Category Archives: Health Care Exchange
Mark this day, June 25,2015 (also my daughter’s 10th birthday) as also the birth of a new state. Our country, according to the Supreme Court’s decision in King v. Burwell, now consists of 51 states. The Health and Human Services (HHS) is now our 51st state.
Today the Supreme Court decided the King v. Burwell case.
If you recall, this case was to determine whether the plain language of the Affordable Care Act (ACA) should be upheld. According to the ACA, people were to receive tax subsidies or “premium tax credits” to subsidize certain purchases of health insurance made on Exchanges, but only those enrolled in through an Exchange established by the State under [§18031]. §36B(c)(2)(A).
“Specifically, the question presented is whether the Act’s tax credits are available in States that have a Federal Exchange.”
“At this point, 16 States and the District of Columbia have established their own Exchanges; the other 34 States have elected to have HHS do so.”
In Justice Scalia’s words, “This case requires us to decide whether someone who buys insurance on an Exchange established by the Secretary gets tax credits. You would think the answer would be obvious—so obvious there would hardly be a need for the Supreme Court to hear a case about it. In order to receive any money under §36B, an individual must enroll in an insurance plan through an “Exchange established by the State.” The Secretary of Health and Human Services is not a State. So an Exchange established by the Secretary is not an Exchange established by the State—which means people who buy health insurance through such an Exchange get no money under §36B.”
However, the majority disagrees.
Apparently, HHS is now our 51st state.
The upshot of the Decision is that the majority found that, despite our country’s deep-rooted, case law precedent that when a statute is unambiguous that the plain meaning of the statute prevails. Despite hundreds of years of the Supreme Court upholding statutes’ clear meanings, the Supreme Court, in this case, decided that “[i]n extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.”
Therefore, when the ACA became law, and the word “state” was used, surely, Congress meant “state and/or federal government.” Or, on the other hand, let’s just call HHS a state for the purpose of the ACA.
In Justices Scalia, Thomas, and Alito’s opinions, the decision is absurd. In the dissent they write, “The Court holds that when the Patient Protection and Affordable Care Act says “Exchange established by the State” it means “Exchange established by the State or the Federal Government.” That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.”
Obama’s Executive Order, Its Impact on Health Care Costs, and the Constitutionality of Executive Orders
Pres. Barack Obama will address the nation tonight at 8 pm (Thursday, November, 20, 2014). He is expected to discuss his executive order that will delay deportations of up to 5 million migrants.
What does an executive order on immigration have to do with Medicaid? Well, you can bank on the fact that almost none of the 5 million people has private health care coverage….which means, there is a high likelihood that most, if not all, the people would qualify for Medicaid.
With the expansion of Medicaid in many states, adding another 5 million people to the Medicaid program would be drastic. Think about it…in NC, approximately 1.8 million people rely on Medicaid as their insurance. 5 million additional Medicaid recipients would be like adding 3 more North Carolinas to the country.
So I looked into it…
The Kaiser Family Foundation website states that even immigrants who have been in America over 5 years are sometimes still barred from getting Medicaid and those people would remain uninsured. The Kaiser website states that under current law “some lawfully present immigrants who are authorized to work in the United States cannot enroll in Medicaid, even if they have been in the country for five or more years.”
By law, only immigrants who have green cards are entitled to enroll in Medicaid or purchase subsidized health care coverage through the ACA. Usually those immigrants with green cards are on the course to become citizens.
Regardless of whether Obama’s executive order tonight will or will not allow the 5 million people Medicaid coverage (which it will not), the executive order absolutely will greatly increase health care costs
The truth is that, with or without Obama’s executive order, the government already funds some health care for undocumented immigrants. We have an “emergency Medicaid” program and it pays hospitals to provide emergency and maternity care to immigrants if: 1) he or she otherwise would be Medicaid eligible if they weren’t in the country illegally or 2) he or she are legally present in this country for less than 5 years. (Which is the reason that ER wait times are so long…if you have no health insurance and you get sick, the ER is precisely where you go).
