Ruling Striking Down Obamacare Moves Health Debate to Center Stage
by Sheryl Gay Stolberg, Robert Pear and Abby Goodnough - NYT - December 15, 2018WASHINGTON — The decision by a federal judge in Texas to strike down all of the Affordable Care Act has thrust the volatile debate over health care onto center stage in a newly divided capital, imperiling the insurance coverage of millions of Americans while delivering a possible policy opening to Democrats.
After campaigning vigorously on a pledge to protect patients with pre-existing medical conditions — a promise that helped return them to the House majority they had lost in 2010 — Democrats vowed to move swiftly to defend the law and to safeguard its protections.
On the defensive, Republicans campaigning this fall promised that they too backed the health law’s protections for people with pre-existing medical conditions. But the Texas ruling illustrated the fruits — and possible perils — of their long-running campaign, stepped up in the Trump era, to remake the judiciary through the confirmation of dozens of conservative judges, including two appointees to the Supreme Court.
The ruling, if it stands, would not only do away with coverage protections for people with pre-existing health conditions but also strike down the guarantee of coverage for what the law deems “essential health benefits.” These include emergency services, maternity and newborn care, mental health and substance abuse treatment, prescription drugs and pediatric care.
But it is so sweeping that many legal analysts believe it is likely to be overturned. The Supreme Court, in a 5-to-4 decision, has already upheld the Affordable Care Act’s legality. The political reaction to the Texas decision, though, is not likely to diminish anytime soon.
“This is a five-alarm fire,” said Senator Christopher S. Murphy, Democrat of Connecticut. “Republicans just blew up our health care system.”
Top Republicans were by and large muted in their response, but Representative Kevin McCarthy of California, the incoming House minority leader, appealed to Democrats to come to negotiate a successor to what he called “an unconstitutional law.”
“President Trump has made clear he wants a solution, and I am committed to working with my colleagues on both sides of the aisle to make sure America’s health care system works for all Americans,” he said in a statement Saturday.
The Democrats’ first step will be in the courts; aides to Representative Nancy Pelosi, the top House Democrat, said Saturday that House Democrats would move quickly to notify the Trump administration that they intended to intervene in the case. A vote on a resolution to do so is expected in the earliest days of the new Congress.
President Trump this month. He sent a celebratory Twitter post after the ruling, calling it “great news for America!” but the administration sought to allay concerns about the decision.Sarah Silbiger/The New York Times
Democrats also intend to convene hearings to spotlight the sweeping impact of the Texas ruling — and lay the groundwork for their case to reclaim the White House in 2020. If upheld on appeal, the decision could deprive an estimated 17 million Americans of their health insurance — including millions who gained coverage through the law’s expansion of Medicaid. Still others could see premiums skyrocket as price protections for pre-existing conditions lapse.
The immediate practical effect of the ruling was not clear. While the judge declared that the whole law was invalid, as Texas and 19 other states had asserted, he did not issue an injunction to stop federal officials from enforcing it, and the effects of the judgment could be delayed pending appeals.
But the timing of the decision seemed designed to maximize political reverberations. It came a day before open enrollment was to end for coverage under the health law for the coming year. Sign-ups were already expected to dipafter successive blows to the law by Congress and the Trump administration. But the passage of statewide referendums last month and the election of Democratic governors could also mean coverage expansions in the coming year under the health law’s Medicaid expansion.
In an email to millions of Americans on Saturday, the Trump administration tried to allay concerns caused by the court decision in the Texas case.
The case is “still moving through the courts,” said the message from the federal Centers for Medicare and Medicaid Services. “The marketplaces are still open for business, and we will continue with open enrollment. There will be no impact to enrollees’ current coverage or their coverage in a 2019 plan.”
But Mr. Trump was in a celebratory mood. “It was a big, big victory by a highly respected judge, highly, highly respected in Texas, and on the assumption that the Supreme Court upholds, we will get great, great health care for our people,” Mr. Trump told reporters on Saturday. “We’ll have to sit down with the Democrats to do it, but I’m sure they want to do it also.”
In his ruling on Friday, Judge Reed O’Connor of the Federal District Court in Fort Worth struck down the law on the grounds that its mandate requiring people to buy health insurance is unconstitutional and the rest of the law cannot stand without it. The judge found that the “myriad parts” of the law are all interconnected. Without the mandate, he said, the rest of the law comes crashing down.
The ruling is just the latest chapter in the tumultuous history of a law that has transformed life for millions of Americans since the measure was passed without any Republican votes and signed in March 2010 by President Barack Obama.
The decision puts Republicans in Congress into a political box. Most of them tried over and over to repeal the Affordable Care Act. And many of them survived the Democratic wave in midterm elections last month only by vowing to preserve the law’s protections for people with pre-existing conditions — protections that would be swept aside by Judge O’Connor.
President Barack Obama signing the Affordable Care Act in 2010, with Ms. Pelosi behind him. Many Republicans have since repeatedly tried to repeal the law.Doug Mills/The New York Times
“Republicans in office would mostly prefer to run away from this issue or hope it disappears before they have to deal with it legislatively,” said Thomas P. Miller, a lawyer and health economist at the American Enterprise Institute and a critic of the law.
After struggling for eight years to come up with an alternative to the Affordable Care Act, some Republicans in Congress seemed to hope that the judge’s decision would be a catalyst for cooperation, which has been virtually nonexistent to date. Representative Greg Walden, Republican of Oregon and the departing chairman of the Energy and Commerce Committee, said the decision offered “a rare opportunity for truly bipartisan health care reform that protects those with pre-existing conditions.”
In the Senate, two Republicans who have cooperated on health legislation — Susan Collins of Maine and Bill Cassidy of Louisiana — said in separate interviews that the ruling showed the need for a bill like one they introduced last year. The bill would keep consumer protections from the Affordable Care Act but give states much more discretion over the use of federal funds for health care.
“Obamacare is failing,” Mr. Cassidy, a medical doctor, said. “People are going without insurance because they can’t afford it. Democrats may be doing the political calculus, saying, ‘This is great for us because we want to use the issue in 2020.’ But I don’t care about the politics. I’m concerned about that family of four in Louisiana who don’t get a subsidy, who are paying $40,000 a year for a policy with a $13,000 deductible.”
Ms. Collins, who has sought unsuccessfully to persuade the Justice Department to defend the law’s provisions on pre-existing conditions, predicted that the Texas ruling would be overturned, but said the Senate needed to press ahead with legislation even if it was not.
“I was surprised that the judge was so sweeping in his decision,” she said. “There was no need for him to strike down the entire A.C.A. He could have taken a much more surgical approach.”
Others were taking a wait-and-see attitude. Representative Tom Cole, Republican of Oklahoma, said in an interview Saturday that he and his colleagues would likely wait until they saw the outcome of the lawsuit before reacting.
“They think they can whip people up over the health care issue; it worked well for them in the midterms,” Mr. Cole said, referring to Democrats. “But we are two years away from the election, and I think very seldom does something happen in this time frame that has lasting political impact.”
Friday’s decision could also give a boost to liberal Democrats who won hotly contested races running as advocates of “Medicare for all.” Even before the court decision on Friday, liberals were promising to make health care a central issue in the next presidential election.
