In a brief Order issued on December 5, 2016, in U.S. House of Representatives v. Burwell, the U.S. Court of Appeals for the D.C. Circuit granted the motion filed by the U.S. House of Representatives (House) seeking to put the lawsuit challenging the Affordable Care Act’s (ACA’s) cost-sharing subsidies on hold until the Trump administration takes over.  In granting the stay, the court also directed the parties to file motions to govern further proceedings for the case by February 21, 2017.  The Order was issued by the three judge panel hearing the case, Judges Henderson, Tatel and Srinivasan.  Judge Henderson was appointed by President George W. Bush, Judge Tatel by President Clinton and Judge Srinivasan by President Obama.

As we have discussed in prior posts, the House is asking the court to bar the issuance of cost-sharing subsidies to eligible ACA policyholders unless and until Congress appropriates the funds. The ACA cost-sharing reduction program reduces co-pays, co-insurance and deductibles for individuals with incomes of up to 250% of the federal poverty line who enroll in “Silver” plans through the healthcare exchanges. If the lower court decision agreeing with the House position is affirmed, one of the central features of the ACA making insurance and healthcare coverage affordable to millions of Americans would be removed.

In a motion filed after the November election, the House asked the court to put the case on hold to give the incoming Trump administration the opportunity to decide whether to amend, repeal or replace the ACA. According to the motion, representatives of the House and the Trump transition team are in discussions regarding options that could resolve the matter.

What lies in store for the ACA is being closely watched.  Few programs have been as controversial, have had such broad impact and great consequence.  The new administration, Congress and the many stakeholders will be debating and seeking to influence future policy directions.  The details of what is broadly described by terms such as repeal, repeal and replace, repeal and delay – will determine the future of healthcare for years to come.

The Department of Justice (DOJ) has filed its response to the motion filed on behalf of the U.S. House of Representatives (House) seeking to put the lawsuit challenging the Affordable Care Act’s (ACA’s) cost-sharing subsidies on hold until the Trump administration takes over. Not surprisingly, the DOJ strongly opposes the House request.

In U.S. House of Representatives v. Burwell, the House is asking the court to bar the Obama administration from issuing cost-sharing subsidies to eligible ACA policyholders unless and until Congress appropriates the funds. The ACA cost-sharing reduction program reduces co-pays, co-insurance and deductibles for individuals with incomes of up to 250% of the federal poverty line who enroll in “Silver” plans through the healthcare exchanges. The administration has argued that the House does not have legal standing to bring its suit and in any case, the ACA supports payment of the cost-sharing subsidies. The district court agreed with the House and the administration has appealed the rulings to the Court of Appeals for the D.C. Circuit.

In a motion filed after the November election, the House is asking the court to put the case on hold to give the incoming Trump administration the opportunity to decide whether to amend, repeal or replace the ACA. According to the motion, representatives of the House and the Trump transition team are in discussions regarding options that could resolve the matter.

In its response opposing the hold request, the DOJ notes that the monthly subsidy payments have been made since 2014 and Congress has taken no legislative action to restrict the ongoing payments. The DOJ says the House suit is unprecedented and raises separation of powers concerns. According to the DOJ, the case “meddl[es] in the internal affairs of the legislative branch” by allowing one House of Congress to circumvent the legislative process. The DOJ states that if the House wants to eliminate the subsidies it should enact legislation, which would require the House to obtain the agreement of the Senate, present the resulting measure to the President, and to accept responsibility for the results.

The DOJ says that the House is seeking to decide how laws will be executed – but that is the job the constitution assigns to the executive branch. Further, the DOJ argues that the House is asking the court to go beyond the judicial branch’s constitutional authority as well. According to the DOJ, the election did not change these constitutional principles and the incoming administration likely won’t agree that the House should be able to alter the way the executive branch administers federal law.

Beyond the procedural concerns, the DOJ states that the lower court adopted a misguided interpretation that “would thwart the structure of the ACA’s carefully calibrated system of subsidies, severely disrupt the insurance markets, and – perversely – lead to substantially greater federal expenditures.” The DOJ referred to amicus briefs filed by the insurance industry expressing concerns about the dire impact sudden removal of the subsidies could have on the insurance market.

The DOJ points out that the ACA and its subsidy provisions remain the law of the land and requiring the House to file its appellate brief on the agreed upon schedule will not constrain the incoming President, as the House asserts. Denying the motion will simply allow the appeal to proceed in an orderly and timely fashion.

