O’Neill Institute for National and Global Health LawO’Neill Institute for National and Global Health LawLegal Issues in Health Reform

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Missing Social Solidarity: An Interview with William Sage

William M Sage is Vice Provost for Health Affairs and James R. Dougherty Chair for Faculty Excellence at the University of Texas School of Law.

Lester Feder: What do you think are the most interesting aspects of the health reform legislation that we’re still trying to make sense of?

William Sage: Where should one start? I worked in the Clinton White House in early 1993, and can’t help but think about this reform effort in light of that one.  I began teaching law a couple of years later, so my academic career tracks the intervening period of health policy, especially the rise and fall of managed care.

I think the legislation is very good about asserting its priorities. The law’s table of contents provides a nice road map: Title I says we’re going to reform private health insurance markets so that almost everyone is insurable at a reasonable price. Title II says we’re going to extend public programs for people who still can’t afford coverage, largely though Medicaid. Title III says we need to reform health care delivery, Title IV says we need to keep people healthier through public health and prevention, and Title V—which I think is absolutely essential—is about the workforce that will assure access, reduce the cost of services, and improve health. That’s a very good set of priorities that I completely agree with.

But tensions are also apparent. Read More »

“The New Normal”: An interview with Sara Rosenbaum about health reform implementation

Sara Rosenbaum is Chair of the Department of Health Policy and Harold and Jane Hirsh Professor of Health Law and Policy at George Washington University School of Public Health and Health Services. She is heading up a new joint project with the Robert Wood Johnson Foundation tracking health reform implementation, Health Reform GPS. The O’Neill Institute’s Lester Feder spoke with her about the process of turning legislation into policy.

Lester Feder: What happens now that the health reform law and the reconciliation bill have passed?

Sara Rosenbaum: The starting point is understanding that we have a new normal, which I think is an enormous. At one time, health insurance coverage was understood as aspirational: You hoped you got a job that had insurance, you hoped you married someone who had insurance, and if you were a child, your parents hoped that they could get insurance for you.

This is all about to change. It will take a while to phase in, of course, but for the vast majority of the population, the new normal is the expectation of health insurance. Of course, this is not true for everyone, and much work remains to be done to make this expectation universal. This is a foundational change in American society, and not one without speed bumps along the way.

Lester Feder: So what—especially for the legal community—are the steps now in turning this into reality?

Sara Rosenbaum: Health reform is 2,700 pages of law; the process of digesting it is a serious undertaking. Read More »

Supreme Court qui tam case mooted by PPACA

On March 30, 2010, the Supreme Court decided Graham County Soil and Water Conservation Dist. v. U.S. ex rel. Wilson, — S.Ct. —-, 2010 WL 1189557 (2010), holding that the public disclosure provisions of the qui tam section of the federal civil false claims act, 29 U.S.C. 3730(e)(4) barred qui tam relators from bringing an action based on information disclosed in county and state administrative reports. Both the majority opinion written by Justice Stevens and the dissent authored by Justice Sotomayor (joined by Breyer) offer treatises on statutory construction (complimented by a grumpy concurring opinion by Scalia reminding the reader that the “snippets of legislative history” are “utterly irrelevant” as it is “utterly impossible” to discern legislative intent from anything other than the text of a law).

It should be noted that even as the Court announced its decision, it was already moot. Section 10404(j) of the Patient Protection and Affordable Care Act has amended 29 U.S.C. 3730(e)(4) to provide:
“The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed—
(i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party; (ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or (iii) from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.”

Under this statute, information found in a state administrative report (or in a state court case or even in a federal court case to which the federal government is not a party) is not publicly disclosed, and can form the basis of a qui tam case, contrary to the Court’s holding.

The statute also amends the definition of “original source”:

“For purposes of this paragraph, ‘‘original source’’ means an individual who either (i) prior to a public disclosure under subsection (e)(4)(a), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (2) who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing.”