Senator Susan Collins of Maine provided one of the three Republican “no” votes that doomed an effort to kill the health care law in 2017.Gabriella Demczuk for The New York Times
“Democrats need to put a bright North Star in the sky for 2020 voters showing what Democrats would do with more power, and making clear that we’re moving toward ‘Medicare for all’ as a big part of a 2020 electoral strategy,” said Adam Green, a founder of the Progressive Change Campaign Committee, an advocacy group. “It seems pretty clear that the presidential nominee, whoever it is, will support Medicare for all.”
Recent polls have found that slightly more than half of Americans approve of the Affordable Care Act, with many more, across political persuasions, wanting to keep its provisions protecting people with pre-existing health conditions. But polls have also found that many Americans are unhappy with their health care and its costs, particularly drug prices, and both parties in Congress have taken note.
Under the Affordable Care Act, many people of modest means can obtain subsidies covering all of their premiums, so the insurance is essentially free. But for those whose income is too high to qualify for subsidies, the costs remain high — a problem that the Trump administration and congressional Republicans have seized on.
Encouraging enrollment has never been a priority for Trump administration officials, and confusion caused by the court decision in Texas could further depress enrollment, which was already lagging behind last year’s numbers.
From Nov. 1 to Dec. 8, about 4.1 million people had signed up for Affordable Care Act coverage through the federal marketplace, with new enrollment in the 39 states that use the federal website Healthcare.gov down by 20 percent compared with the same period last year.
In all, 11.8 million people in all 50 states signed up for health insurance through the law’s marketplaces for 2018. This year’s enrollment period is now ending except for in Rhode Island, where it will end Dec. 23, and in California, Colorado, Massachusetts, Minnesota, New York and the District of Columbia, where it will end in January.
“During a year when most people don’t know when the deadline is, if the only news you hear is that the A.C.A. was struck down, that is only going to hurt enrollment,” Josh Peck, a co-founder of the group Get America Covered and the former chief marketing officer for Healthcare.gov during the Obama administration, said in an email.
The administration has slashed marketing efforts and enrollment assistance and encouraged people to buy skimpier, less expensive plans that do not meet the standards of the law. These actions, and the elimination of the law’s tax penalty for not having coverage starting next year, are most likely among the reasons fewer people are signing up.
Even as enrollment in private plans under the Affordable Care Act will most likely be smaller next year, hundreds of thousands more low-income adults are expected to enroll in expanded Medicaid in five states that recently gave them the option through citizens’ initiatives or legislative action. Those states are Idaho, Maine, Nebraska, Utah and Virginia. Last month’s Kaiser tracking pollfound that 59 percent of respondents living in the 14 states that have not yet expanded Medicaid want them to do so.
Other broadly popular provisions of the law are one that allows young people to stay on their parents’ health insurance plan until they turn 26, and another that allows people to get certain types of preventive care, like vaccinations, mammograms and other types of screenings for diseases, at no charge.
Reed Abelson contributed reporting from New York.
Democrats see ‘5-alarm fire’ over health law
Boston Globe - December 15, 2018
WASHINGTON — The decision by a federal judge in Texas to strike down all of the Affordable Care Act has thrust the volatile debate over health care onto center stage in a newly divided capital, imperiling the insurance coverage of millions of Americans while delivering a possible policy opening to Democrats.
After campaigning vigorously on a pledge to protect patients with preexisting medical conditions — a promise that helped return them to the House majority they had lost in 2010 — Democrats vowed to move swiftly to defend the law and to safeguard its protections.
On the defensive, Republicans campaigning this fall promised that they, too, backed the health law’s protections for people with preexisting medical conditions. But the Texas ruling illustrated the fruits — and possible perils — of their long-running campaign, stepped up in the Trump era, to remake the judiciary through the confirmation of dozens of conservative judges, including two appointees to the Supreme Court.
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The ruling, if it stands, would not only do away with coverage protections for people with preexisting health conditions but also strike down the guarantee of coverage for what the law deems “essential health benefits.” These include emergency services, maternity and newborn care, mental health and substance abuse treatment, prescription drugs, and pediatric care.
But it is so sweeping that many legal analysts believe it is likely to be overturned. The Supreme Court, in a 5-4 decision, has already upheld the Affordable Care Act’s legality. The political reaction to the Texas decision, though, is not likely to diminish anytime soon.
“This is a five-alarm fire,” said Senator Chris Murphy, Democrat of Connecticut. “Republicans just blew up our health care system.”
Republicans were by and large muted in their response, but incoming House minority leader Kevin McCarthy of California appealed to Democrats to come to negotiate a successor to what he called “an unconstitutional law.”
“President Trump has made clear he wants a solution, and I am committed to working with my colleagues on both sides of the aisle to make sure America’s health care system works for all Americans,” he said in a statement Saturday.
The Democrats’ first step will be in the courts; aides to current House minority leader Nancy Pelosi of California said Saturday that House Democrats would move quickly to notify the Trump administration that they intend to intervene in the case. A vote on a resolution to do so is expected in the earliest days of the new Congress.
Democrats also intend to convene hearings to spotlight the sweeping impact of the Texas ruling — and lay the groundwork for their case to reclaim the White House in 2020. If upheld on appeal, the decision could deprive an estimated 17 million Americans of their health insurance — including millions who gained coverage through the law’s expansion of Medicaid. Still others could see premiums skyrocket as price protections for preexisting conditions lapse.
The immediate practical effect of the ruling was not clear. While the judge declared that the whole law was invalid, as Texas and 19 other states had asserted, he did not issue an injunction to stop federal officials from enforcing it, and the effects of the judgment could be delayed pending appeals.
But the timing of the decision seemed designed to maximize political reverberations. It came a day before open enrollment was to end for coverage under the health law for the coming year. Sign-ups were already expected to dip after successive blows to the law by Congress and the Trump administration. But the passage of statewide referendums in November and the election of Democratic governors could also mean coverage expansions in the coming year under the health law’s Medicaid expansion.
In an e-mail to millions of Americans on Saturday, the Trump administration tried to allay concerns caused by the court decision in the Texas case.
The case is “still moving through the courts,” said the message from the federal Centers for Medicare and Medicaid Services. “The marketplaces are still open for business, and we will continue with open enrollment. There will be no impact to enrollees’ current coverage or their coverage in a 2019 plan.”
‘This is a five-alarm fire. Republicans just blew up our health care system.’
But President Trump was in a celebratory mood, tweeting, “Wow, but not surprisingly, Obamacare was just ruled UNCONSTITUTIONAL by a highly respected judge in Texas. Great news for America!”
In his ruling Friday, Judge Reed O’Connor of the US District Court in Fort Worth struck down the law on the grounds that its mandate requiring people to buy health insurance is unconstitutional and the rest of the law cannot stand without it. The judge found that the “myriad parts” of the law are all interconnected. Without the mandate, he said, the rest of the law comes crashing down.
The ruling is just the latest chapter in the tumultuous history of a law that has transformed life for millions of Americans since the measure was passed without any Republican votes and signed in March 2010 by President Obama.
The decision puts Republicans in Congress into a political box. Most of them tried over and over to repeal the Affordable Care Act. And many of them survived the Democratic wave in November’s midterm elections only by vowing to preserve the law’s protections for people with preexisting conditions — protections that would be swept aside by O’Connor.
