Affordable Care Act Litigation - Texas v. United States

• The Trump administration unveiled its argument for striking down the entire Affordable Care Act (ACA) in a filing with the 5th Circuit Court of Appeals. The 5th Circuit will hear the appeal of a Texas judge’s December 2018 decision that without the individual mandate penalty, the entire ACA is unconstitutional. The argument may be generally summarized as follows:
  • In 2010, Congress included findings in the ACA that the individual mandate was key to the functionality of protections for those with pre-existing conditions. Congress has not repealed those findings.
  • In 2017, Congress eliminated the penalty for being uninsured, but left in place the requirement to have insurance and maintained protections for those with pre-existing conditions.
  • The Department of Justice (DOJ) argues that Congress’ 2017 action is not evidence of Congressional intent and that the findings from 2010 override the 2017 legislation. DOJ is extending this argument to the entire law, despite the fact that the findings are specific to the mandate and pre-existing condition protections.
•  The coalition of state Attorneys General defending the law has three weeks to respond to this brief. Oral arguments are scheduled for the week of July 8th. Most legal experts anticipate the Texas judge’s opinion will be overturned and the Fifth Circuit will rule that the individual mandate penalty is severable from the rest of the ACA, allowing the remainder of the law to stand. In this instance, most experts anticipate the case will not be appealed to the Supreme Court. However, if the Fifth Circuit upholds the Texas judge’s opinion, it is likely the Attorneys General would appeal to the Supreme Court. Experts believe the Supreme Court would then be likely to grant cert and hear the case, in part because such a decision would set up a circuit split, the Eleventh Circuit has previously ruled that the individual mandate is severable from the rest of the law. A split in circuit court rulings is one factor the Supreme Court considers in granting cert. It is possible the Supreme Court could consider the case during the term beginning in the fall of 2019.

Association Health Plans

• On April 26, 2019, the Department of Labor (DOL) appealed a federal court’s decision that the Trump administration’s rule promoting association health plans (AHPs) violates the law. The rule, released last summer, expanded the definition of employer under the Employee Retirement Income Security Act (ERISA) to include sole proprietors, allowed unrelated businesses to join together to sponsor AHPs within states, and allowed related business to sponsor AHPs across state lines.
• On April 29, 2019, DOL issued guidance indicating it will not take enforcement action against AHPs operating in good faith under the summer 2018 rule. Under the ACA’s guaranteed renewability requirement, issuers may renew AHP coverage at the end of the current plan year if the renewal coverage complies with market requirements for the employer’s size (i.e. for small group plans, essential health benefits, premium rating rules, etc.). Likewise, DOL will not take enforcement action against states that permit continued operation of AHPs meeting these conditions.
• Meanwhile, members of the House and Senate introduced legislation to give statutory protection to the AHP regulation. The legislation, led by Senator Mike Enzi (R-WY) and Representative Tim Walberg (R-MI), would ensure the AHP pathway outlined in the final rule remains available regardless of the outcome of the legal challenge. Committee hearings have not been scheduled.

CBO Issues Report on Single-Payer Health Care

• A report from the Congressional Budget Office (CBO) on single-payer health care asks more questions than it answers. Because CBO was not analyzing a particular proposal, the report instead addressed design considerations for establishing a single-payer system. Among these are determining what is covered and what discrete services within each benefit category are covered; whether cost-sharing be required and at what levels; and many more. CBO indicates estimating the cost of such a change without these details is impossible, and that even with such details, transitioning to a single-payer system would be so disruptive to the economy as to make meaningful cost estimates very difficult. But the report includes enough talking points to keep both sides of the debate busy as presidential campaigns move forward.