I discussed the ramifications of this change in an earlier post.

How Does the Health Reform Legislation Affect Self-Insured Plans?

Analysis of the application of the Patient Protection and Affordable Care Act to self-insured plans must begin with section 1562 of the Act, which adds section 715 to ERISA and section 9815 to the Internal Revenue Code. These provisions state that all of the provisions of Part A of Title XXVII of the Public Health Service Act, as amended by the PPACA, apply to ERISA group health plans and health insurance issuers that insure group health plans. The section further provides that if anything in the group plan requirements of ERISA conflicts with Part A of the PHSA, the PHSA shall apply. The fact that this section refers both to group health plans and to insured group health plans makes it clear that the provision is meant to apply to self-insured plans. This is reinforced by the subsection B of this section, which states that sections 2716 and 2718 of the PHSA do not apply to self-insured plans, suggesting that the remaining provisions do.

This analysis is strengthened by the definition of “group health plan” in section 1301(b)(3), which incorporates the definition of section 2791 of the PHSA (42 U.S.C. 30gg-91), which defines “group health plan” to mean an employee welfare benefit plan as defined in ERISA 3(1), 29 U.S.C. 1002(1). Section 1551 also provides that the definitions of PHSA 2791 apply to the PPACA.

The provisions of Part A of the PHSA, as amended by the PPACA, and the entities to which they apply, are, as best I can figure out, the following;

  • Sec. 2701. Fair health insurance premiums, limiting rating to age, geographic area, individual or family unit, and tobacco use. (Health insurance issuers for individual and small group market. Also insurers of large groups if offered through exchange.)
  • Sec. 2702. Guaranteed availability of coverage. (Former sec. 2011). (Health insurance issuers offering individual and group coverage.)
  • Sec. 2703. Guaranteed renewability of coverage. (former sec 2012) (Health insurance issuers offering individual and group coverage.)
  • Sec. 2704. (former sec. 2701) Prohibition of preexisting condition exclusions or other discrimination based on health status. (Group health plans and health insurance issuers offering group and individual health insurance coverage.)
  • Sec. 2705. (former sec. 2702) Prohibiting discrimination against individual participants and beneficiaries based on health status. (Group health plans and health insurance issuers offering group and individual health insurance coverage.)
  • Sec. 2706. Non-discrimination in health care. This section both prohibits discrimination by insurers against providers operating within their scope of practice, and against individuals in violation of section 1558, which prohibits retaliatory action against employees who complain about actions their employers take in violation of the reform act. (Group health plans and health insurance issuers offering group and individual health insurance coverage.)
  • Sec. 2707. Comprehensive health insurance coverage. Requires insurance issuers in the individual and small group market to provide essential benefits under sec. 1302(a) and group health plans to comply with the cost sharing requirements of sec. 1302(a).
  • Sec. 2708. Prohibition on excessive waiting periods (over 90 days). (Group health plans and health insurance issuers offering group and individual health insurance coverage.)
  • Sec. 2709, Coverage for individuals participating in approved clinical trials (group plans and insurers in the group and individual market)
  • Sec. 2709. (Formerly 2733). Disclosure of information by health insurance issuers.
  • Sec. 2711. No lifetime or annual limits (group health plans and health insurance issuers offering group and individual health insurance coverage, more permissive rules for self-insured and large group plans.)
  • Sec. 2712. Prohibition on rescissions. (Group health plans and health insurance issuers offering group and individual health insurance coverage.
  • Sec. 2713. Coverage of preventive health services. (Group health plans and health insurance issuers offering group and individual health insurance coverage.)
  • Sec. 2714. Extension of dependent coverage. (Group health plans and health insurance issuers offering group and individual health insurance coverage.)
  • Sec. 2715. Development and utilization of uniform explanation of coverage documents and standardized definitions. (Secretary to develop standards. To be applied by health insurance issuers and sponsors of self-insured plans.
  • Sec. 2715A Provision of information required by sec. 1311(e)(3) to HHS and to state insurance commissioners.. (Group plans and insurers in the group and individual market).
  • Sec. 2716. Prohibition of discrimination based on salary. (Plan sponsors of group health plans other than self-insured plans.)
  • Sec. 2717. Ensuring the quality of care. (Group health plans and health insurance issuers offering group and individual health insurance coverage.)
  • Sec. 2718. Bringing down the cost of health care coverage. (minimum loss ratios) (Health insurance issuers offering group or individual health insurance coverage. Does not apply to self-insured plans.)
  • Sec. 2719. Internal and external appeals processes. (Group health plans and health insurance issuers offering group and individual health insurance coverage.)
  • Sec. 2719A Patient Protections.
  • Sec. 2722. (Formerly 2721). Exclusion of certain plans (i.e. governmental plans)
  • Sec. 2723. (Formerly 2722). Enforcement provisions.
  • Sec. 2724. (Formerly 2723). Preemption, state flexibility, construction.
  • Sec. 2725. (Formerly 2704) Drive through delivery. (Group health plan and health insurance issuer offering group and individual coverage.)
  • Sec. 2726. (Formerly 2705). Mental health parity (group health plan and health insurance issuer offering group and individual coverage.)
  • Sec. 2727. (Formerly 2706). Reconstructive surgery following mastectomies. (Group health plan and health insurance issuer offering group and individual coverage.
  • Sec. 2728. (Formerly 2707). Coverage of dependent students during medically-necessary leave of absence. (Group health plan and health insurance issuer offering group and individual coverage.
  • Sec. 2731 (Formerly 2711). Section rewritten as a limitation on guaranteed coverage based on network or financial capacity and transferred to 2702
  • Sec. 2732. (Formerly 2712). Guaranteed renewability of coverage in small group market. (revised and transferred to section 2703)