“Republicans in office would mostly prefer to run away from this issue or hope it disappears before they have to deal with it legislatively,” said Thomas P. Miller, a lawyer and health economist at the American Enterprise Institute and a critic of the law.
Recent polls have found that slightly more than half of Americans approve of the Affordable Care Act, with many more, across political persuasions, wanting to keep its provisions protecting people with preexisting health conditions. But polls have also found that many Americans are unhappy with their health care and its costs, particularly drug prices, and both parties in Congress have taken note.
Under the Affordable Care Act, many people of modest means can obtain subsidies covering all of their premiums, so the insurance is essentially free. But for those whose income is too high to qualify for subsidies, the costs remain high — a problem that the Trump administration and congressional Republicans have seized on.
Encouraging enrollment under the Affordable Care Act has never been a priority for Trump administration officials, and confusion caused by the court decision in Texas could further depress enrollment, which was already lagging behind last year’s numbers.
This year’s enrollment period is now ending except for in Rhode Island, where it will end Dec. 23, and in California, Colorado, Massachusetts, Minnesota, New York, and the District of Columbia, where it will end in January.
What the Lawless Obamacare Ruling Means
By Jonathan H. Adler andAbbe R. Gluck - NYT - December 15, 2018
In a shocking legal ruling, a federal judge in Texas wiped Obamacare off the books Friday night. The decision, issued after business hours on the eve of the deadline to enroll for health insurance for 2019, focuses on the so-called individual mandate. Yet it purports to declare the entire law unconstitutional — everything from the Medicaid expansion, the ban on pre-existing conditions, Medicare and pharmaceutical reforms to much, much more.
A ruling this consequential had better be based on rock-solid legal argument. Instead, the opinion by Judge Reed O’Connor is an exercise of raw judicial power, unmoored from the relevant doctrines concerning when judges may strike down a whole law because of a single alleged legal infirmity buried within.
We were on opposing sides of the 2012 and 2015 Supreme Court challenges to the Affordable Care Act, and we have different views of the merits of the act itself. But as experts in the field of statutory law, we agree that this decision makes a mockery of the rule of law and basic principles of democracy — especially Congress’s constitutional power to amend its own statutes and do so in accord with its own internal rules.
The individual mandate is the law’s controversial requirement that all Americans maintain qualifying health insurance coverage or pay a penalty. In 2012, the Supreme Court upheld this penalty as an exercise of Congress’s taxing power. In 2017, unable to get the votes to repeal the entire law, Congress just zeroed out the penalty.
In this case, Texas and 19 other states argue that with zero penalty, the mandate lacks a constitutional basis because it will no longer be enforced like a tax. If that were all there was, the case would have little consequence because starting in 2019, the mandate is unenforceable.
But audaciously, the states argued — and Judge O’Connor agreed — that the rest of Obamacare must fall, too. They claim that the mandate is so central to the A.C.A. that nothing else in it can operate without it.
That’s not how the relevant law works. An established legal principle called “severability” is triggered when a court must consider what happens to a statute when one part of it is struck down. The principle presumes that, out of respect for the separation of powers, courts will leave the rest of the statute standing unless Congress makes clear it did not intend for the law to exist without the challenged provision. This is not a liberal principle or a conservative principle. It is an uncontroversial rule that every Supreme Court justice in modern history has applied.
Sometimes severability cases are difficult because it is hard to guess how much importance Congress attributed to one provision, especially in a lengthy law like the Affordable Care Act. But this is an easy case: It was Congress, not a court, that eliminated the mandate penalty and left the rest of the statute in place. How can a court conclude that Congress never intended the rest of the statute to exist without an operational mandate, when it was the 2017 Congress itself that decided it was fine to eliminate the penalty and leave the rest of the law intact?
The 55-page opinion devotes just two pages to the intention of the 2017 Congress. Instead, it relies on the perspective of the 2010 Congress that enacted the law, and two Supreme Court cases that were charged with asking questions about that 2010 Congress’s intent. While the dozens of pages rehearsing those old viewpoints may look superficially sound, that part of the opinion is smoke and mirrors, because the 2010 Congress’s intention is not relevant to this case — the 2010 law is no longer what is at issue.
Congress is allowed to amend its own law, and the Constitution does not permit any court to undermine that power. Still, Judge O’Connor wrote that we cannot divine the intent of the 2017 Congress because Congress didn’t have the votes to repeal the entire law but wished it could. That’s ridiculous. Congressional intent is all about the votes. One would not say Congress wished it could repeal the Civil Rights Act if only a minority of Congress supported such a move. It is conservative judicial doctrine 101, as repeatedly emphasized by Justice Antonin Scalia, that the best way to understand congressional intent is to look at the text Congress was able to get through the legislative process.
Instead, Judge O’Connor goes down a rabbit hole, hypothesizing whether the 2010 Congress would have enacted the entire law without the mandate and whether the law can function without it. What findings Congress made in 2010 are irrelevant to the interpretation of this later legislative act. Regardless, Congress’s own act of 2017 makes clear Congress thinks the law works without an operational mandate. To believe otherwise is to assume Congress enacts unworkable laws and that is not what courts are allowed to presume. Judge O’Connor’s claim to the contrary is the equivalent of saying that your 2017 tax cut isn’t valid because the 2010 Congress also enacted a tax bill, and wouldn’t have included your tax cut there.
What happens next? The health law is likely to continue in place while the case moves to the higher courts. California, the leader of a group of states that stepped in to defend the law because the Justice Department refused to do so, will almost certainly go to the Fifth Circuit — the federal appellate court that presides over Texas — to have the effects of the decision paused and the case reviewed. The House of Representatives will also likely join the lawsuit once the Democrats take control.
If the Fifth Circuit reverses Judge O’Connor, we think it unlikely the Supreme Court will take the case. If the Fifth Circuit upholds the ruling, we are skeptical a majority of the court would sustain this weak analysis.
Chief Justice John Roberts is sensitive to allowing the court to be an instrument of politics, particularly when doing so violates separation of powers. Justice Brett Kavanaugh is an expert on statutory interpretation who has previously saidthat courts should “sever an offending provision from the statute to the narrowest extent possible unless Congress has indicated otherwise in the text of the statute.” To do otherwise would be for the court to substitute its own judgment for Congress’s.
Justice Clarence Thomas has opined that the kind of hypothesizing analysis on which Judge O’Connor relied is inappropriate: Congress’s intentions “do not count,” he wrote earlier this year, unless they are “enshrined” in a text that made it through the “constitutional processes of bicameralism and presentment” — as everyone agrees the 2017 tax bill did.
Friday was another sad day for the rule of law — the deployment of judicial opinions employing questionable legal arguments to support a political agenda. This is not how judges are supposed to act. Reasonable people may disagree on whether the health law represented the best way to reform America’s health care system, and reasonable people may disagree on whether it should be replaced with a different approach. Yet reasonable people should understand such choices are left to Congress, not to the courts.
Legal experts rip judge’s rationale for declaring Obamacare law invalid
by Devlin Barrett - The Washington Post - December 15, 2018
A federal judge’s ruling declaring the entire Affordable Care Act invalid came under harsh attack Saturday from legal analysts who predicted higher courts will reject the rationale as a tortured effort to rewrite not just the law but congressional history.