However, with the additional 5 million people living within the borders of USA, it is without question that the “emergency Medicaid” funds will sharply escalate as hospitals provide more emergency care. ER waits times will, inevitably, increase. Health care costs, in general, surge as the population increases. And the addition of 5 million folks in America is not a “natural” increase in population. It will be like we added additional states. Overnight and with the stroke of a pen, our population will grow immensely. I guess we will see whether we get “growing pains.”
An act of Congress will still be required before the undocumented immigrants impacted by the executive order would be allowed to participate in the Medicaid programs and the Children’s Health Insurance Program (CHIP) coverage.
As to the Constitutionality of executive orders…
Executive orders are not specifically mentioned in the Constitution. Many people interpret the nonexistence of executive orders in the Constitution as barring executive orders.
Article I Section I of the Constitution clearly states that all legislative powers reside in Congress. However, an executive order is not legislation. Technically, an executive order is a policy or procedure issued by the President that is a regulation that applies only to employees of the executive branch of government.
Nonetheless, our country has a vast history of president’s issuing executive orders. Abraham Lincoln issued an executive order to engage military in the Civil War, Woodrow Wilson issued an executive order arming the military before we entered World War I, and Franklin Roosevelt approved Japanese internment camps during World War II with an executive order.
Regardless of your political affiliation, in my opinion, it is very interesting that Obama would initiate an executive order regarding immigration given his past statements over the years complaining about past presidents’ executive orders being unconstitutional.
In 2008 campaign speeches, Obama regularly emphasized the importance of civil liberties and the sanctity of the Constitution.
In fact, in speeches, Obama stated, “most of the problems that we have had in civil liberties were not done through the Patriot Act, they were done through executive order by George W. Bush. And that’s why the first thing I will do when I am president is to call in my attorney general and have he or she review every executive order to determine which of those have undermined civil liberties, which are unconstitutional, and I will reverse them with the stroke of a pen.”
Whether or not people believe that executive orders are constitutional, it is indisputable that presidents on both sides of the aisle have issued executive orders.
Reagan and Bush issued executive orders. Although there is an argument that those executive orders came on the heels of congressional bills, as adjustments. Neither Reagan nor Bush simply circumvented Congress.
Going back to tonight’s anticipated executive order allowing 5 million migrants to remain in America…
While the executive order will not allow the 5 million people immediate access to Medicaid and other subsidized health care, it will allow 5 million more uninsured people to exist in America, which will, undoubtedly, increase health care costs and ER visits. And, eventually, the additional 5 million people will be eligible for Medicaid, subsidized health care, and all other benefits of living in America.
Supreme Court Will Decide Whether Citizens in NC and 26 Other States Can Receive Tax Credits for Health Care Premiums!!
With a decision that, I can only imagine, ricocheted against the White House walls, the Supreme Court granted certiorari to hear King v. Burwell this past Friday, November 7, 2014, despite Obama’s administration’s request for the Supreme Court to postpone granting certiorari in order to wait for a D.C. circuit to re-visit an opinion, the Halbig ruling.
The Supreme Court’s decision in King could, potentially, have devastating consequences on the Affordable Care Act (ACA). However, I write that last sentence with an asterisk. Journalists across the country are entitling articles, “Obamacare Is Doomed! Everybody Panic!”, “The Supreme Court Might Gut Obamacare. Your State Could Save It,” and “Obamacare vs. Supreme Court.” These titles to articles are misleading, at best, and factually incorrect, at worst. King v. Burwell is actually not an attack on the ACA. But I will explain later…
First of all, what the heck is certiorari…or “cert”, as many attorneys call it?
A writ of certiorari is actually an order from a higher court to a lower court demanding a record in a case so that the higher court may review the lower court’s decision. A writ of certiorari is the instrument most used by the Supreme Court to review cases. The Supreme Court hears such a small, minute fraction of lawsuits that when the Supreme Court “grants cert,” it is a big deal.