The DOJ did offer a way out for the House to avoid proceeding with the case, stating that the administration has no objection if the House wishes to dismiss the case and if the court vacates the lower court decision that agreed with the House position. With such a resolution being highly unlikely, the House’s request is now teed up for the court to rule on the motion.

We will continue to follow this case so check back for further developments.

A link to the DOJ response is below:

http://premiumtaxcredits.wikispaces.com/file/view/DCC%20Govt%20op%20to%20abeyance%20mo.pdf/600275754/DCC%20Govt%20op%20to%20abeyance%20mo.pdf

President Obama recently published an article in the Journal of the American Medical Association, JAMA, discussing his signature legislative achievement, the Affordable Care Act (ACA). The President considers ACA’s comprehensive reforms to be the most important healthcare legislation enacted in the United States since the creation of Medicare and Medicaid in 1965.

As he prepares to leave office, the President reviews the factors influencing his decision to pursue health reform, summarizes data on the law’s impacts, recommends further action to improve the healthcare system, and discusses public policy lessons learned.

The President credits the ACA as having helped to improve the US healthcare system. He points out that the uninsured rate has declined by 43%, from 16.0% in 2010 to 9.1% in 2015. He also credits the law for improved access to care, providing financial security through reduction in debts sent to collection, and better population health. The President also points to benefits from trends in provider compensation, noting that an estimated 30% of traditional Medicare payments now flow through alternative payment models.

Noting this progress, the President suggests ways that remain to further improve the healthcare system. He recommends continuing to implement the programs and policies in the law, such as the health insurance marketplaces, delivery system reform, and providing and increasing federal financial assistance for marketplace enrollees.

While prescription drug cost reform was not a focus of the ACA, the President believes that cost increases must be addressed. He recommends that Congress require more transparency around manufacturers’ actual production and development costs, increase rebates manufacturers are required to pay for drugs prescribed to certain Medicare and Medicaid beneficiaries, and give the federal government the authority to negotiate prices for certain high-priced drugs.

Significantly, President Obama also suggests introducing a public plan option in areas that lack competition in the individual insurance market. The public option was considered but not included in the ACA in favor of Consumer Operated and Oriented Plans, or CO-OPs. As we have addressed in this Blog, the CO-OP program has been unsuccessful in many of the states where CO-OPs were established. However, the President believes that costs could be better controlled by public plans operating alongside private insurers in areas of the country where competition is limited.

While recognizing that the law can be improved and supporting efforts to do so, President Obama notes much time has been absorbed by the more than 60 attempts to repeal parts of all of the ACA. Hyperpartisanship and the financial power of special interests are viewed as obstacles to progress. However, he concludes with an optimistic assessment that the ACA demonstrates that positive change addressing complex challenges is achievable.

President Obama’s article can be read in its entirety at the following link:

http://jama.jamanetwork.com/article.aspx?articleid=2533698

 

In a suit brought by the U.S. House of Representatives challenging the administration’s implementation of the Affordable Care Act (ACA), a federal district court for the District of Columbia ruled in a major decision that the administration exceeded its authority, and in doing so violated the Constitution, by funding ACA’s cost-sharing reductions program with funds that had not been specifically appropriated for that purpose by Congress.  The ACA cost-sharing reduction program reduces co-pays, co-insurance and deductibles for individuals with incomes up to 250% of the federal poverty line (FPL), who enroll in “Silver” plans through the healthcare exchanges.

The judge, Rosemary M. Collyer, enjoined the administration from making any further reimbursements under the cost-sharing reduction provisions of the ACA.  The decision is not expected to have an immediate impact as the judge stayed the injunction pending appeal, and the administration has announced that it will appeal.  Further, the court did not suggest that the injunction would be applied retroactively, so those health insurance issuers that have participated on the exchanges to date will not be required to repay amounts previously received under Section 1402.

That appeal will be to the United States Court of Appeals for the DC Circuit.  If the case tracks other ACA challenges, based on the composition of the DC Circuit, there is a significant possibility that Judge Collyer’s decision will be overturned.  The next level of appeal is to the U.S. Supreme Court, where once again, a major case involving a challenge to the ACA could be heard.  When and whether the Supreme Court would hear the case is uncertain.  When and by whom the current vacancy on the Supreme Court is filled, could impact the disposition of the case.

