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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Gearing up for the Long Aftermath of Health Reform

Post by Christina S. Ho

Senior Fellow and Project Director of the China Health Law Initiative

O’Neill Institute

The passage of universal health care, or (near-universal health care in this case), as Obama proclaimed, finally affirms in principle that as a society, we owe some security to one another against the life-and-death risks that can befall anyone from illness or injury.   And it was in honor of this proposition that when the House passed the Senate bill and the package of fixes, I got out the crystal, poured a toast.  And then I started thinking about how the sides would already be girding for the next battle.

And I don’t mean the lawsuits to block reform, or the fantasy scenario of repeal.  Instead I’m thinking about the slow grinding battle that will take place over years, even as a similar battle has been waged in previous decades over Medicare.  At stake in this struggle—which will be a struggle of inches–is the nature of health insurance.  Repeal is not the way to roll-back the transformation in our social safety net that health reform has wrought.

Health reform skeptics and opponents have already managed to slip in provisions that could serve as toeholds for future incursions—including a carveout from health insurance standards for the so-called “young invincibles” (Sec. 1302(e) of the Senate Bill) so they can buy catastrophic high-deductible coverage.  This fragments the risk pool and sets the conditions for health care to be viewed as something people fund through cash savings.

Examples abound, but even a recent history of Congressional fights over Medicare reveals exactly this type of maneuvering. As society’s guarantee of certain hospital and physicians’ benefits primarily for the aged, Medicare was a target for opponents of health care entitlements who worked to erode the defined benefit promised under the program.  Representative Paul Ryan nakedly avows the voucherization of Medicare in his recent bill, but voucherization by increments, shifting risk (under the guise of choice) to the seniors, and transforming assistance to a defined contribution by Medicare and no more, has been the creeping agenda of conservative interests for a while.  The success in Medicare has been limited, but sufficient to constitute a thorn in the side of the left.

Medicare Advantage, for example, transfers set subsidies out of the Medicare Hospital Insurance and Supplemental Medical Insurance Trust Funds to private insurance plans to provide benefits.  Medicare had already guaranteed certain benefits to seniors; the delivery of those benefits through a private insurance product served as a fig leaf only. But even that seems marginally better to those driven by an ideological horror of citizens expecting any guarantee from the government. When it became clear that the private insurance plans could not afford to provide the benefits as cheaply as the government, we did not allow them to trim back benefits.  The logic of Medicare, as a promise of certain benefits, clashed and ultimately prevailed against the logic of a voucher system.  We paid more and more to the private plans to bribe them to maintain coverage, ultimately much more than it would have cost to deliver the benefits through traditional Medicare. That overpayment, to appease the demand for private delivery of benefits, even if entirely cosmetic, will finally be reined in by this health reform bill.

The Medicare prescription drug benefit, passed in 2003, represented a masterful play by the opponents of health entitlements, posing as a new health benefit, but introducing for the first time into Medicare a health item that the government was barred from directly assuring.  Instead the government provided a “voucher”-like subsidy to private entities to offer drug coverage.  This was all the more shocking given that these private prescription drug plans were not a product the market had ever thought to offer—they did not exist and had to be wholly created in order to satisfy the uncompromising ideological refusal to allow government to provide benefits to anyone but private industry.  Recognizing the possibility that no such private entities would be willing to undertake this new function, the legislators were at least willing to allow a trigger for government to step in to assure that the benefit would still be provided.

If this was what Medicare was up against, at least Medicare started with the premise of a benefit that the government would arrange for and guarantee more or less directly, and seniors have a chance to re-enroll in traditional Medicare if they are dissatisfied with the private Medicare Advantage plans.  In health reform, the Democrats relinquished that ground early on, excluding a “public option.”  The path toward voucherization of health care is arguably within sight, and it is but a short distance further to argue that individuals should be able to “cash out” the premiums and subsidies into some kind of savings account.  Instead of guaranteeing health security, this framework could devolve into a defined contribution, and a rejection of governance as a mechanism for addressing collective risks.  If I were an opponent of health reform, once the volume dies down on repeal and lawsuits, I’d be trying to expand the domain of health savings accounts.