I have written in the past about these same two appellate court cases, which were both published July 22, 2014, within hours of one another, regarding the Health Care Premium Subsidies Section of the Affordable Care Act. These two cases yield polar opposite holdings. In Halbig v. Burwell, the D.C. Circuit Court found that the clear language of the ACA only allows the health care premium subsidies in states that created their own state-run health care exchanges, i.e, residents in NC along with 35 other states would not be eligible for the subsidies. See my blog: Halbig: Court Holds Clear Language of the ACA Prohibits Health Care Subsidies in Federally-Run Exchanges.
Juxtapose the 4th Circuit Court’s decision in King v. Burwell, which held that “For reasons explained below, we find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion.”
So the two cases came to two entirely different conclusions. Halbig: ACA is clear; King: ACA is ambiguous.
Well, for everyone else, that is as clear….as mud.
When the D.C. court decided Halbig, it was not an en banc decision. In English, this means that the entire bench of judges in the D. C. Circuit did not hear the case, only a panel of three (which is the usual way for a case to be heard on appeal to a federal circuit). The Obama administration, along with other proponents of the ACA, hoped that the U.S. Supreme Court would deny cert to King until the D.C. court could re-visit its decision, this time en banc.
Yet, this past Friday, the Supreme Court opted to consider King v. Burwell.
The sole issue to be decided is: Whether the Internal Revenue Service may permissibly promulgate regulations to extend tax-credit subsidies to coverage purchased through exchanges established by the federal government under Section 1321 of the Patient Protection and Affordable Care Act.
How is King v. Burwell NOT an attack on the ACA?
The plaintiffs in King are not asking the Supreme Court to strike down the ACA, even, in part. They are asking the Court to uphold the plain language of the ACA by holding that the IRS’s interpretation of the ACA is erroneous. Let me explain…
Section 1311 directs states to establish exchanges, and Section 1321 directs the federal government to establish exchanges “within” any state that opts to not set up its own state-run exchange, e.g., NC.
Section 1401 authorizes subsidies for people whose household income falls between 100 and 400% of the federal poverty level, who are not eligible for qualified employer coverage or other government programs, and who enroll in coverage “through an Exchange established by the State.” (emphasis added). These 3 criteria are crystal clear based on the plain language of the statute.
The statute makes no provision for subsidies in states that opt not to create their own exchange but, instead, allow the federal government to create an exchange within its state.
The ACA was intended to create penalties if the states do not establish their own exchanges. For example, the subsidies are not allowed to citizens of states without state-created exchanges.
In August 2011, the IRS issued a proposed rule [add link] announcing it would provide tax credits (and implement the resulting penalties) in states with federal exchanges, too. IRS officials later admitted to Congress that they knew the statute did not authorize them to issue tax credits through federal exchanges…Oops…
The proposed rule received much negative feedback based on the fact that the IRS appeared to have no statutory basis for the rule. Nonetheless, the proposed rule was finalized in May 2012, and lawsuits ensued…
Oklahoma began the litigation with Pruitt v. Burwell in September 2012. In September 2014, a federal district court held that the plain language of the ACA does not allow subsidies in states with federally-run exchanges. In May 2013, Halbig v. Burwell was filed, and in September 2013, King v. Burwell was filed.
So, much to the contrary of popular belief, these lawsuits are not “against the ACA” or “proving the unconstitutionality of the ACA.” Instead, these lawsuits are “against” the IRS interpreting the ACA to allow tax credits for all states, even if the state has a federally-run exchange.
Will it negatively impact the ACA if the plaintiffs win? That would be a resounding yes.
Oral argument could be as soon as March 2015.
Representative David Price spoke as the Keynote Speaker at the North Carolina Society of Health Care Attorneys annual meeting yesterday morning. Since Representative Price was actually up in Washington D.C. during the shutdown, it was very interesting to hear him speak. His opinion, as one would expect from his ideology, was that the shutdown was idiotic and unnecessary.
What I found interesting was how he described the relationships between congressmen and women today versus in the 90s. Remember, he has represented NC in Washington for more than one decade. He described the relationships, even across party lines, as more cordial in the 90s than today’s relationships. I wonder why our legislative body has become more segregated.
