By Emily Curran, Dania Palanker, Sabrina Corlette<\/p>\n
On July 9, the Fifth Circuit Court of Appeals heard oral arguments<\/a> in Texas v. United States<\/em>, a case concerning the constitutionality of the Affordable Care Act\u2019s (ACA) individual mandate penalty. Though the individual mandate has been challenged before<\/a> and was found constitutional by the U.S. Supreme Court, this argument was renewed when Congress passed the Tax Cuts and Jobs Act<\/a> in 2017, reducing the individual mandate penalty to $0 beginning in 2019. Now, Republican state attorney generals and governors in eighteen states are arguing that since the individual mandate penalty has been \u201czeroed out\u201d (and is therefore no longer a \u201ctax,\u201d and thus constitutional under Congress\u2019 taxing power), it must be ruled invalid. These plaintiff states also argue that the mandate is \u201cessential\u201d to the ACA, so the entire law should be struck down, if the mandate is found invalid. Though the U.S. Department of Justice (DOJ) \u2013 in siding with plaintiffs \u2013 had originally taken the position that the individual mandate could <\/em>be severed from the rest of the law, it later<\/a> changed its stance to agree with the Texas district court\u2019s finding that the entire ACA is invalid.<\/p>\n Now, DOJ is changing its position again. In supplemental briefings<\/a> to the Fifth Circuit Court of Appeals, DOJ states that any invalidation of the ACA should \u201cnot extend beyond the plaintiff states\u2026.\u201d As a remedy, DOJ argues<\/a> that the court should invalidate the ACA only in the states that brought suit. In effect, if the court were to follow DOJ\u2019s scheme it would mean striking down the ACA in the eighteen plaintiff states, but allowing it to remain intact in the thirty-two other states. This proposed remedy is illogical on many levels, in part because the ACA includes provisions that touch on almost every aspect of our health system, including the federal Medicare program, which is not operated on a state-by-state basis, Food and Drug law governing the review and approval of prescription medicines sold nationwide, as well as several federal taxes designed to pay for the new spending under the law. However, here we focus on how DOJ\u2019s suggested \u201csolution\u201d would upend our system of employer-based coverage \u2013 the primary source of insurance for approximately 158 million<\/a> people.<\/p>\n DOJ\u2019s Remedy Would Undermine the Purpose of ERISA & Create a Race to the Bottom <\/strong><\/p>\n The Employee Retirement Income Security Act, commonly known as ERISA<\/a>, is a federal law that sets certain minimum standards for most retirement and employee welfare benefit plans, including health plans, in the private market. The purpose of ERISA was to establish uniform standards of protections for employers that apply across states. Specifically, Congress stated<\/a> that the Act was intended \u201cto protect interstate commerce\u201d by \u201cimproving the equitable character\u201d of such plans. Before ERISA was enacted, employee benefit plans were subject<\/a> to different state laws, often creating confusion for employers, especially those who operated across multiple states. As a result, ERISA makes it easier for employers offering health benefits to employees, retirees and dependents living in multiple states because the employer only needs to comply with federal ERISA law.<\/p>\n The ACA added additional protections for employees, including coverage of preventive services without cost sharing, a prohibition on pre-existing condition exclusion periods, maximum limits on out-of-pocket costs, and a prohibition on lifetime limits, to name a few. These requirements raise the bar for employee benefits and ensure that employees have equivalent access to comprehensive, quality care, regardless of state of residence.<\/p>\n If DOJ has their way, ERISA requirements would vary by state. This is a fundamental change not only to the ACA, but also to decades-old ERISA regulation, and it would throw regulation of employer health benefits into disarray. Consider an employer based in Texas with employees in California. Do the employees in California retain all of the ACA protections because they are residents of California, leaving an employer based in Texas having to provide those protections to some employees but not others? Or does the employer no longer have to comply with the ACA for any employees, retirees, or their dependents if the health plan is based in Texas? What if all the employees live in Texas, but some dependent children have moved out of state?