In addition to defending their ground against these efforts, what might Democrats consider as next steps?  Many are undoubtedly developing their list of fixes even now.  Medicare buy-in, a perennial issue, should be kept alive.   It seems to me that Medicare Part D should be rethought—when we as a society guarantee benefits, we should be able to assure that we can manage those benefits affordably, and government delivery should be an option.  The administrative standards on insurance, benefits, and exchanges will be crucial, I imagine.  I would be curious to see what others think will emerge as key items on both sides’ long-term strategic wish-lists.

Immigrants and Reform: An Interview with Kara Ryan, the National Council of La Raza

Kara Ryan is a research analyst at the Health Policy Project of the National Council of La Raza. The O’Neill Institute’s Lester Feder spoke with her on March 22.

Kara Ryan: We were excited for the House to pass the health reform bill last night.

Lester Feder: Well, let me ask you about that, because I thought NCLR came out opposing the bill right before the vote.

Kara Ryan: We didn’t actually oppose it, though it got reported that way. The point that we were trying to make is that we weren’t going to be able to support the bill if there were no changes made from the Senate version. So what the House did last night was to pass the bill, but also the reconciliation bill. The reconciliation language came out with a number of important changes that we thought on balance made a lot of sense to support the bill.

Lester Feder: So overall, what does the passage of the legislation mean for Latinos?

Kara Ryan: We are happy that the health care reform bill builds on the current employer-sponsored system, we know that that’s how a lot of immigrant families are able to access coverage, and we’re very happy to see that it expands the Medicaid program to everyone living under 133% of poverty, which includes legal immigrants who have had qualified status for at least five years. (There could be cases in which a legal immigrant has been present for more than five years, but became categorized as a “qualified” immigrant for fewer than five years.) And of course it creates the new health insurance marketplace in the form of these state-based exchanges, and it includes a lot of important consumer and patient protections. And legal immigrants can actually access the affordability tax credits, without any sort of waiting period for purchasing coverage in the exchange.

One of the things that the bill did was make a very large investment in community health centers. Community health centers are already on the front lines serving folks that are uninsured, having very little access to care. Many of them are immigrants, many of them are undocumented. And they’re already doing a great job at providing family-centered, high quality care. However, I don’t think that makes up for the fact that these populations were excluded from access to coverage.

Lester Feder: So what were the changes in the reconciliation bill that were so important to you?

Kara Ryan: One of the major things is that previously, Puerto Rico residents were not able to participate in the exchange, and the reconciliation language fixed that. The reconciliation language also provides a major boost to their Medicaid program in Puerto Rico, which had previously been capped and the island would not have the ability to draw down on the federal funds to implement that extension. There were also some small fixes in legal immigrant affordability. It also removed a penalty for the very poorest legal immigrants who are unable to buy coverage.

Lester Feder: You didn’t mention some of the provisions that were of concern to a lot of advocates, such as barring undocumented immigrants from using their own money to purchase insurance and the five-year waiting period for legal immigrants to be able to participate in Medicaid. What is the status of those, and how do you feel about them?

Kara Ryan: Unfortunately, those were not fixed in the reconciliation language, and we continue to have great concerns about how undocumented and legal immigrants subject to the bar will be able to access coverage. However, we received some assurances from the administration that we’re going to work on connecting folks with coverage and care in the implementation phase.

The bill doesn’t make any changes to state programs that are already covering legal immigrants inside that waiting period, with state-only money.  The problem with that, though, is that when state budgets are tight—as we’ve seen in California and Massachusetts—legal immigrants’ coverage is first on the chopping block. So while those programs can be maintained with state-only money, it would have been a much better situation if the five-year bar had been removed and states were able to draw down on federal funds to cover those populations.

Lester Feder: Are legal immigrants subject to the mandate, once it kicks in? And are they subject to the mandate before they are eligible for participation in Medicaid?

Kara Ryan: Yes they are. In the reconciliation language that was passed by the House and not yet passed by the Senate, there were a couple of fixes for very poor immigrants, who would be subject to the mandate, but they are no longer subject to penalties.

Lester Feder: The CBO estimates that some eight percent of US residents will remain uninsured. Do we know what portion are likely to be immigrants? Do we know how many of those are undocumented folks, and how many of those will be legal immigrants who are just not yet eligible for Medicaid?