In the afternoon session, Linwood Jones from the North Carolina Hospital Association spoke about recent legislative action. This legislature was not good to hospitals. As Linwood described the legislative session this year…”It was all about Medicaid.” (I know you were wondering how the NC Society of Health Care Attorneys annual meeting was going to be germane to Medicaid). According to Mr. Jones, the Medicaid budget was the primary factor in almost all budget cuts. And what entities get most of Medicaid funding?
Duh…Hospitals. Hospitals are the biggest providers in the state, and, in some areas, the biggest employers.
Our Medicaid budget is approximately $13 billion.
Remember…36 million a day is what we spend on Medicaid in NC.
How much of that $13 billion Medicaid budget goes to hospitals? According to Kaiser Family Foundation, 25.7% for inpatient care. Or $3.341 billion annually. Or $9.252 million a day!!
Including outpatient care? 38.7% Or $5.031 billion annually. Or $13.932 million a day!!
According to the handy-dandy Wikipedia website, North Carolina has 126 hospitals in 83 counties. For those of you who never went to 6th grade in North Carolina, we have 100 counties in NC. (In the 6th grade, if you grew up here, you learn all about North Carolina geography, which apparently didn’t stick, because I still get lost).
That is $13.932 million dollars a day going to 126 hospitals in NC. That is a lot of money!!!
Does Medicaid matter to hospitals?
Heck, yes!! Remember, a hospital cannot turn anyone away, including Medicaid recipients and uninsured. Add the fact that the mentally ill in NC are not getting medically necessary services because our managed care organizations (MCOs) have monetary incentives to NOT provide the expensive mental health services; PLUS the fact that Medicaid reimbursements are painfully low, which leads to many physicians not accepting Medicaid, and you get the sad sum of Medicaid recipients ending up in emergency rooms of hospitals.
Don Dalton, a spokesman for the Hospital Association, said that statewide about 46 percent of hospitals’ revenue comes from Medicaid. (See Rose Hoban’s article).
But, hospitals don’t make a huge profit. Especially on Medicaid recipients.
On average, Medicaid reimburses hospitals 80% of the actual cost for hospital services.
But this year, the General Assembly created a budget in which the 80% will be reduced to 70%.
Medicaid reimbursements were already bad. But now, the Medicaid reimbursements will be 10% worse. Subtract 10% from the $13.932 million dollars a day…
This is not a good thing for hospitals nor Medicaid recipients.
When Representative Price was speaking, a woman raised her hand with a question/vignette. She said that she and her friends had gotten on the health care exchange (Obamacare) (Healthcare.gov) website and “shopped” for health insurance. She said that all the people who signed up for health care exchange (because it is mandated and there is a penalty for not having insurance) had their premiums increase anywhere from 300%-800%. Although Rep. Price made a good point, that they all should have contacted Blue Cross Blue Shield (BCBS) and asked why BCBS dropped that particular insurance plan. Nonetheless, the woman harped on the fact that Obama had promised, “You like your insurance? You can keep it! You like your doctor? You can keep him/her!” (I added the “her.”)
So, here we are…with low Medicaid reimbursements to begin with, high medical costs, and the General Assembly reducing the Medicaid rates for hospitals by 10%.
Incentive to accept Medicaid recipients? I think not…but hospitals have no choice.
Physicians and other Medicaid providers have the choice as to whether to accept Medicaid patients, but hospitals? No choice there. Hospitals must accept Medicaid recipients. Mandatory!!!
In my opinion, the very first step toward fixing the Medicaid system is RAISING Medicaid reimbursement rates.