The ruling in Texas came on the eve of Saturday’s deadline for Americans to sign up for coverage in the federal insurance exchange created by the ACA, more commonly called Obamacare. The judge did not issue any injunction in the case, meaning that in the short term, nothing will change in health-care services or insurance while the courts consider the issue.
The 55-page ruling late Friday from U.S. District Judge Reed O’Connor found the law invalid on the basis of the political and legal history of a few key provisions. O’Connor decided that once Congress repealed the tax penalty that enforced a mandate that most Americans get health insurance, the whole law became invalid.
The political and legal fights surrounding the ACA tend to focus on the mandate and the requirement that insurance companies provide coverage to people with preexisting medical conditions. The 2,000-page law, however, covers a vast array of other health-care issues, touching almost every part of the health-care industry in the United States.
For that reason, if the ruling were to take effect, it could create major disruptions across the U.S. health-care system — affecting which drugs patients can buy, preventive services for older Americans, the expansion of Medicaid in most states and the structure of the Indian Health Service.
“There’s really no American that’s not affected by this law,” said Yale law professor Abbe Gluck, who filed an amicus brief with other lawyers in the Texas case.
The judge’s ruling, she said, flouts settled legal doctrine and places key acts of Congress in reverse order.
By ignoring that Congress specifically declined to strike down the ACA in 2017 when it chose to alter only one portion of the bill, she said, the judge decreed that the 2010 Congress, which first passed the law, has more authority than the same legislative body in 2017.
“It’s absolutely ludicrous to hold that we do not know whether the 2017 Congress would have wanted the rest of the ACA to exist without an enforceable mandate, because the 2017 Congress did exactly that when it zeroed out the mandate and left the rest of the ACA standing,” Gluck said. “He effectively repealed the entire Affordable Care Act when the 2017 Congress decided not to do so.”
The Affordable Care Act was passed in 2010 and became the signature domestic policy achievement of the Obama administration. The Supreme Court upheld the law in 2012 and again in 2015, and it was modified by Congress in 2017.
A key element of the current legal fight surrounding the ACA is the individual mandate, which requires most Americans to get health insurance. Under the original law, those who failed to comply with the requirement would face a tax penalty. In 2017, Congress passed a law that revoked the tax penalty, making the individual mandate essentially toothless.
Texas and 18 other states then sued, arguing that the revised law was still unconstitutional because of a legal principle called “inseverability” — the notion that some parts of a law are so intrinsic to other parts that invalidating one invalidates the others. Sixteen other states intervened in defense of the ACA.
The Justice Department, which had been defending the law in court for years, announced in June that it would no longer argue for the mandate, and, as a result, the Trump administration said, a separate requirement that insurance companies cannot reject people who have preexisting conditions was also invalid.
That reversal, ordered by then-Attorney General Jeff Sessions, prompted the resignation of senior Justice Department lawyer Joel McElvain, a career employee who had worked on ACA litigation for years.
Since that change in position, President Trump and other Republicans have sent mixed signals on the ACA — asking the judge to end protections for people with preexisting conditions but insisting during the midterm elections that they would preserve those protections, and accusing Democrats of undermining them.
Those contradictory claims continued Friday night, when the president tweeted his approval of the ruling.
“As I predicted all along, Obamacare has been struck down as an UNCONSTITUTIONAL disaster!” Trump tweeted. “Now Congress must pass a STRONG law that provides GREAT healthcare and protects pre-existing conditions.”
The White House later issued a statement saying the administration expects the ruling will be appealed to the Supreme Court, and the law will remain in place while the court process continues.
In his ruling, O’Connor wrote that by revising the law in 2017, Congress “sawed off the last leg it stood on. . . . The court finds the individual mandate ‘is essential to’ and inseverable from ‘the other provisions of’ the ACA.”
O’Connor was nominated to the bench by President George W. Bush. He has previously ruled against other Obama administration initiatives, including a nationwide injunction in 2016 that blocked a policy advising school districts that transgender students should have access to the restrooms that match their gender identity. Also in 2016, he issued an injunction blocking regulations aimed at protecting transgender people from discrimination in health care, saying the rules could violate the religious beliefs of health-care providers.
A Justice Department spokeswoman declined to comment on the decision.
Legal scholars who support the ACA quickly denounced the judge’s ruling; conservative lawyers also criticized it.
Ted Frank, a lawyer at the Competitive Enterprise Institute who is critical of the ACA, called the decision “embarrassingly bad” because “you’re twisting yourself into knots” to reach a particular conclusion.
Over the past two years, Frank said, he and other conservative lawyers have complained when district court judges did similar intellectual gymnastics to attack Trump administration initiatives. “It’s not appropriate in the other direction, either,” he said.
Nicholas Bagley, a University of Michigan law professor, predicted “a long slog” while the courts wrestle with O’Connor’s decision.
“I think this case is frivolous, and I think the judge’s opinion is about as naked a piece of judicial activism as I have ever seen; I don’t even think it’s close,” said Bagley, who supports the ACA. “Like any lawsuit, you should take it seriously, but I don’t think this is an imminent or mortal threat to the Affordable Care Act.”
Judge’s ruling on Obamacare poses new problems for Republicans
• December 16, 2018
WASHINGTON — A federal judge’s ruling that the Obama health law is unconstitutional has landed like a stink bomb among Republicans, who’ve seen the politics of health care flip as Americans increasingly value the overhaul’s core parts, including protections for pre-existing medical conditions and Medicaid for more low-income people.
While the decision by the Republican-appointed judge in Texas was sweeping, it has little immediate practical impact because the Affordable Care Act remains in place while the legal battle continues, possibly to the Supreme Court.
HealthCare.gov, the government’s site for signing up, was taking applications Saturday, the deadline in most states for enrolling for coverage next year, and those benefits will take effect as scheduled Jan. 1. Medicaid expansion will proceed in Virginia, one of the latest states to accept that option. Employers will still be required to cover the young adult children of workers, and Medicare recipients will still get discounted prescription drugs.
But Republicans, still stinging from their loss of the House in the midterm elections, are facing a fresh political quandary after U.S. District Judge Reed O’Connor said the entire 2010 health law was invalid.
Warnings about the Texas lawsuit were part of the political narrative behind Democrats’ electoral gains. Health care was the top issue for about one-fourth of voters in the November election, ahead of immigration and jobs and the economy, according to VoteCast, a nationwide survey for The Associated Press. Those most concerned with health care supported Democrats overwhelmingly.
In his ruling, O’Connor reasoned that the body of the law could not be surgically separated from its now-meaningless requirement for people to have health insurance.
“On the assumption that the Supreme Court upholds, we will get great, great health care for our people,” President Donald Trump told reporters during a visit Saturday to Arlington National Cemetery. “We’ll have to sit down with the Democrats to do it, but I’m sure they want to do it also.”
Economist Gail Wilensky, who oversaw the Medicare program for President George H.W. Bush, said the state attorneys general from GOP strongholds who filed the lawsuit really weren’t very considerate of their fellow Republicans.