Kara Ryan: We haven’t actually been able to do those calculations yet. But if you look at all of the barriers that have been put in place—such as the prohibition and the exchange for undocumented folks—if you look at not lifting the five-year bar it is reasonable to assume that a lot of the folks that are uninsured at the end of the day will be composed of non-citizens.

We’re also concerned that one of the things that the legislators did, in order to make doubly sure that undocumented immigrants wouldn’t be able to access the exchange or the subsidies, was to require several layers of verification. That’s verifying your citizenship, legal status, and your identity. We have seen when, for example, documentation requirements were imposed on the Medicaid and CHIP programs, that it ends up impacting citizens and legal immigrants especially. It prevents folks from getting enrolled, it creates delays, and—while costing states a lot of money to implement—and really not finding very many ineligible people receiving benefits. A GAO study said that they only found eight people receiving benefits who shouldn’t be in all the states they researched.

Lester Feder: Eight?

Kara Ryan: Eight.

The Brennan Center for Justice did a study a couple of years ago about how many working age adults had the ready availability of some of these documents that were required. Folks who were especially affected were elderly folks, particularly in the black community, who may not have access to their original birth certificates. Very few working age women—I think about half—have access to their original birth certificate with their current name, and then children, of course.

Lester Feder: So, once everything is in place, will the uninsured primarily be immigrants? Do we know how heavily immigrant that pool will be?

Kara Ryan: I don’t actually know, but if you look at all of the barriers that have been put in place—such as the prohibition in the exchange for undocumented folks and not lifting the five-year bar—it is reasonable to assume that a lot of the folks that are uninsured at the end of the day will be composed of non-citizens. Since obviously coverage is very important in access to care, at the end of the day what we’re really concerned about is people being able to access care.

Atlas Shrugged—So Did Wall Street

The following post is one I’m afraid I’ll look back on and say, “What was I thinking?”! At a time when the right wing is in high dudgeon and many states, with Tea Party encouragement, are essentially fomenting massive civil disobedience against the health insurance reform legislation, I’m making a more positive (albeit contrarian) argument about the long-term effects of this historic achievement.

We now know most of what’s in the legislation, who the winners and losers are, and the continuing shape of the political battle to come. What we don’t know are the contours of the political and cultural changes to follow. Will its enactment stimulate a broad political shift toward sustained libertarianism (along the lines of the current level of civil disobedience) and hence the legislation’s collapse? Or, will the implementation process accelerate broad cultural changes that fundamentally reshape health care delivery? Given the level of vitriol directed toward proponents of the bill, smart money will probably be on collapse.

But maybe the smart money is wrong. (Am I setting up a straw man here? Would I do that?) Every legislative enactment has unintended consequences. Up to now, the legitimate critiques of the legislation have been the failure to adopt more stringent cost controls, the potential for an increased tax burden on middle-income Americans, and the failure to change the health care delivery system. Combined with the sustained distortions and illegitimate critiques, the opponents have dominated the debate, though, fortunately, not the legislative outcome.

As unlikely as it may now seem, there’s a chance that the legislation will actually stimulate the kinds of reforms that many hoped would be included in the bill from the beginning. But these changes may not need additional legislation to occur. Instead, there’s a serious possibility of deep cultural change that will force stakeholders to achieve voluntarily what they failed to achieve through the legislative process.

First, the legislation includes numerous demonstration projects with the potential to provide information that will encourage policymakers and stakeholders to develop new delivery arrangements. For example, demonstrations may indicate which cost control mechanisms will be effective and how to implement them across the country. These projects may determine whether accountable health systems will reduce inefficiency and improve the coordination of care. Taken together, the demonstrations may stimulate the broad re-thinking of how health care is delivered that health policy scholars have advocated for many years.

Second, many actions can be taken voluntarily. As I’ve argued in previous posts, health insurers could have deflected some of the public’s antipathy toward them through changes that would have reduced the adverse consequences of pre-existing conditions. Tobacco control provides an analog. Many businesses decided to go smoke-free, even in the absence of tobacco control laws, because it was in their economic interests, because the public demanded it, or because they saw the inevitability state and local clean indoor air laws. Without doubt, health insurers could argue that their economic model precluded coverage for pre-existing conditions absent the full mandate included in the current legislation. But practices such as rescission were unnecessary and certainly compromised the industry’s public image.