<\/p>\n The court or the administration would need to decide whether the ACA protections baked into ERISA apply based on where the participants and beneficiaries live, or where the employer health plan is based. If the court aims to only eliminate the ACA protections for residents of the plaintiff states, then the protections would have to apply based on the state of residence of participants and beneficiaries. But this approach completely upends the intent of ERISA, as employers would need to have different health benefit plans depending on where their employees, retirees, and dependents live.<\/p>\n The other option would be to have the protections based on where the employer health plan is based. This makes life easier for employers, but undermines the intent of DOJ\u2019s remedy as people who live and work in plaintiff states would still have ACA-compliant plans if their employer is based in another state, while residents of non-plaintiff states could suddenly find themselves without key ACA protections because their employer plan is based in a plaintiff state. What\u2019s more, because ERISA allows employers in multiple states to base their health plan in any state in which they have a presence, we could witness a \u201crace to the bottom\u201d among employers seeking to set up their health plans in the states without the ACA protections.<\/p>\n This variation strays far from \u201cprotect[ing] interstate commerce\u201d and \u201cimproving the equitable character\u201d of health plans, which Congress envisioned when it implemented ERISA.<\/p>\n DOJ Forgets that Many Other ACA Provisions Are Not State-Based<\/strong><\/p>\n Striking down the ACA in eighteen states, while preserving it in thirty-two others is also impractical because many of the ACA\u2019s largest initiatives are not state-based; rather, they are national reforms that span across the healthcare industry. For example, the Biologics Price Competition and Innovation Act (BPCIA<\/a>), which is included in the ACA, creates a regulatory pathway for biosimilars (i.e., biological products that are \u201chighly similar\u201d or \u201cinterchangeable\u201d with a previously approved FDA product). If the ACA is struck down in the eighteen plaintiff states, would this regulatory pathway \u201ccease to exist<\/a>\u201d? Would biosimilar applications only be allowed from the thirty-two other states? The ACA also phased in coverage adjustments to Medicare Part D\u2019s \u201cdonut hole\u201d to reduce enrollees\u2019 out-of-pocket spending and close the coverage gap<\/a>. Under DOJ\u2019s remedy, will beneficiaries in the eighteen plaintiff states still be subject to higher spending? What happens if a beneficiary moves to a plaintiff state mid-year? These and other national reforms, including changes to provider payments, industry taxes, quality initiatives, and more, were never designed to stop at a state\u2019s border. Implementing them in some states but not others would create unprecedented confusion and insurmountable operational problems at national and local levels.<\/p>\n Take Away<\/strong>: It is unclear whether DOJ understands the full scope and impact of its proposed remedy. When pressed on the uncertainty in oral arguments, DOJ\u2019s response was: \u201c[A] lot of this stuff would have to get sorted out and it\u2019s complicated.\u201d This glibness is worrisome, given the chaos that would result if the court followed DOJ\u2019s recommendation.<\/p>\n","protected":false},"excerpt":{"rendered":" In supplemental briefings to the Fifth Circuit Court of Appeals, the Department of Justice recently proposed that the Affordable Care Act be struck down in the eighteen plaintiff states bringing suit in Texas v. United States, but upheld in all other states. CHIR’s Emily Curran, Dania Palanker, and Sabrina Corlette explain why this \u201csolution\u201d would upend our system of employer-based coverage and is illogical given the ACA’s national reforms. <\/p>\n","protected":false},"author":5,"featured_media":4010,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[701,700,659,15,687],"_links":{"self":[{"href":"https:\/\/chirblog.org\/wp-json\/wp\/v2\/posts\/5181"}],"collection":[{"href":"https:\/\/chirblog.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/chirblog.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/chirblog.org\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/chirblog.org\/wp-json\/wp\/v2\/comments?post=5181"}],"version-history":[{"count":1,"href":"https:\/\/chirblog.org\/wp-json\/wp\/v2\/posts\/5181\/revisions"}],"predecessor-version":[{"id":5182,"href":"https:\/\/chirblog.org\/wp-json\/wp\/v2\/posts\/5181\/revisions\/5182"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/chirblog.org\/wp-json\/wp\/v2\/media\/4010"}],"wp:attachment":[{"href":"https:\/\/chirblog.org\/wp-json\/wp\/v2\/media?parent=5181"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/chirblog.org\/wp-json\/wp\/v2\/categories?post=5181"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/chirblog.org\/wp-json\/wp\/v2\/tags?post=5181"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}