Of these provisions, section 2704, 2705, 2706, 2707 (as to maximum cost sharing), 2708, 2709 (clinical trials), 2711, 2712, 2713, 2714, 2715, 2715A, 2717, 2719, 2719A, 2725, 2726, 2727, and 2728 apply to group health plans, and thus to self-insured plans. The remaining sections apply only to insured plans.

Several sections of the PPACA refer specifically to self-insured plans. Section 2701(a)(5), applying the health status underwriting provisions to large group plans in the exchange, does not apply to self-insured plans. Section 2715 requires the plan sponsor or designated administrator to make the disclosures required by that section for self-insured plans. Section 2716, discrimination in favor of highly-compensated employees, expressly states that it does not apply to self-insured plans, which are already covered by a similar requirement under sec. 105(h). Self-insured plans are expressly subject to the external review requirements of 2719 established by HHS. The reinsurance provisions of 1341 expressly apply to self-insured plans; the risk-pooling provisions of 1343 expressly do not. Self-insured plans are expressly subject to a per-member fee to fund patient centered outcomes research under a new section 4376 of the IRC. Section 1253 requires the Secretary of Labor to collect information on self-insured plans and to file a report with Congress, while 1254 requires a similar report on the large group market, including self-insured plans.

One puzzle of the PPACA with respect to self-insured plans is section 1301(b)(1)(B), which provides

(B) EXCEPTION FOR SELF-INSURED PLANS AND MEWAS.—Except to the extent specifically provided by this title, the term ‘‘health plan’’ shall not include a group health plan or multiple employer welfare arrangement to the extent the plan or arrangement is not subject to State insurance regulation under section 514 of the Employee Retirement Income Security Act of 1974 [i.e. a self-insured plan or MEWA].

Read literally, this would mean that self-insured plans are not subject to any of the insurance reforms, since the term “group health plan,” used throughout the PPACA to define coverage, includes the term “health plan.” This would, however, run contrary to all of the other provisions of Title I that state or indicate that self-insured plans are included in “group health plans” and covered by the PPACA. The application of this exception, therefore, must be limited to section 1301, which defines “qualified health plans” as “health plans” that meet specific requirements. It would thus mean that self-insured plans cannot be qualified health plans.