Third, don’t underestimate the power of culture to change and to force policymakers and stakeholders to meet public demands. Once the hysteria over “government takeover,” etc., subsides and people get a better sense of how the legislation can improve their health insurance coverage, a swing in how the legislation is viewed is entirely possible.

Facts matter, and the facts favor reform. Opponents have saturated the media with lies and distortions, and it will take time for the benefits of the legislation to be disseminated and absorbed. For instance, several provisions, nicely summarized in Monday’s New York Times, may mollify Medicare recipients once they learn that the donut hole is less onerous, etc. When people digest that pre-existing conditions will no longer bar them from health insurance coverage, average citizens may well rethink their initial opposition. As passions cool and people realize that the fear mongering was deceptive, the environment for cultural change, which now seems quite hostile, will be more favorable.

Two counterexamples, however, should give pause. First, Congress enacted the Medicare Catastrophic Coverage Act of 1988. A year later, the Act was repealed later after massive protests from Medicare recipients. Second, the managed care backlash seriously undermined managed care’s implementation of cost containment initiatives.

Republicans, along with its Tea Party and talk radio/TV sympathizers, will surely foment the kind of outrage that saw angry senior citizens surround Representative Dan Rostenkowski’s car following the Medicare Catastrophic Coverage Act. I honestly believe that’s a losing strategy in this case. For one thing, AARP strongly backs the current legislation. For another, the Obama administration has the opportunity now to convince the public that the fears are overblown, and, to the contrary, many people will benefit from the changes.

At a minimum, the public is more engaged now and perhaps susceptible to a reasoned explanation of what’s actually in the legislation as opposed to the misleading distortions they’ve heard for months. None of this will mollify the Tea Party acolytes, who are beyond reach. And we can assuredly expect a period of continuing trench warfare to shape the legislation’s public image.

Nonetheless, the early signs are not terrible. It’s interesting that many Republicans have been predicting economic calamity if the bill is enacted. It would appear that Wall Street doesn’t agree. Even though the reconciliation process has yet to unfold, Wall Street’s initial response was a shrug. If Atlas Shrugged and Ayn Rand is rolling over in her grave, the mavens of Wall Street also shrugged. To be sure, Wall Street factors in the potential benefits to pharmaceutical manufacturers and hospitals, whose stocks rose on Monday, though health insurance stocks fell. But if Wall Street truly thought the legislation would wreck the economy, the market would have taken a dive. Maybe it will today or next week. Maybe not.

And if the legislation survives the initial onslaught, Republican members of Congress may be compelled to rethink their obdurate opposition to the law. Ultimately, their just say no philosophy did not impede enactment of a law they refused to help shape. Assuming that the Democrats retain their majorities in Congress, the real bargaining will begin after the 2010 elections. When the new Congress convenes in 2011, bargaining to strengthen the legislation will commence. At that point, the cultural shift will have begun. Once Republicans stop fomenting civil resistance and begin to bargain in good faith, the reforms will gain bipartisan legitimacy.

As congressional attention returns to other issues, such as banking reform, the exclusive focus on health care will subside somewhat, allowing the cultural process to operate naturally. With banking reform, Democrats may be able to place the Republicans on the defensive, forcing the Republicans to defend Wall Street malefactors. This, too, can help solidify the health insurance reforms.

The Executive Order on Abortion

Article II of the Constitution states that “the executive Power shall be vested in the President of the United States of America.” It further states that the President “shall take Care that the Laws be faithfully executed.” Presidents since Washington have often issued executive orders including for example the Emancipation Proclamation, President Truman’s order desegregating the armed services, or the executive orders of President Eisenhower, Kennedy, and Johnson desegregating schools and ending discrimination in federal programs. While a few Executive Orders, such as President Truman’s order seizing the steel industry, have been struck down by the courts, as long as the President is acting within his constitutional authority as the chief executive of the nation’s executive departments and not acting directly contrary to a federal statute, his orders are not subject to legal challenge. Indeed, they independently have the force of law.

