of native Spanish speakers. Neighborhoods were blanketed with Spanish-language brochures urging residents to turn down their water heater settings, and scalding incidents dropped, Geraghty said.
“We think of ourselves, in some ways as the ultimate data-integrator,” Geraghty said. “We are promoters of open data, yet we understand why private companies find value in proprietary data sets.”
Esri shares data, but it also sells about 10,000 data variables, she said.
Getting free-flowing heath information can be a challenge even in a country with a national health system, like the United Kingdom.
Tim Kelsey, national director for patients and information at the National Health Service England, told his American colleagues that preventing companies there from claiming patient health data was proprietary required outlawing it. By law, the entire healthcare system must identify patients using a single number, allowing for seamless sharing.
A focus on improving care helped the new, more open standards win acceptance, Kelsey said. “It’s fundamental to how we ensure early diagnosis of cancer because we are able to track outcomes and experience of patients across the pathway of their care.”
The CMS also announced during Datapalooza that it will make Medicare data accessible to entrepreneurs that previously was available only to researchers. Slavitt asked innovators not to use the data merely to create cool gizmos for the nation’s healthiest and wealthiest but also to help the sickest Americans. “We are aiming directly at shaking up healthcare innovation,” he said.
The burgeoning group of official and unofficial GOP presidential candidates all agree on one thing when it comes to healthcare policy: They really, really hate Obamacare.
Former Florida Gov. Jeb Bush called the law that has reduced the number of uninsured Americans by nearly 17 million a “monstrosity.”
Dr. Ben Carson, the retired African-American pediatric neurosurgeon, said the Affordable Care Act is “the worst thing that has happened in this nation since slavery.”
But differences are emerging on the candidates’ approaches to strengthening the long-term finances of Medicare, with former Arkansas Gov. Mike Huckabee bucking Republican orthodoxy. That could become an important fissure in the GOP presidential primary campaign.
The discussion about the ACA is unlikely to gain more nuance during the GOP primaries. That’s because there’s no political payoff to saying anything but horrible things about President Barack Obama’s signature healthcare reform law, which remains deeply unpopular among Republican activists. “The only way a Republican gets in trouble is if they say they want to somehow make the ACA work better,” said Robert Blendon, an expert on healthcare politics at Harvard University. “There’s just no constituency in Republican primaries for that position.”
Some candidates, while providing few details, have offered clues on their vision for repealing and replacing the ACA. Sen. Marco Rubio (R-Fla.) has proposed a three-part plan including premium tax credits for individuals that he says would be comparable to the tax breaks for employer-based health plans.
He also backs a menu of long-standing conservative policy nostrums, including allowing insurers to sell plans across state lines and expanding health savings accounts.
Bush said in March that the government’s primary role in healthcare should be to provide access to high-deductible, “catastrophic” coverage. He advocates replacing the ACA “with a model that is consumer-directed, where consumers, where patients, have more choices … where the subsidies, if there were to be subsidies, are state-administered … where people have more customized types of insurance based on their needs.”
But Bush’s tenure as a well-paid board member for Tenet Healthcare Corp.—which has strongly supported coverage expansion efforts under the ACA—has prompted skepticism among some conservatives about his anti-Obamacare bona fides. Bush stepped down from the board in December, when he began actively exploring a presidential campaign.
The GOP field, with two major exceptions, is also unified in rejecting the ACA’s Medicaid expansion. Louisiana Gov. Bobby Jindal and Wisconsin Gov. Scott Walker have boasted about their refusal to take the federal dollars, which hasn’t been broadly popular in their own states. In contrast, New Jersey Gov. Chris Christie and Ohio Gov. John Kasich supported Medicaid expansion in their states.
Kasich, who has strongly signaled his interest in running, has been a passionate evangelist for Medicaid expansion, which has angered many in the GOP. “Put yourself in the shoes of a mother and a father of an adult child that is struggling,” he told a Republican legislator during his state’s debate over expansion in 2013. “Walk in somebody else’s moccasins. Understand that poverty is real.”
Differences also are emerging over Medicare. Christie has made major Medicare and Social Security restructuring the centerpiece of his agenda, proposing to gradually raise the Medicare eligibility age to 69 and hike premiums for seniors with incomes above $85,000. His proposal is seen as an effort to revive his scandal-marred presidential prospects, but it could alienate the GOP base of older voters.
Last month, Bush and Rubio also came out in favor of raising the retirement age for future Medicare beneficiaries. “The math is unmistakable,” Rubio said. Two other declared candidates, Sens. Rand Paul (R-Ky.) and Ted Cruz (R-Texas), have long backed gradually raising the Medicare age. None of them have addressed the Congressional Budget Office’s 2013 finding that raising the Medicare age to 67 would have only a modest effect on the federal deficit because it would lead to higher spending on Medicaid and ACA premium subsidies.
