Bar News - August 19, 2015
NH Healthcare Policy After King v. Burwell
By: Lucy C. Hodder
With the legal questions in King v. Burwell now settled and the threatened health insurance “death spiral” avoided, New Hampshire can focus on the difficult work still ahead to improve the availability of affordable and sustainable coverage.
To understand what was at stake in King v. Burwell, it is important to understand New Hampshire’s Health Insurance Marketplace today. Health care consumers in New Hampshire have seen growth in competitive choices and a stabilization of the growth in premium prices for coverage through the federally operated Marketplace (www.healthcare.gov). Another “open enrollment” period starts Nov. 1 for new consumers and the 46,000 already enrolled in Marketplace plans.
In 2014, only Anthem offered Marketplace plans (also called Qualified Health Plans, or QHPs). In 2015, options expanded to include five insurers offering more than 50 plans. Five insurers intend to offer Marketplace coverage in 2016, including an affiliate of one of New Hampshire’s Medicaid managed care organizations.
Next year, the NH Health Protection Program (often referred to as Medicaid expansion) will transition its 42,000 enrollees to Marketplace plans. The NH Legislature planned for this transition to private plans in the hopes that the added Marketplace population would further stabilize insurance markets and allow for continuity of coverage.
Most of New Hampshire’s low-income enrollees in 2015 (30,000 out of 46,000) are able to afford insurance coverage because of federal premium tax credits available to them when purchasing coverage through the federally operated Marketplace. In fact, of the 10.2 million Marketplace enrollees nationwide, an estimated 7.5 million low-income Americans rely on credits to purchase qualified insurance through federally operated Marketplaces.
The availability of federal premium tax credits for millions of people and the future viability of New Hampshire’s federally operated Marketplace hung on the June 25 decision in King v. Burwell. The question before the Court required a seemingly simple interpretation of four words. When referring to exchanges “established by the State,” did the Affordable Care Act mean to limit premium tax credits only to individuals accessing coverage through “state-based” marketplace exchanges?
The Court said “no” and affirmed, in a 6-3 decision, both the availability of tax credits on federally operated Marketplaces and the fundamental reform policies of the Affordable Care Act (ACA). After more than five years of ACA implementation and more than 637 legal challenges, the Court offered a clear reminder of the purpose of the reform effort: “Congress passed the [ACA] to improve health insurance markets, not to destroy them.”
In the Court’s decision, Justice John Roberts eschewed the two-step “framework” of Chevron (1984), which recommended the Court ask whether the statute is ambiguous, and if so, “whether the agency’s interpretation is reasonable.” The Court decided that in this “extraordinary” case, Congress could not have delegated the decision to the IRS, which the Court notes “has no expertise in crafting health insurance policy of this sort.” By taking control of the statutory interpretation, the Court left no room for any alternative interpretations by agencies going forward.
The Court pointed to separate sections of the ACA where the language implies qualified individuals can access tax credits regardless of which authority operates the Marketplace. But the crux of Roberts’s contextual argument is that the law’s overall purpose and policy goals would be rendered futile if the availability of tax credits were so limited (as argued by the plaintiffs) and “we cannot interpret federal statutes to negate their own stated purposes.”
The decision explained in detail the policy goals of the ACA and the interdependent nature of the various reforms: The guaranteed issue and community rating requirements ensure that anyone can buy insurance; the coverage requirement creates an incentive for people to do so before they get sick; and the tax credits – it is hoped – make insurance more affordable. Together, those reforms “minimize… adverse selection and broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums.”
Eliminating the availability of tax credits would make insurance unaffordable to most individuals and “would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very ‘death spirals’ that Congress designed the Act to avoid.” The Court ultimately held, therefore, that the tax credits are available to qualified individuals purchasing insurance in states hosting a federally operated exchange and a state-based exchange.
Justice Antonin Scalia, joined by Justices Clarence Thomas and Samuel Alito, committed an equal number of pages to his dissent, the crux of which is that the words of the statute mean what they say. The dissenters argue that an Exchange “established by the State” does not imply an “Exchange established by the State or the Federal Government.” Scalia offered his signature embellished commentary, deriding the majority’s reasoning as a “bit of interpretive jiggery-pokery” and “somersaults of statutory interpretation.”
With the King challenge over, if there is truth to the policies of the ACA, the combination of the mandate, coverage availability and coverage “affordability” should stabilize the insurance markets. Yet tough policy decisions still lie ahead. The health care delivery, financing and regulatory system is complex and expensive, with incompatible incentives divided haphazardly amongst the many vested and essential participants.
These policy choices impact lawyers and clients. As Roberts suggested, “[a] fair reading of legislation demands a fair understanding of the legislative plan.” A fair reading of the King v. Burwell decision and its dissertation on health reform is a fair place to start.
Lucy Hodder is professor of law at the UNH School of Law and director of health law and policy for the University of New Hampshire, College of Health and Human Services, Institute for Health Policy and Practice. She recently served as legal counsel and senior health policy advisor to the governor. Reach her by email.