The great health care pivot

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Led by Speaker Nancy Pelosi, and an unanticipated assist by the Administration, Congress has veered from the Russia investigation right back into relitigating the Affordable Care Act (ACA). In less than a week, we have seen action in all branches of government.

A divided Congress will make passing legislation in the health care space difficult, but this week’s actions by the Department of Justice (DOJ)—at the direction of the Trump Administration (the Administration)—will force Congress to once again engage on health care and the ACA. However one notable difference this time around is that the GOP has been chastened by its drubbing in the 2018 election, where the strengthening of the ACA, not its repeal and replacement, was the top issue for voters. As highlighted below, the debate over health care will continue for weeks and months to come.

Executive branch

To the surprise and chagrin of many congressional Republicans, President Trump again declared that the Republican Party will be the party of health care. Thursday afternoon the President tweeted “The Republican Party will become the Party of Great HealthCare!” and “Moving forward in Courts and Legislatively!” The President’s pronouncements followed the DOJ’s announcement earlier this week that it will support the federal district court ruling in Texas v. Azar invalidating the ACA in its entirety. In a two-page letter to the Fifth Circuit Court of Appeals, the DOJ indicated that the agency has determined that the district court’s judgment should be affirmed, and that no portion of the judgment should be reversed.

The DOJ’s position stands in stark contrast to the Administration’s earlier position that only certain provisions under the ACA, specifically the protections for patients with pre-existing conditions, should be invalidated. The decision to support the lower court ruling surprised many in Washington, particularly given the perceived weakness of the lower court ruling and that health care represented one of the most important and most damaging issues for Republicans during the 2018 midterm elections.

Legislative branch

Despite President Trump’s support for health care moving forward in the courts and Congress, congressional Republicans may not share his enthusiasm for a full repeal of the ACA. In addition to the outcome of the midterm elections, many Republicans still remember the failed attempt to repeal the ACA in 2017, despite controlling both houses of Congress. As reported in Politico, Senate Majority Leader Mitch McConnell indicated yesterday morning that he “looks forward to seeing what the president is proposing and what he can work out with [Speaker Pelosi].” Further, press reports indicate that House Minority Leader Kevin McCarthy has told President Trump he disagrees with the Administration’s decision to support the Texas federal district court ruling. As the Washington Post reports, even allies of the Administration are raising concerns, emphasizing that Congress and the Administration must have an alternative plan in place before repealing the ACA.

In contrast to congressional Republicans, Democrats are relishing the opportunity to change the conversation in Washington and return to health care. A day after the ninth anniversary of the signing of the ACA, House Democratic leaders introduced the Protecting Pre-Existing Conditions & Making Health Care More Affordable Act of 2019. The legislation is intended to strengthen protections for people with pre-existing conditions and make health care more affordable by lowering health insurance premiums with strengthened and expanded affordability assistance. Further, on Wednesday, the House Committee on Energy and Commerce Subcommittee on Health convened the first round of hearings on legislation to lower health care and prescription drug costs.

Judicial branch

  • Association health plans. Yesterday, Judge John D. Bates of the US District Court for the District of Columbia struck down a Trump administration rule promulgated by the Department of Labor in June 2018 that allows self-employed individuals and small businesses to band together to purchase association health plans, or AHPs, that are exempt from the essential benefits requirement of the ACA. At issue was whether such groups of different employers could be described as one employer under the Employee Retirement Income Security Act (ERISA). Judge Bates concluded that the proposed plans were “an end-run around the ACA” minimum requirements for insurance plans. The 2018 rule was intended to implement President Trump’s October 2017 executive order encouraging the expansion of AHPs. A similar but separate Trump administration rule expanding the duration of short-term insurance plans is also the subject of a lawsuit pending in the same district court.
  • Medicaid work requirements. Also in the DC federal district court, on March 27, 2019, Judge James Boasberg made simultaneous rulings and struck down Medicaid work requirement rules in Arkansas and Kentucky. The rules were approved by the Centers for Medicare & Medicaid Services (CMS) as section 1115 waiver demonstration projects allowing the states to include proof of ongoing work as a condition of eligibility for Medicaid. To date, the Administration has approved proposals from eight states that require certain Medicaid beneficiaries to work, volunteer or train. Seven other states are seeking approval. The Administration, specifically CMS Administrator Seema Verma, have been strong proponents of work requirements. Despite the ruling, Verma pledged that CMS will continue to defend the Administration’s efforts to give states greater flexibility in designing their Medicaid programs.
  • The ACA. As noted above, on December 14, 2018, a judge in the US District Court for the Northern District of Texas ruled in Texas v. Azar that the entire ACA is unconstitutional. This case was brought by a number of Republican state attorneys general (AGs) and other plaintiffs and focuses on the argument that the ACA’s individual mandate is unconstitutional after the 2017 tax reform legislation eliminated the penalty associated with the mandate. The decision was appealed to the Fifth Circuit. A timeline for hearings has yet to be set by the court.

2020 campaigns

A common talking point on the campaign trail and for several members of the 115th Congress is the need for a public health care option. Public options range in scope and include Medicare for all, Medicare buy-in, Medicaid buy-in, and a new public plan option in the existing ACA insurance marketplace. However, despite the widespread discussion within certain campaigns, industry stakeholders have raised concerns regarding the cost and overall viability of what could be a significant market disruption. Additionally, the Administration’s renewed push for a full repeal of the ACA may force supporters of the public option to focus their attention back on defense of the ACA.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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