But Huckabee has staked out a sharply different, populist stance on Medicare, vowing to protect the program from cuts. “I’ll never rob seniors of what our government promised them and even forced them to pay for,” he said last week.
That could cause headaches for other Republican candidates because most have embraced the ambitious entitlement restructuring agenda laid out by Rep. Paul Ryan (R-Wis.). Medicare is highly popular with voters, especially seniors, and Democrats effectively pummeled the GOP ticket of Mitt Romney and Paul Ryan on the Medicare issue during the 2012 president campaign.
Florida Gov. Rick Scott Tuesday followed through on his threat to file a lawsuit alleging HHS is illegally trying to coerce the state into expanding Medicaid eligibility by threatening to end funding for hospitals that care for low-income patients.
As part of a federal Medicaid waiver, Florida has received between $1 billion and $2 billion annually since 2005 in low-income pool funding, which helps safety net providers with uncompensated-care costs. That waiver is set to expire in June.
Earlier this month, the CMS informed the state that “the future of the (low-income pool), sufficient provider rates and Medicaid expansion are linked.” The Obama administration has delivered a similar message to other states that have low-income funding under Medicaid waivers and have decline so far to expand Medicaid eligibility under the Affordable Care Act.
Florida’s Senate supports expansion, which would provide coverage to as many as 800,000 individuals. However, House leaders and Scott do not. The split on Medicaid has led to an impasse on the state’s budget, with the House adjourning two days before the end of the legislative session after feeling a compromise could not be reached. State leaders will have to convene a special session to address the budget before the next fiscal year begins July 1.
Scott and Florida Attorney General Pam Bondi have asked Paul Clement, the attorney who successfully argued that the Obama administration could not coerce states into Medicaid expansion in NFIB v. Sebelius in 2012, to represent Florida in the case.
“President Obama’s sudden end to the Low Income Pool (LIP) healthcare program to leverage us for Obamacare is illegal and a blatant overreach of executive power,” Scott said in a statement. “This sort of coercion tactic has already been called illegal by the U.S. Supreme Court.”
The CMS said in its letter to Florida officials >and has communicated to other states, including Texas, Kansas and Tennessee, that the low-income pool should not pay for costs that would be covered if the state expanded Medicaid eligibility.
The administration says the extension of the low-income pool is not a quid pro quo for Medicaid expansion but also emphasizes that the funding is part of an optional and temporary program established under a Medicaid waiver granted by the CMS.
Legal experts are divided about the governor’s prospects for success. They note the Supreme Court’s decision on NFIB v. Sebelius expressly prohibited HHS from taking away all of a state’s federal Medicaid funding in order to get it to expand Medicaid. Some legal observers consider it a stretch to say withholding low-income pool funding presents a similar threat.
“The decision to expand Medicaid, or not, is a state decision,” CMS spokesman Aaron Albright said in an e-mail. Albright said the agency does not comment on litigation.
“We will work with Florida and each state that has an uncompensated care pool regardless of its Medicaid expansion status, to support access to health care for low-income residents that works for individuals, hospitals and taxpayers, taking into account the state’s specific circumstances,” Albright said.
Rick Scott, et al v. HHS was filed in U.S. District Court in Pensacola.
Jim Nathan, CEO of Fort Myers, Fla.-based Lee Memorial Health System, is watching his state’s ferocious political battle over Medicaid expansion with growing concern. The stakes are high for his system’s three hospitals.
Under a federal Medicaid waiver that expires in June, Florida receives between $1 billion and $2 billion annually to help its safety net providers with uncompensated-care costs. The Obama administration recently made clear that it’s tying possible renewal of the funding to the state expanding Medicaid coverage to nearly 800,000 adult residents with incomes up to 138% of the federal poverty level. Florida’s Republican-led Senate supports the administration’s position, while Gov. Rick Scott and the GOP-led House oppose it.
The CMS has delivered the same message to other non-expansion states that receive similar Medicaid supplemental funding, including Kansas, Tennessee and Texas, detailing criteria for receiving continued dollars. It also contacted five other states, including Arizona and California, that receive such funding and have already expanded Medicaid.
The moves signal a new, tougher stance by the administration in its ongoing campaign to persuade Republican-led states to expand Medicaid under the Affordable Care Act.
The latest actions by HHS Secretary Sylvia Mathews Burwell and acting CMS Administrator Andy Slavitt suggest the administration may go as far as withholding the extra funding—at the risk of causing disruption of safety net care—to get people covered through the expansion while President Barack Obama is still in office.
U.S. Sen. Bill Nelson (D-Fla.) said Burwell considers the low-income pool “paying two times for the same thing” because states can receive federal Medicaid expansion funds to provide coverage for the same population.
“CMS used to be a lot more accommodating and flexible with states as they tried to achieve the same goals,” said Philo Hall, an attorney at Epstein Becker & Green and former associate director for health on the White House Domestic Policy Council. “But in these final two years of the Obama administration, they have a more aggressive leadership team.”