Despite claims to the contrary, the President’s Executive Order Ensuring Enforcement and Implementation of Abortion Restrictions in the Patient Protection and Affordable Care Act is clearly authorized by the Constitution, and consistent with the Patient Protection and Affordable Care Act itself and existing law and regulations. Section 2 of the Executive Order simply directs federal agencies to rigorously implement the express provisions of the Act requiring that premium credits and cost-sharing subsidies not be used to finance abortions. The Executive Order also implements the Act’s requirements that federal funds be strictly segregated from private premium payments that may be used to purchase abortion coverage. Section 3 of the Executive Order directs the Secretary of Health and Human Services to assure that all community health centers comply with the Hyde amendment, which governs their HHS appropriations, in all of their operations. The Secretary is also directed to update grant policy statements and issue new interpretive rules to make this clear. There is nothing in the Patient Protection and Affordable Care Act or existing law governing federally qualified community health centers that contradicts or limits the scope of this order. Indeed, the Order repeats longstanding regulations governing community health centers, which in turn simply interpret and implement that statutory mission of community health centers to provide primary care. This executive order is clearly legal.

Deem and Pass

The latest constitutional dust-up over health care reform concerns whether the dDeem-and-pass rule proposed by Congresswoman Slaughter for passing the Senate bill though the House is constitutional. The problem, for anyone who has not been following the health care reform battle minute by minute, is that a lot of House members hate the Senate bill and are not eager to vote for it. But the Senate bill must be adopted by the House before it can be “fixed” through reconciliation. Rather than pass the Senate bill as such, the proposal is to pass a “special rule” that will “deem” the Senate bill to be adopted once the reconciliation bill is adopted. In effect, Congress will vote on the Senate bill, but they will pretend that they didn’t.

Is this procedure constitutional? Professor McConnell, writing in the Wall Street Journal, contends that it is not. He argues that it violates the bicameralism and presentment requirements of Article 1, sec. 7 of the Constitution. He cites an earlier case, Clinton v. City of New York (1998), in which the Supreme Court struck down a statute as unconstitutional because it violated the procedures established by this provision of the Constitution. But the Clinton case (and the case of INS v. Chadha (1983), cited by other critics of the deem and pass rule) dealt with very different circumstances. Clinton addressed the line-item veto law which allowed a President to sign a bill and then cancel parts of it, clearly not allowed by the veto provisions of Art. 1, sec. 7. Chadha allowed one House to by vote overrule an executive determination, clearly violating the bicameralism requirement. Neither addressed the validity of an internal Congressional procedural rule.

In fact, Article1,sec.5 provides that “each House may determine the Rules of its proceedings” Although the federal courts will hear challenges to federal laws that are not adopted in accordance with express constitutional requirements, United States v.Munoz-Flores (1990), the Courts do not get involved in disputes over internal rules, which are the provenance of the legislative branch. Public Citizen v.District Ct. (D.C.Ct . App. 2007). Professor McConnell cites the “yeas and nays” vote requirement of section 5 as demanding a vote on any bill passed by a house of Congress, but that provision only applies if such a vote is demanded by one fifth of those present, and does not specify what rule the vote shall be on. Indeed, the rule refers to a vote on a “question,” not a bill.

The special rule procedure has been used repeatedly for nearly 80 years to pass dozens of bills at the instance of both parties; often politically decisive or unpopular bills. If it were to be ruled unconstitutional, dozens of laws would come under challenge, including a many of the federal expenditures appropriated in recent years since the raising of the debt ceiling is often done under a special rule. Who wants to open this can of worms? The real question is whether there will be a vote that adopts the language of the Senate bill, meeting the bicameralism requirement. If that happens, the procedure through which it happens is not of constitutional significance.

Having said that, I wish the House would not take this approach. Using an arcane rule to pass the bill only adds fuel to the fire of the right-wing demagogues who are claiming that this bill, after a year of exhausting public debate, is somehow being rammed through. It is necessary to use the reconciliation process, which people already find confusing, to get this legislation done. Deem and pass is not obligatory. Moreover, the law will undoubtedly be challenged, and we, frankly, have a right-wing activist Supreme Court that has shown itself capable of reaching result-oriented political decisions and does not feel particularly bound by precedent. Why provoke them? It will be clear to absolutely everyone anyway that the House members have in fact voted to accept the Senate bill, as modified through reconciliation, of course. The House should just get it done.

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