Sound counterintuitive? Yes, I agree it sounds counterintuitive. But think about Medicaid like this:
If you agree with me that Medicaid is an entitlement and that the Medicaid budget is way too high, but that all Medicaid recipients deserve quality health care…if you agree with all that…
And you also agree with me that it is drastically more expensive for Medicaid recipients to go to the emergency room (ER) for health issues that could be solved in a family physicians’ office…if you agree with all that…
Then we would save Medicaid dollars by increasing (drastically) the Medicaid reimbursements. If doctors had a monetary incentive to accept Medicaid, then more doctors would accept Medicaid (Logic 101). If more doctors accept Medicaid, then more Medicaid recipients have the ability to go see a doctor. If more recipients have more office visits then ER visits drop. If more unnecessary ER visits drop, then the State pays less money to the hospitals, which is an extremely higher rate (even with the 10% reduction) than a higher Medicaid reimbursement to physicians. Cut the $13.932 million a day to hospitals, not by decreasing the reimbursement rate, but by fewer Medicaid recipient going to the ER…instead have the recipients receive quality care outside the hospital, thus saving money…
By reducing the Medicaid reimbursements to hospitals, the legislature did decrease the Medicaid budget, but not in a way that intelligently attempts to fix the system. The same amount of Medicaid recipients will be going to hospitals. Since the hospitals cannot turn anyone away, reducing reimbursements to hospitals merely hurts the hospitals.
Want to decrease the Medicaid budget? Increase Medicaid reimbursements (drastically) to Medicaid providers. More providers accepting Medicaid means more recipients receiving quality care and NOT checking into the ER….
Money saved intelligently. Too bad the legislature didn’t ask my opinion prior to slashing Medicaid reimbursement rates.
One week has passed since the infamous federal sequester deadline. Let’s re-assess: Does the Sequester Affect Medicaid?
Remember, according to the federal government, the Medicaid budget was exempt from the across the board slashes in budgets.
However, the following sequester cuts will have a direct effect on Medicaid:
- $44 million cut from the Centers for Medicare and Medicaid Affordable Insurance Exchange grants;
- $168 million cut from Substance Abuse and Mental Health Services Administration;
- $75 million cut from the Aging and Disability Services Programs;
- $17 million cut from Housing Opportunities for Persons with AIDS;
- $19 million cut from Housing for the Elderly;
- $57 million cut from the Health Care Fraud and Abuse Control;
- $51 million cut from the Prevention and Public Health Fund; and
- $27 million cut from the State Grants and Demonstrations.
Let’s analyze the first cut: $44 million from the Affordable Insurance Exchange. The Affordable Insurance Exchange grants is an intregal part of the Affordable Care Act (ACA). The ACA directs the U.S. Department of Health and Human Services (“HHS”) to provide states with funding to support planning, implementation and operation of state exchanges. Already every state except Alaska received an initial allotment of up to $1 million in planning grants in the fall of 2010. North Carolina already received $86,357,315.
As I am sure everyone is aware, NC has opted out of Medicaid expansion. However, the ACA requires an insurance exchange program. On February 12, 2012, Gov. McCrory announced NC’s intent to allow the federal government to operate the exchange.
So, now, our health care exchange program will be only as good as the federal government makes it, which is a scary prospect in my mind, especially in light of the near certain fact that the federal government is in such financial stress that it will not be able to uphold its end of the bargains under the ACA. Already?
I wonder if the states accepting the federal dollars for Medicaid expansion are re-thinking those decisions.
Last week, Charles P. Blahous, III, who has served as a public trustee for Social Security and Medicare since 2009, said there was a “near certainty” that the federal government would not provide the full level of Medicaid funding now scheduled under law.
Blahous also stated that “to return the federal budget to sustainable historical norms in the absence of any cuts in the growth of Medicaid and the new health exchanges would require all other non- interest spending to be cut by nearly one-quarter by 2037 relative to projected levels, and by roughly 15 percent relative to current levels in relation to GDP.”
And: “This is probably unrealistic.”
Despite the budget cuts due to the sequester, the federal government is STILL in severe financial stress.
So as to, the ultimate question posed in the beginning: “Does the Sequester Affect Medicaid?”
The answer: A resounding yes.
Summary: (Please note: The word “impact” should carry a pejorative connotation. When reading, feel free to add in “negatively” each time you read “impact.”)
The sequester impacts health care. Medicaid is health care. The sequester impacts Medicaid.
The sequester impacts the health care exchange program. The federal government is in financial stress. The federal government will control NC’s health care exchange. NC’s health care exchange will be in financial stress.