Washington Wire: December 2019

On December 18, 2019, the U.S. Fifth Circuit Court of Appeals issued its long-awaited ruling in Texas v. United States, a case challenging the constitutionality of the Affordable Care Act.

The 5th Circuit ruling upholds (in part) an earlier lower court decision that declared the ACA to be unconstitutional, due to Congress’ 2017 enactment of a law that zeroed out the tax penalty under the individual mandate.[i] In the latest ruling, the 5th Circuit agreed that the ACA’s individual mandate should be struck down as unconstitutional. However, the three-judge panel also said that perhaps other parts of the ACA could survive (i.e., the mandate could perhaps be “severed” from the ACA, leaving other parts of the law in place). The 5th Circuit sent the case back to the lower court to reconsider this severability question. It also instructed the lower court to consider whether a ruling should be limited to just the 18 plaintiff states or apply to all states.
As patient advocates and other stakeholders weigh next steps, please be aware that the latest ruling in Texas v. United States does not affect your insurance coverage for now. The ACA will continue to be in effect for the full 2020 plan year. This includes ACA protections for people with pre-existing conditions, as well as the ACA’s Medicaid expansion. Individuals who signed up through healthcare.gov for 2020 remain covered – and people living in the handful of states where open enrollment is ongoing (see below) should sign up for 2020 coverage if they still need to do so!
What are the stakes for people with bleeding disorders and other health conditions? Texas v. United Statesthreatens the long-term viability of the ACA’s patient protections. A sweeping final ruling against the ACA would mean an end to the ACA’s protections for individuals with pre-existing conditions. Health plans would once again be free to deny coverage or charge much higher premiums based on health status. Tax credits that help people buy insurance on the individual market would disappear, as would the requirement that health plans cover essential health benefits.
Such a ruling could also have an impact far beyond the individual insurance market and the ACA Exchanges. Large employers would no longer have to offer insurance to their employees. Health plans could re-introduce annual and lifetime caps on benefits; would not have to limit patients’ yearly out-of-pocket costs; would not have to allow parents to keep their children covered up to age 26; and more. The ACA’s Medicaid expansion would disappear, eliminating coverage for many millions of people in 36 states. Provisions that save money for Medicare enrollees (such as those closing the Part D “doughnut hole”) would also expire.
Again, these are consequences that could ensue if the courts ultimately find the ACA broadly unconstitutional. Please remember that the ACA’s consumer protections and other provisions remain in effect for now.
What will happen next? The parties defending the ACA in Texas v. United States – California and 17 other states – have indicated that they will ask the U.S. Supreme Court to review the 5th Circuit ruling. The defending states will also decide soon whether to ask for an expedited review (i.e., ask the Supreme Court to hear the case next spring and issue a decision before the Court recesses in June). The Supreme Court may (a) grant review on an expedited basis, (b) grant review, but on a non-expedited basis, meaning that the Court wouldn’t rule on the case until after the 2020 elections, or (c) refuse to hear an appeal at this point – which would mean that the case returns to the district court, as directed by the 5th Circuit. Option (c) would lead to more years of litigation and uncertainty: another district court decision, another appeal to the 5th Circuit, and yet another petition for review by the Supreme Court.
All observers expect that the ACA will remain in effect pending further review by the courts, whichever path the case takes.
HFA – which had previously joined with sixteen other patient advocacy organizations to file an amicus curiae (“friend of the court”) brief in Texas v. United States – cosigned a statement reaffirming a steadfast commitment to protecting patients throughout the next phases of the case. HFA also joined with 27 other patient groups to issue a statement regarding the 5th Circuit ruling.
HFA staff will continue to update you about the ongoing litigation, and will continue its efforts to advocate for affordable, quality health coverage, in all available forums. Please stay tuned – and thank you for your interest and engagement.
Quick Hits:
Federal spending bill passed; government shutdown averted. The President signed a $1.4 trillion federal spending bill to avert any government shutdown for fiscal year 2020 (ending September 30). The bipartisan compromise includes significant funding increases for the FDA, NIH, and territorial Medicaid programs (including $200 million over the next two years for Puerto Rico) while further postponing the ACA’s cuts to disproportionate share payments for hospital care of indigents. It also ensures that ACA Marketplace plans can continue to automatically re-enroll consumers at the end of the plan year, as well as offset the loss of the ACA’s cost-sharing reductions by increasing premiums only for silver-tier plans (also called “silver-loading”). However, the spending deal eliminates ACA taxes on Cadillac health plans, all health insurers, and medical device manufacturers without offsetting the more than $200 billion in lost revenue.  Only the insurer tax was implemented and it will remain in effect for the 2020 plan year.
Open enrollment period closes across most of the U.S. Enrollment in the 38 ACA Marketplaces operated by the federal government remained steady for the seventh open enrollment season with 8.3 million consumers selecting a plan through the December 17th closing date (compared to 8.45 million last year).  Enrollment continues for state-operated Marketplaces in California, Colorado, Connecticut, the District of Columbia, Massachusetts, New York, Washington and Rhode Island (RI enrollment closes on December 31).