The political stakes are high. It’s unclear which party voters would blame in the 2016 elections if states that refuse to expand Medicaid lose their uncompensated-care funding, causing patients to lose access to coverage and possibly forcing hospitals to close. “I do not think that the House or the governor want this blood on their hands when this cart goes into the ditch because people will not come to the table … over healthcare funding,” Florida Senate Budget Committee chairman Tom Lee said last week during a Senate session.
In Florida, Nathan and other hospital leaders are torn because they strongly support a Senate bill that would expand Medicaid. But they don’t want to risk losing the low-income pool (LIP) funding if Medicaid expansion dies. Nathan’s system receives about $48 million a year in pool funding, which helps subsidize its regional trauma center, complex children’s services, low-income clinics and medical-residency training clinic. “We are very dependent on LIP funding,” he said.
The fight has expanded to Republican-led Kansas, Tennessee and Texas, where GOP leaders adamantly oppose any Obamacare programs. Florida and Texas are the big enchiladas, because expanding Medicaid in those states would extend coverage to nearly 2 million uninsured people. “We told states that our letter to Florida articulates key principles CMS will use in considering proposals regarding uncompensated-care pool programs in their states, but that discussions with each state will also take into account state-specific circumstances,” CMS spokesman Aaron Albright said.
The administration’s aggressive linkage of uncompensated-care funding to Medicaid expansion has drawn varied responses.
“It’s blackmail,” said Robert Weiner, a Democratic strategist and former White House spokesman. “I don’t think CMS needs to do this.”
“They are playing with fire in Florida (because) that state is so important during presidential elections,” said Bradley Blakeman, a Republican strategist and principal at the 1600 Group, a consulting firm.
But Cindy Mann, who recently stepped down as the CMS’ Medicaid chief, said the administration’s position represents well-established policy on Medicaid waivers. “One of the principles of the uncompensated-care pool waivers is that the funds are used to cover care for people … who don’t qualify for Medicaid,” said Mann, now a law partner at Manatt, Phelps & Phillips. “So it is highly relevant to consider (Medicaid) expansion, as the Affordable Care Act provides an avenue of coverage.”
The Obama administration’s new approach is likely to face legal attacks. Scott has promised to sue, arguing that the linkage violates a 2012 U.S. Supreme Court decision that the federal government cannot make a state’s Medicaid funding contingent on expanding the program under the ACA. Texas Republican Gov. Greg Abbott said last week that he would support Scott’s lawsuit. “The Supreme Court made it very clear that the Constitution does not allow the federal government to use these coercive tactics against the states,” Abbott said in a written statement. “Medicaid expansion is wrong for Texas.”
Legal experts differed on Scott’s chances of prevailing in the courts. One issue is that the Supreme Court ruled based on the threat of withholding all federal Medicaid funding from a state, not the relatively small portion from a discretionary waiver program. “There is no precedent of where to draw the line,” said Jesse Witten, a partner at Drinker Biddle & Reath. “It’s less than a full-blown shutdown of the Medicaid program, but (it’s) significant.”
Some provider groups say they feel caught in the middle in the current showdown. They have tried everything over the past several years to get their Republican governors and legislative leaders to expand Medicaid. But they warned that the new federal pressure could prove counterproductive.
“The reality is, we’re just not going to get there for a while, (though) maybe someday,” said Craig Becker, president of the Tennessee Hospital Association. His state’s Republican governor, Bill Haslam, recently tried to pass a Medicaid expansion model to extend coverage to about 200,000 Tennesseans, but it was blocked by Senate Republicans. The state receives about $500 million a year in federal uncompensated-care funding. “If (the CMS) is going to do this, it’s going to be terribly disruptive,” Becker said.
The National Rural Health Association plans to reach out to state hospital associations to pressure the administration into backing down, said Maggie Elehwany, the group’s vice president for government affairs. “This draconian threat leaves rural patients as the ones who are going to suffer,” she said.
In Texas, hospital leaders were split on the administration’s approach, given state GOP leaders’ implacable opposition to Medicaid expansion. “To tie (uncompensated-care funding) to Medicaid expansion would hurt the vulnerable population (it) was created to help,” said John McWhorter, president of Baylor University Medical Center at Dallas.
But George Masi, CEO of Harris Health System, the major safety net provider in Houston, said he supports the administration’s efforts to push Texas to expand Medicaid. “Nobody wins in a scenario where we aren’t providing care to those who require it,” he said.
For now, Medicaid officials in Kansas, Tennessee and Texas say they aren’t too worried because their waiver expirations are a year or more away. Kansas’ program expires in January 2018, Tennessee’s in June 2016 and Texas’ in September 2016.
In Florida, however, the threat is dire. “We must stress the importance of maintaining LIP funding for the short term,” said Jim Burkhart, CEO of Tampa General Hospital. “The loss of $86 million in LIP funding would seriously impact our ability to maintain our mission.”