“The fact that they could cause their fellow Republicans harm did not seem to bother them,” said Wilensky, a critic of President Barack Obama’s signature domestic achievement.
“The people who raised it are a bunch of guys who don’t have serious election issues, mostly from states where saber-rattling against the ACA is fine,” she added. “How many elections do you have to get battered before you find another issue?”
Douglas Holtz-Eakin, top policy adviser to Republican John McCain’s 2008 presidential campaign, said he was struck by the relative silence from top Republicans after the ruling issued.
A prominent example: “The House was not party to this suit, and we are reviewing the ruling and its impact,” said AshLee Strong, spokeswoman for House Speaker Paul Ryan, R-Wisconsin.
Republicans are “going to have to figure out what to do,” Holtz-Eakin said. “If it’s invalidated by the courts, it’s not … ‘We’re going to do it our way.’ They’re going to have to get together with the Democrats in the House.”
The GOP’s failed effort last year to repeal the law showed there’s no consensus within the party itself.
Trump tweeted Friday night that “Congress must pass a STRONG law that provides GREAT healthcare and protects pre-existing conditions.”
“Get it done!” he told Senate Majority Leader Mitch McConnell, R-Kentucky, and Rep. Nancy Pelosi, D-California, who is expected to be speaker in January. But Trump had no plan of his own to offer in the 2017 “repeal and replace” debate.
Two top House Republicans issued diverging statements.
Majority Leader Kevin McCarthy of California said “Obamacare is a broken law,” but added, “I am committed to working with my colleagues on both sides of the aisle to make sure America’s healthcare system works for all Americans.”
The third-ranking GOP leader, Louisiana Rep. Steve Scalise, praised the judge’s ruling and made no mention of working with Democrats, whom he accused of “running a fear-mongering campaign” to win control of the House last month.
The chairman of the House Ways and Means Committee, Rep. Kevin Brady, R-Texas, said that if the law is ultimately overturned, then members of Congress from both parties should start over, working together. He urged maintaining provisions such as protections for pre-existing medical conditions, no lifetime dollar limits on insurance coverage, and allowing young adults to stay on parental coverage until age 26.
Democrats were united in condemning the ruling.
Senate Democratic leader Chuck Schumer of New York said voters will remember. “What will stand is Republican ownership of such a harmful and disastrous lawsuit,” Schumer tweeted.
The next chapter in the legal case could take months to play out.
A coalition of Democratic state officials led by California Attorney General Xavier Becerra will appeal O’Connor’s decision, most likely to the U.S. Court of Appeals for the 5th Circuit in New Orleans.
“The legal merits of the case are frivolous,” University of Michigan law professor Nicholas Bagley said. “The notion that the unconstitutionality of an unenforceable mandate somehow requires toppling the entire ACA is bonkers.” Bagley supports the law generally, but has been critical of how it has been put into effect.
ACA ruling creates new anxieties for consumers and the health-care industry
by Amy Goldstein - The Washington Post - December 16, 2018
The ruling by a federal judge in Texas striking down the Affordable Care Act has injected a powerful wave of uncertainty about recent changes woven into the U.S. health-care system that touch nearly all Americans and the industry that makes up one-sixth of the economy.
The opinion, if upheld on appeal, would upend the health insurance industry, the way doctors and hospitals function, and the ability of millions of Americans to access treatments they need to combat serious diseases.
Parts of the law that would need to be unwound include no-charge preventive services for older Americans on Medicare, allowing parents to keep children on their plans through age 26, a variety of efforts to rein in prescription drug costs and even requirements that some restaurants post calorie counts
“It affects almost everyone in America,” said Tim Jost, a specialist in health law and a professor emeritus at Washington and Lee University.
The court decision also sets up an awkward juggling act for the Republican Party, balancing President Trump’s gleeful tweets over the court’s decision against a perception that the GOP is threatening insurance that covers nearly 20 million Americans through new private health plans and an expansion of Medicaid — a perception that Democrats successfully employed in last month’s elections that gave them control of the House.
While the ruling by U.S. District Judge Reed O’Connor invalidated the law, it did not enjoin any of its provisions. The Trump administration immediately announced that the law the president sought to dismantle would stay in place for now.
Over the weekend, Republicans and Democrats alike predicted it could take a year or more before the true significance of Friday night’s opinion by one conservative federal judge is known. Echoing the Trump administration, they said the ruling would begin a long path through the appellate courts, probably bringing the question of the ACA’s constitutionality before the Supreme Court for a third time.
On Sunday, Senate Minority Leader Charles E. Schumer (D-N.Y.) joined Nancy Pelosi, who is expected to be the next speaker of the House, in promising to make Democrats part of an appeal. Schumer said on NBC’s “Meet the Press” that “the first thing we’re going to do when we get back there in the Senate is . . . put a vote on the floor, urging an intervention in the case.” Unlike the House, the Senate will remain in Republican control.
Nevertheless, the ruling, with its sweeping breadth, unsettles what had at least seemed a greater calm this year for the sprawling law, which has been challenged by its own shortcomings and its Republican political nemeses ever since Democrats pushed it through Congress in 2010. O’Connor’s ruling came out of the most recent Republican challenge, brought by nearly 20 state attorneys general from red states.
If it stands, the most politically delicate part of the law at stake is its rule forbidding insurers from charging more to people with preexisting medical conditions or refusing to cover them at all.
“This can’t happen!” was Christine Nelson’s first thought when she saw reports of the ruling on the news in Phoenix.
Nelson has metastasized melanoma. Without the ACA, she feared, insurers could return to placing yearly and lifetime limits on the cost of her treatment, which has run up more than $1 million in the past dozen years for eight surgeries, radiation on four parts of her body, eight different immunotherapies and so many scans and biopsies that she has lost count. And she and her husband, who runs a small heating and air conditioning business and has Type II diabetes, could be frozen out of health plans without the law’s protections.
“Without any type of government regulation or anything, I would be dead,” said Nelson, 56, a registered Republican who left her job as an economics teacher six years ago because she is too ill to work.
The most immediate impact of the decision, coming a night before the busy final deadline in most states for people to enroll in ACA health plans for 2019, was confusion for the tens of thousands of people who typically sign up at the last moment.
That timing created a maximal shudder across the health-care industry.
Even attorneys for the Justice Department, which had refused to defend the ACA at the administration’s behest, had asked O’Connor to hold off issuing any injunction until after open enrollment.
“The last thing we want is for there to be chaos in the insurance markets and for people who currently have health care to lose that health care,” Deputy Assistant Attorney General Brett Shumate told the judge in September.
As it turned out, O’Connor did not wait.
On Saturday, Andy Slavitt, former administrator of the Centers for Medicare and Medicaid Services (CMS) under Barack Obama, called on the Trump administration to extend open enrollment. “Typically, over 650,000 people sign up on the final day of open enrollment,” Slavitt tweeted, “so the potential for confusion today is highly impactful.”
The CMS did not extend the deadline. Federal figures due out in a few days will show whether the latest legal peril to the law prompted consumers to shy away on what is typically the biggest enrollment day of the season — or remember to sign up as news of the ruling prompted heightened attention to the deadline.