  • California reports a 16 percent increase in Marketplace enrollment due largely to new state premium subsidies that help those earning more than 400 percent of poverty afford coverage.

Surprise medical billing. Contrary to the hopes of many advocates, the end-of-year federal spending bill did not include a surprise billing fix. In early December, patient groups had cheered reports that key Senate and House lawmakers had agreed on a bipartisan solution to the surprise billing problem (that is similar to a model already in place for California). News subsequently emerged, however, that the House Ways and Means Committee wanted to take a different approach – one more favorable to hospitals and physician groups. This left Congress at an impasse, with a resolution unlikely before May 2020 at the earliest.
At least four states (Colorado, New Mexico, Texas, and Washington) have new surprise billing protections that go into effect on January 1, 2020.
Drug pricing. The House of Representatives passed H.R. 3 on December 12th, a sweeping bill aimed at lowering prescription drug costs by allowing Medicare to negotiate with pharmaceutical companies over certain high-priced drugs. H.R. 3 would also cap seniors’ out-of-pocket spending for Part D prescriptions. However, Senate Majority Leader McConnell has already announced that the bill will not be considered by the Senate.  It is also opposed by the Trump Administration and was not included in the federal spending bill for fiscal 2020. Another drug pricing bill, S. 2543, passed Senate Finance Committee last summer with bipartisan support, but has also failed to reach the Senate floor.
Drug importation policy. The Trump Administration on December 18, 2019, released a draft plan to allow for the importation of drugs into the U.S. The controversial proposal creates two pathways for importation. One pathway would allow states, wholesalers, and pharmacies to import certain medicines from Canada. Under the second pathway, pharmaceutical manufacturers could (re)import their own products that they sell in other countries. A couple of things to know for now: (i) the importation proposal is still in draft form, with many legal and practical hurdles to overcome before it can be implemented; (ii) the importation proposal as currently drafted would exclude IV drugs and biologics (so therefore would not apply to clotting factor and other key bleeding disorders treatments); and (iii) the Administration has admitted it cannot predict possible cost savings for U.S. consumers from the drug importation plan because it doesn’t know how many states might come forward with plans.
Medicaid developments.  The U.S. Centers for Medicare and Medicaid on December 12, 2019, granted South Carolina approval to move forward with plans to impose work reporting requirements on Medicaid beneficiaries. This is the first time CMS has given approval to work reporting requirements in a non-Medicaid expansion state. HFA and other patient advocacy groups warned that CMS’s decision jeopardizes vital health care coverage for thousands of South Carolinians with serious and chronic health conditions.
On December 18th, HFA joined with 16 other patient advocacy groups to file federal comments opposing Tennessee’s request to radically restructure the state’s Medicaid program, TennCare. As a reminder, Tennessee is the first state to ask for an upfront block grant of federal Medicaid funds – and, in exchange for that limited funding, with more state freedom from federal standards governing how it spends its Medicaid dollars. Patient advocates have warned that TennCare’s block grant proposal could reduce access to quality and affordable healthcare for patients with serious and chronic health conditions, while exposing both the state and patients to increased financial risk.
Finally, in other Medicaid news, Utah on December 23rd received CMS approval for its voter-approved Medicaid expansion, which includes job search requirements added by the legislature. Newly-elected Kentucky Governor Beshear announced that Kentucky would drop plans to implement its work reporting requirements. Virginia Governor Northam also asked CMS to delay finalizing his state’s pending work reporting waiver. The Michigan legislature, by contrast, has denied Governor Whitmer’s request to pause the state’s work reporting requirements, which (despite pending litigation) are presently set to go into effect January 1, 2020.
[i] In 2012, the Supreme Court had upheld the ACA as a constitutional exercise of Congress’ taxing power; with the penalty reset to zero, ACA opponents argued, the law could no longer be viewed as a tax.