The essential health benefit requirements of section 1302 specifically do not apply to self-insured plans under section 2707. This raises a final puzzle under the statute. Under section 1401 of the PPACA an employee can qualify for a premium tax credit to purchase insurance through the exchange if his or her employment-related plan fails to cover 60 percent of the allowed cost of benefits covered by the plan. An employer whose employees receive credits under this provision is liable under 1513 for a penalty of $3000 per employee who qualifies for premium subsides under the legislation. Since self-insured plans, however, are not subject to a minimum essential benefit requirement, could the employer not always offer a slim enough benefit package so as to cover 60 percent of it and avoid the fine? This issue will, it is hoped, be addressed through regulations.

The legislation does not affect 514 or 502 preemption. ERISA plan beneficiaries will still be limited to ERISA‘s remedies. States will still not have jurisdiction over ERISA plans. Section 2715A (in Title X) would seem to require ERISA plans to report information to state insurance commissioners as well as to the federal government, but I would hope that the regulations will sort this out.

Are The Attorneys General’s Constitutional Claims Bogus?

Immediately after passage of health care reform, over a dozen state A.G.s sued to declare it unconstitutional, as violating states’ rights.  The Florida complaint is here, and Virginia’s here. Reminiscent of southern governors in the 1960s blocking their state universities’ gates, these legal officers in effect are saying “not on our sovereign soil.”  Since the constitutional issues have already been hashed through so thoroughly, what’s new to talk about?

First, the Florida complaint, which a dozen other states joined (AL, CO, ID, LA, MI, NE, PA,SC, SD, TX, UT, WA), focuses mainly on the financial burdens of expanding Medicaid.  This is challenged under the “commandeering” principle, as requiring states to devote sovereign resources to achieve federal aims.  But, as we know, states are free to withdraw from Medicaid, so the argument seems to fall entirely flat.  The complaint makes a bait-and-switch type of estoppel argument , that states got into Medicaid without any expectation of this expansion, and now it’s too damaging for them to withdraw.  So, in effect, states argue that the Constitution allows them to keep the federal carrot but refuse the federal stick.  Good luck selling that to an appellate court.

Second, these states complain about having to implement the insurance purchasing exchanges and their rules, but here again, states are entirely free to opt out and let their citizens use the federal exchange.  The only reason states have to implement exchanges is that they insisted the legislation give them this option, rather than forcing everyone into a single national exchange.  States can hardly complain about the responsibilities they asked for, especially when they’re still free to duck them.

Third, there are procedural problems.  States probably have no standing to enforce arguments about violation of individual rights (which is the main concern regarding the individual mandate).  Also, consider the remedy if states were to prevail:  It would wreak havoc to overturn the mandate to purchase, but not the mandate for insurers to sell without any medical underwriting.  Doing that would cause massive adverse selection and probably destroy some companies and some portions of the market, so a court would have little option but to strike down most or all of the entire law.  Surely that measure is extreme enough to give even the most activist judge pause, and so will compel most courts to find every possible way to uphold constitutionality, regardless of political persuasion.

Finally, do state nullification statutes like Virginia’s make a difference?  Not according to Harvard’s Charles Fried (who was Reagan’s Solicitor General):

The notion that a state can just choose to opt out is just preposterous…. As long as the federal law is independently constitutional, it doesn’t matter what Virginia says… It’s like Virginia saying we don’t have to pay income tax….One is left speechless by the absurdity of it.”

This leaves only the well-worn arguments about exceeding powers to regulate commerce and to tax for the general welfare.  On these, most legal scholars are loud and clear about the merits.  In sum, as Sandy Levinson’s (Univ. Texas) says, “The argument about constitutionality is, if not frivolous, close to it.”

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