Over the weekend, the administration tried to stave off consumer worries. “The exchanges are still open for business and we will continue with open enrollment,” current CMS Administrator Seema Verma tweeted a few hours after the ruling. “There is no impact to current coverage or coverage in a 2019 plan.” The CMS oversees much of the ACA.
An agency spokesman said Saturday that, as in the five previous ACA sign-up periods, “we have seen an increase in the volume of consumers contacting our call center and visiting HealthCare.gov during the final days of open enrollment.”
Some insurance seekers were asked to leave contact information with the call centers and would be allowed to finish choosing a health plan after the deadline, the spokesman said, without providing figures.
For the insurance industry, the ruling brings new confusion just as years of political turmoil, major insurers withdrawing from marketplaces and spiking rates had finally given way to some sort of stability.
“This year we got back to some semblance of normal,” said Kristine Grow, spokeswoman for America’s Health Insurance Plans, the industry’s main trade group. Despite the ruling, “nothing is changing with the law today. We are going to continue business as usual,” she said.
Justine Handelman, senior vice president at the Blue Cross Blue Shield Association, whose members play a large role in the individual marketplaces, said, “I don’t think it will have an impact on 2019. . . . But certainly, as you do look to the future, it does bring in uncertainty.
Obamacare Ruling Hits Health Care Stocks
by Stephen Grocer - NYT - December 17, 2018
A federal judge’s decision to strike down the entire Affordable Care Act late Friday has hit the stocks of health insurers and hospitals.
Shares of Molina Healthcare, which specializes in providing care to low-income people under Medicaid and is a mainstay of the individual insurance markets created by the law, fell almost 9 percent on Monday. The stock of Centene, which had expanded aggressively into the state marketplaces, dropped nearly 5 percent.
Other health insurers — Anthem, UnitedHealth and Cigna — were down at least 2.6 percent.
An end to the health law, commonly called Obamacare, could also ding the bottom lines of hospitals, which could treat fewer patients and face more unpaid bills. Shares of HCA, the nation’s largest profit-making hospital chain, were down nearly 3 percent. Two hospital operators were particularly hard-hit. Community Health Systems shares slid almost 14 percent, and stock in Tenet Healthcare was down nearly 7 percent.
The declines on Monday followed a slide in health stocks last Friday, which was set off by a Reuters report that Johnson & Johnson had kept the presence of asbestos in its baby powder from regulators and consumers.
[Read more: In hundreds of pages of memos, The New York Times learned that executives worried about a potential government ban of talc, the safety of the product and a public backlash over Johnson’s Baby Powder, a brand built on a reputation for trustworthiness and health.]
The judge who ruled on the legality of the Affordable Care Act did not issue an injunction to stop federal officials from enforcing the law, so it was not immediately nullified and existing coverage has not been affected. Democrats promised to appeal the decision, which seems destined for the Supreme Court.
Still, the ruling added uncertainty to the health care sector, parts of which have done very well under the law. Since the law’s passage in 2010, shares of health insurers had soared, easily outperforming the broader market. Anthem, UnitedHealth, Cigna, Centene and Molina were all up between 300 percent and 750 percent in that time. By comparison, the S&P 500 has gained about 100 percent over that period.
The Medicare-for-all paradox
by Dylan Scott - VOX - December 16, 2018
Employer health insurance does do a few things quite well. It covers a lot of people, of course. It helps pool risk — companies, particularly larger ones, are almost by default a useful mix of healthy and sick people, helping to spread costs around, because they were not formed for the purpose of providing health insurance.
The price for insurance in the employer market has always been significantly less than buying insurance in the individual market. So its costs are lower, at least compared to what has been the alternative in this country for a long time, and people usually get pretty good benefits.
But Sanders and other stalwart single-payer proponents see health care as fundamentally different from other commodities and believe the government should guarantee health coverage. Their proposals would move every American out of private insurance and into a new government plan. (Supplemental private coverage would be permitted under Sanders’s bill, but the government’s benefits would be so generous that it’s hard to imagine much of a private market remaining.)
Medicare-for-all supporters argue the current system isn’t really working all that well anyway. Their evidence: Out-of-pocket costs are rising, millions of people are still uninsured, and yet America still somehow spends more money on health care than any developed country.
Other Democrats and left-leaning think tanks — cognizant of how deeply ingrained work-based insurance is in our health care ecosystem and of how allergic many Americans are to massive change — have introduced more incremental approaches, like Medicare buy-ins or a supercharged Obamacare that melds with Medicaid. Most of those plans would let private companies continue offering insurance.
Sen. Jeff Merkley, an Oregon progressive with stated presidential interests, co-sponsors Sanders’s Medicare-for-all bill — but he has also introduced his own narrower proposal with Sen. Chris Murphy of Connecticut to give people the option to buy a government plan.
“You have folks who will say, ‘Wait a minute, I don’t have a choice,’ and they will provide resistance,” Merkley tells me. “And, of course, the private insurance companies, which would be replaced, will put up massive resistance.”
The other argument made in favor of employer-based insurance is that it’s a constant experiment in how to better structure benefits and deliver health care. Hundreds of private companies are (the argument goes) constantly working to figure out how to offer insurance at a lower cost while still providing quality health care to their workers.
“A debate we’re constantly having is what’s the right way to cover the services we cover?” Paul Fronstin, who oversees the health insurance program at the Employee Benefits Research Institute, tells me. “My concern about moving away from the employer system is you lose that. Where does the innovation come from?”
But other experts are skeptical — they don’t see much evidence yet that employers are actually spending a lot of time or resources on these initiatives. “They haven’t proven that successful at improving health or managing costs,” Caroline Pearson, a senior fellow at NORC-University of Chicago, says. “What they’re investing in hasn’t shown any return yet. Behavior change is really hard. Frankly, we have no idea how to do it well.”
Salfia noted that the West Virginia school system tried to set up a wellness program at the same time as it was shrinking doctor networks and increasing copays. Teachers would be rewarded if they exercised or ate healthy or went to the doctor. They just had to wear a tracking device and upload the data to an online platform — in a state where many people still lack access to broadband Internet or cellphone service.
“The whole thing was crazy,” she says. The program was eventually dropped.
Employers are asking employees to pay more money for health care
What happened in West Virginia isn’t that different from what’s happening in companies across the country. As health care costs rise, workers over the past decade have been asked to pay more and more money out of their own pockets, as their businesses shift toward less generous benefits.
“Our system is a policy disaster. If there weren’t some strong locked-in features of our system, nobody would accept it,” says Jacob Hacker, who studies health policy at Yale University. “It’s a great system when people had something closer to lifetime employment and employers were providing good benefits, but it’s a really crappy system when that’s not true.”
The percentage of workers with a deductible of more than $1,000 has increased significantly, from 34 percent to 51 percent since 2012, according to the Kaiser Family Foundation.
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Christina Animashaun/Vox
“When times are tough, employers start to cut back on the generosity of their benefits,” Fronstin says. “Deductibles go up. People are paying more money out of pocket.”
The foundation of our work-based insurance system — that health insurance benefits are tax-free to companies and workers — also makes the problem worse.
The economics are pretty straight-forward: Employers save on taxes when they spend money on health care instead of wages. They provide more generous insurance than they would if benefits were taxed and because the benefits are more generous, employees use more health care.