We will continue to follow developments in this important case, so check our blog for updates.

A more detailed summary of Judge Collyer’s analysis is below:

Background

U.S. House of Representatives v. Burwell was filed by the House of Representatives (House) in late 2014, alleging that the administration usurped the House’s legislative authority and caused the House to suffer institutional harm.  The House asked the court to bar the federal government from issuing cost-sharing subsidies unless and until Congress appropriates the funds.  As it relates to the cost sharing subsidies, the court addressed two legal issues in separate decisions.

Initially, the administration asked the court to dismiss the case for lack of standing.  It termed the dispute a political fight that should not be resolved by the judiciary.  The court, after noting that the case was unprecedented, ruled in favor of the House, holding that it had standing to pursue its constitutional claims.  The court then denied the administration’s request to seek an immediate appeal on the standing issue.  The case proceeded with consideration of the parties’ motions for summary judgment.

The District Court Decision

Judge Collyer’s analysis begins with the observation that Congress has sole authority to authorize the appropriation and expenditure of public monies, thus tying the Executive Branch to the Legislative Branch via purse strings.

     a.  The ACA Subsidies

Section 1401 of the ACA added a new section to the Tax Code providing tax credits and refunds for individuals and families with household incomes between 100% and 400% of FPL to help defray the cost of their insurance premiums.

Section 1402 of the ACA establishes the cost sharing reduction program and requires health plan issuers to reduce cost sharing (co-insurance and deductibles) for individuals and families with incomes between 100% and 250% of FPL who purchase the “Silver” level plans offered on the exchanges.  Issuers are to be reimbursed by the government for the reductions provided through the Section 1402 subsidies.

While Congress passed a permanent appropriation of the funds needed for the premium tax credits under Section 1401, it has not specifically appropriated funds to pay for the cost sharing reductions program under Section 1402.

The administration argued that Sections 1401 and 1402 must work together.  But the relevant appropriation statute, 31 U.S.C. § 1324, only appropriates monies for Section 1401 and not for Section 1402.  The court was not swayed by the administration’s statutory construction arguments looking at the fabric of the ACA as a whole, relying instead on the plain language in the law’s text.

In support of its contextual reading, the administration cited the Supreme Court’s decision in King v. Burwell, upholding the premium tax credit subsidies on the federal exchanges.  In that case, the Court described the ACA as a “closely intertwined” system of subsidies.  The administration argued that language that appears unambiguous out of context may have a different meaning when considering the statute as a whole.  The court distinguished King v. Burwell because in that case the ACA could not function if the phrase was interpreted literally so it “had to saved from itself.”  The court determined that a plain text reading of the statute in the case brought by the House would not impede operation of the ACA.

     b.  Unintended consequences

The administration additionally argued that a “cascading series of nonsensical and undesirable results” would occur if the House’s argument prevailed.  For example, insurers would still be required to reduce cost-sharing to qualifying customers and if they were not reimbursed, the result would be higher premiums for all.  The court responded that higher premiums would be mitigated by increased tax credit subsidies, although the increase in tax credits would end up costing the government more than the cost-sharing subsidies.

The only question according to the court was whether it would be “nonsensical” or “absurd” for Congress to authorize a program permanently in 2010 but not appropriate for it permanently at the same time.  Referring to the ACA Risk Corridors program as an example, the court said that Congress “can authorize a program, mandate that payments be made, and yet fail to appropriate the necessary funds.”  While negative consequences could result, it was Congress’s prerogative to structure the law and the court could not override Congress by rewriting the provision.

     c.  ACA’s Legislative History

The administration also pointed out that since the cost-sharing provision was scored by the Congressional Budget Office (CBO) as “direct spending,” the funds must be considered appropriated.  Individual Representatives and Senators also presumed the provision would be funded.  The court was not persuaded, noting that the CBO is required to assume programs will be funded and Congress’ expectations regarding how funds will be spent is dependent on actual appropriations.  The court found persuasive that HHS requested an appropriation for the cost-sharing program in its 2014 budget request.  Not persuasive were statements by Members of Congress considered anecdotal and not evidentiary.  The court also refused to give deference to the administration’s own interpretation of the law as, in its view, the statute is clear.

     d.  Still Standing

Finally, court refused the administration’s request that it reconsider its prior decision that the House has standing to bring its suit.