“That makes health care more expensive and makes the health care market bigger,” says Austin Frakt, a health economist at Boston University.
Health care spending for job-based insurance increased by 44 percent from 2007 to 2016, according to researchers at the Health Care Cost institute. Its growth rate was consistently higher than that of Medicare or Medicaid, the major government insurance programs.
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HCCI/Health Affairs
Making matters worse, from a left-leaning economic perspective, the current system favors large employers and higher-income employees.
“The higher the tax bracket of the employee, the bigger the subsidy, which accounts for hundreds of billions of dollars each year,” Stanford University’s Victor Fuchs wrote in JAMA recently. “Perversely, most of the tax subsidy is received by employees with above average incomes.”
This is the opening for single-payer supporters: While you might be used to the health insurance system we have now, it isn’t nearly as good a deal as you might think it is and a single-payer program would be more equitable.
A surprising number of Americans might be persuaded by the argument: Kaiser found in June 2018 that 20 percent of people with work-based insurance said they’d had problems in the past year paying their medical bills. Just because you’re technically covered doesn’t mean you can’t face onerous medical bills. Medicare-for-all offers a coverage guarantee and eliminates out-of-pocket costs.
One development to watch is whether businesses themselves come to decide that they might be better off under single-payer. This is an argument that I’ve heard from Medicare-for-all supporters who won House races this year, like Katie Porter in Orange County, California. It’s also an argument that Sanders, the godfather of single-payer, has made.
Companies have found it worth their while to offer insurance for the better part of a century. Good benefits help attract good workers. The benefits are tax-free. “They’ve felt there was a lot of value for them to offer it,” says Fronstin.
But these days, the cost of covering workers is going up for companies — the average employee contribution rose from $3,300 in 2007 to $5,700 in 2017, but the average employer cost also went up, from $8,800 to $13,000 — and administering health care benefits requires staff, time, and money.
Companies are at least starting to ask the question, Fronstin says: “Are we doing better than Medicare-for-all?”
“That’s the thing they have to wrestle with,” he adds, “which they’ve never really had to wrestle with before.”
Should your employer really determine your health insurance?
One of the promises of Obamacare was that it might loosen the ties between work and health coverage. It hasn’t. Some people see that as a sign of the current model’s strength.
“There’s no indication that the employer market is at a breaking point,” Pearson says.
When President Obama and Democrats in Congress settled on a health care plan, they largely left big employer plans alone. That was a political calculation, but Democrats still reaped the whirlwind of more than 4 million canceled insurance plans that didn’t meet the new standards they set. Transitioning to single-payer in the near term requires canceling plans for 160 million people.
Work-based insurance is so untouchable that, though economists to the right and left agree its tax benefits should be limited, both Democrats and Republicans ended up ducking the issue when it came time to actually pass a health care bill. The ACA’s ‘Cadillac’ tax on high-end insurance plans, a different means to similar ends, has never actually been enforced; Congress has, on a bipartisan basis, repeatedly delayed it. House Republicans caved with just the whiff of industry pressure in 2017, quickly pulling such a provision from their plan.
Single-payer supporters see this as another failure of the ACA and the need for more ambitious reforms. They condemn a system that tethers people to their jobs, even if they don’t like them, strictly so they can hold on to their insurance.
“You also talk to people who say, ‘You know, I really don’t like my job, I really hate my job, but I go to my job because my wife is ill and I have to make sure that I have good coverage to take care of her.’ Is that a way to run an economy?” Sanders told Vox. “So there are a lot of reasons why I think we need to do what virtually every other country has done, and get private insurance companies out of the essential health care.”
There is a foundational question here, one often lost in debates about premiums and health care expenditures and uninsured rates or rates of growth: Should your employer be allowed to decide what kind of health insurance you have?
The Trump administration has recently relaxed the ACA’s requirement that all insurance plans cover contraception, allowing even major Fortune 500 firms to refuse to cover birth control over any religious or moral objection.
One anti-abortion Christian woman told the Senate Judiciary Committee during the Brett Kavanaugh Supreme Court hearings about how her faith-based health plan, contracted through her church-affiliated employer, refused to pay for her IUD. She and her husband cut back on their student loan payments to cover the $1,200 bill.
“I have experienced firsthand what it is like to struggle to afford birth control when someone else’s religious beliefs deny it to you,” Rev. Alicia Baker Wilson told senators earlier this year.
Single-payer skeptics talk a lot about freedom and choice, which they say would be lost under Medicare-for-all. Many Americans seem to genuinely share those concerns.
But there should be no illusions: Your freedoms can also be compromised when your employer decides how much you must pay for health care or what kinds of medical services you can get covered.
As Jacob Hacker put it, drawing on the language so often deployed by Medicare-for-all supporters: “Our system will not create health care as a right.”
by Michael Johnson - Daily Kos - December 14, 2018
You’ve probably heard of, and may even have, Delta Dental insurance. But did you know that the main entity behind it, Delta Dental of California, which operates plans using the Delta name in 16 states, is a tax-exempt nonprofit? Because of the public good it supposedly does, you subsidize it.
That, however, hasn’t stopped it from paying its CEO as if he ran a for-profit company 20 or 40 times as big. The $14.3 million it paid him in 2016 is more than the CEO compensation paid by 30 of the 100 largest companies in America, including Apple and Anthem, the giant health insurer.
Obscene CEO pay is just one of the ways that Delta Dental flouts its duties as a nonprofit. But the jig could soon be up. Delta Dental needs regulatory approval in order to close a deal it made this summer to acquire a health insurance company, Moda Health Plan, and that gives its California regulator leverage to force it to start acting like a real nonprofit.
ENRICHING MANAGEMENT
Delta Dental’s latest IRS filing shows just how far away it is from doing that now. For starters, there’s the huge pile of money paid to top management, and not just the CEO. In 2016, the organization spent $54 million compensating its leaders, which accounts for over one-fifth of total pay to company personnel. Nonprofit health plans of comparable size spend a fraction of that.
Delta Dental’s board members also make out like bandits. Despite a provision of the corporate bylaws prohibiting director salaries (“Directors, as such, shall not receive any salary for their services...”) they pay themselves up to $220K annually. The bylaws allow per-meeting fees, but the median amount for such fees among S&P 500 companies is just $1,900.
And then there’s all of the pampering of directors and executives on the organization’s dime.
SHIRKING ITS NONPROFIT DUTY
So what public good does Delta Dental do as a tax-exempt nonprofit?
It claims two things: providing “exceptional dental benefits service” and making charitable contributions. But its services are no different from those of tax-paying insurers, and it donated a grand total of just $1.8 million in 2016. The lack of benefit it provides the public is not for lack of resources; it has $1.4 billion in retained earnings, according to it latest financial statement to regulators.
Meanwhile, the dental plans the organization sells to individuals and small businesses come with huge administrative expense margins. Costs of actual dental care account for only 61% of small group premiums and 63% of individual premiums. Compared to the 80% minimum that Obamacare health plans are required to devote to medical care, that truly is “exceptional” service.
Adding insult to injury, Delta Dental used some of its fat expense margin last year to pay lobbyists to kill a legislative proposal to require dental insurers to devote a minimum of 70% of premiums to dental care. California bill SB 1008 would have established that bit of consumer protection, but Delta Dental fought the provision and it was stripped from the measure.
SOON TO FEEL THE REGULATOR’S WHIP?
There’s some hope, though, that Delta Dental won’t be allowed to keep escaping accountability. It made a $155 million deal this summer to acquire Moda, an Oregon health insurer, and in order to complete the deal it needs the California Department of Managed Health Care to approve it.
The DMHC, in addition to regulating health and dental insurance, is charged with enforcing the public benefit duties of nonprofit health plans. In most states, that responsibility lies with the attorney general. But in California, the lawauthorizes only the DMHC to take enforcement action against nonprofit health plans that disregard their nonprofit obligations.
One of the primary ways that the DMHC is supposed enforce such obligations is by requiring nonprofit plans that seek approval for major transactions, such as acquisitions, to demonstrate that they are, and will continue, doing good for the public. If a plan can’t show that, the DMHC can force it to take concrete steps to start benefiting the public as a condition of approving the deal.
If the DMHC does its job well, Delta Dental could soon be forced to act like the nonprofit “social welfare” organization it claims to the IRS and public to be. But if the regulators drop the ball, nothing will stop Delta Dental management from continuing to lavish themselves with huge paychecks and perks while ignoring their responsibility to do good for the public
Trump Officials Say Drug Prices Are Inflated. So Are Some of Their Claims on a Solution.
by Robert Pear - NYT - December 16, 2018
WASHINGTON — In his zeal to fulfill a campaign promise, President Trump has correctly identified high drug prices as a major problem for many Americans. But in defending his proposed solutions, he has sometimes stretched the facts.
Mr. Trump has proposed that Medicare pay for certain prescription drugs based on the prices paid in other developed countries. He called this “a revolutionary change” and said it would save money for the government and for Medicare beneficiaries without hurting their ability to get the medicines they need.
As part of a demonstration project covering half the country, Medicare would establish an “international pricing index” and use it to calculate a “target price” for each drug covered by Part B of Medicare. The proposal is expected to produce “a 30 percent reduction in Medicare spending” for drugs included in the test, the Department of Health and Human Services said.
The new pricing model, unveiled less than two months ago, has encountered a torrent of criticism from drug companies, which benefit from high prices under the current system, and from conservative groups, which accuse Mr. Trump of trying to import price controls from foreign countries.
Part B of Medicare spends roughly $30 billion a year for drugs that patients receive in doctor’s offices and outpatient hospital clinics — often by infusion or injection — for cancer, rheumatoid arthritis, macular degeneration and other conditions. Some of the drugs cost more than $100,000 a year. Many are biologic drugs made from living cells.
What was said
“U.S. drug companies voluntarily cut the price” of drugs overseas far below what they charge in the United States “for the exact same drug.”
— The Trump administration, in statements this fall.
This is misleading.
Mr. Trump is right that brand-name drugs often cost much more in this country than in Europe. But it is a stretch to say that drug companies voluntarily provide discounts abroad. They generally charge lower prices to ensure that their products will be covered by national health systems in other countries.
Medicare does not use its leverage in that way. As a candidate, Mr. Trump said Medicare should directly negotiate prices with drug makers, a proposal long favored by Democrats. But since taking office, he has dropped the idea.
Most of the 36 countries in the Organization for Economic Cooperation and Development “regulate pharmaceutical prices directly or indirectly through coverage determinations,” the group said in a report last month.
Daniel Hartung, an associate professor at the Oregon State University College of Pharmacy, explained: “Many O.E.C.D. countries have single-payer systems in which the government is essentially setting prices and telling companies what it will pay for coverage. That’s how they can extract substantial reductions relative to prices paid in the United States.”
Mr. Trump is proposing to use prices in 14 other countries as a benchmark or guide in deciding what Medicare would pay. The administration acknowledged that some of these countries, like the Czech Republic and Greece, “have far lower per capita incomes than the United States.”
Several of the 14 countries have a budget for spending on prescription drugs. Many peg their payments to drug prices in other countries, a practice known as reference pricing or international benchmarking. Some of the countries assess the “cost-effectiveness” of drugs and limit how much they will pay for expected gains in the length and quality of life, with some exceptions allowed.
Just seven months ago, the Trump administration criticized the use of reference pricing by other countries, but it has now proposed something similar for Medicare.
What was said
“The president is also going to bring smart negotiation to billions of dollars’ worth of drugs in a part of Medicare where there is currently no negotiation at all.”
— Alex M. Azar II, the secretary of health and human services, in May
What was said
“In Medicare Part B today, the government gets the bill, and we just blindly pay it — oh, plus a 6 percent markup for the provider who administers it. There is no negotiation.”
This is misleading.
It is true that the government does not negotiate with drug manufacturers to determine the prices paid for drugs in Part B of Medicare. But the prices paid for many of those drugs do reflect the results of competition and negotiations in the private sector.
Under the Medicare Modernization Act of 2003, the government’s payment for a Part B drug is based on the drug’s “average sales price.” This price, as defined in the law, accounts for commercial discounts, rebates and other price concessions that drug manufacturers negotiate with health insurance plans, pharmacy benefit managers and other private purchasers.
These price concessions, generally treated as trade secrets, may knock 15 to 35 percent off the list price of a drug.
The problem for Medicare and for consumers is that, for some drugs, manufacturers do not give substantial discounts. This may be the case, for example, if a drug has no direct competitors, so doctors cannot prescribe an alternative, or if the market for a drug outside Medicare is small.
“For at least 30 percent of Part B spending, Medicare prices are at least half of the market, meaning there is effectively no competition within that substantial federal spending among competing products,” said John O’Brien, the senior adviser on drug pricing at the Department of Health and Human Services.
What was said
“This model will expand patient access, through lower prices. This is a pro-patient-access model. We are going to lower drug prices substantially, for our most costly drugs, without restrictions on patient access.”
This lacks evidence.
Under Mr. Trump’s proposal, Medicare payment for physician-administered drugs would be based, in part, on prices in other countries, including some that restrict access to drugs by limiting coverage.
The administration assumes that Medicare can pay lower prices without limiting access. This assumption is based on a belief that drug manufacturers could not walk away from the Medicare market because it is so large, with 55 million people in Part B.
Moreover, Medicare officials say they would monitor the use of prescription drugs to ensure that beneficiaries’ access to medicines is not compromised. Even with the pricing index, they say, Medicare would still be paying more than the average of other countries.
But some advocates for patients are apprehensive.
“We share the administration’s goal of reducing prescription drug costs,” said Christopher W. Hansen, the president of the advocacy arm of the American Cancer Society, but the proposal “raises numerous questions about beneficiary access.”
“For instance,” Mr. Hansen said, “how would patients access necessary care if there are no vendors willing to bring drugs to physicians in their area? What if the drug maker decides not to sell a particular drug at the price required under the proposal, and patients are unable to get the Medicare-covered drugs they need to treat their disease?”
Dr. Debra Patt, a breast cancer specialist at Texas Oncology, a group of more than 400 doctors, asked: “What leverage would a vendor have to bring manufacturers to the table? Suppose a manufacturer is selling drug X for $1,000, and the vendor wants to pay only $750. What if the manufacturer says no? What then happens to Medicare beneficiaries?”
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