The Affordable Care Act Suffers Another Setback

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On December 18, 2019, just a few hours before the historic impeachment vote, the Fifth Circuit Court of Appeals in New Orleans, Louisiana issued a 98 page opinion affirming a lower court’s prior ruling that the “individual mandate” in the Affordable Care Act was unconstitutional. However, it also sent the case back to the lower court to determine whether all other aspects of the ACA should be allowed to stand or are they constitutionally infirm.

And so, the treatment of mental health care, the treatment of eating disorders and the ability to refer our loved ones to treatment facilities outside of their home state hang in the balance.

In this article, we will address (1). What is the individual mandate and why it is important; (2). Whether the rest of the ACA will be allowed to stand since the individual mandate has been determined to be unconstitutional, and; (3). What this ruling means to the mental health and eating disorder industries.

The Individual Mandate

When President Barack Obama signed the ACA into law on March 23, 2010, the ACA sought to “increase the number of Americans covered by health insurance and decrease the cost of health care” through several key reforms.

Some of those reforms implemented new consumer protections, aiming primarily to protect people with preexisting conditions. For example, the law prohibited insurers from refusing to cover preexisting conditions. 42 U.S.C. § 300gg-3. The “guaranteed-issue requirement” forbade insurers from turning customers away because of their health. See 42 U.S.C. §§ 300gg, 300gg-1. The “community-rating requirement” kept insurers from charging people more because of their preexisting health issues. 42 U.S.C. § 300gg-4.1.

Other reforms sought to lower the cost of health insurance through the use of the “individual mandate.” The individual mandate required individuals to “maintain health insurance coverage.” 26 U.S.C. § 5000A(a). If individuals did not maintain this coverage, they were required to make a payment to the IRS called a “shared responsibility payment.”

The individual mandate was designed to lower insurance premiums by broadening the insurance pool. See 42 U.S.C. § 18091(2)(J) (“By significantly increasing . . . the size of purchasing pools, . . . the [individual mandate] will significantly . . . lower health insurance premiums.”). When the young and healthy must buy insurance, the insurance pool faces less risk, which, at least in theory, leads to lower premiums for everyone. See 42 U.S.C. § 18091(2)(I) (positing that the individual mandate will “broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums”).

The individual mandate thus served as a counterweight to the ACA’s protections for preexisting conditions, which pushed riskier, costlier individuals into the insurance pool. Under the protections for consumers with preexisting conditions, if there were no individual mandate, there arguably would be an “adverse selection” problem: “many individuals would,” in theory, “wait to purchase health insurance until they needed care.”

The individual mandate was challenged a few months after the ACA was implemented. This case went up to the Supreme Court. The Court, in Nat’l Fed’n of Indep. Bus. v. Sebelius (NFIB), 567 U.S. 519, 538 (2012) narrowly upheld the law’s individual mandate. The Court decided that the ACA’s individual mandate could be read as a tax on an individual’s decision not to purchase insurance, which was a constitutional exercise of Congress’ taxing powers under Article I of the U.S. Constitution. The Court favored this tax interpretation to save the provision from unconstitutionality.

Chief Justice Roberts reasoned that the individual mandate could be read in conjunction with the shared responsibility payment in order to save the individual mandate from unconstitutionality. Read together with the shared responsibility payment, the entire statutory provision could be read as a legitimate exercise of Congress’ taxing power.

Absent that interpretation, reading the individual mandate as a standalone command to purchase insurance would have rendered it unconstitutional. This reading could not have been justified under the Commerce Clause because it would have done more than “regulate commerce . . . among the several states.” U.S. Const. art. I, § 8, cl. 3. It would have compelled individuals to enter commerce in the first place.

The Court explained that the U.S. Constitution, “gave Congress the power to regulate commerce, not to compel it.” As Chief Justice Roberts observed, if the individual mandate were a proper use of the power to regulate interstate commerce, that power would “justify a mandatory purchase to solve almost any problem.” Id. at 553 (Roberts, C.J.). If Congress can compel the purchase of health insurance today, it can, for example, micromanage Americans’ day-to-day nutrition choices tomorrow. Id. (Roberts, C.J.); see also id. at 558 (Roberts, C.J.)

And so, for the time being, the ACA survived.

But then, in December 2017, as part of the Tax Cuts and Jobs Act, Congress set the “shared responsibility payment” amount—the amount a person must pay for failing to comply with the individual mandate—to the “lesser” of “zero percent” of an individual’s household income or “$0,” effective January 2019.

This effectively rendered the individual mandate unconstitutional because:

(1) NFIB rested the individual mandate’s constitutionality exclusively on reading the provision as a tax; and

(2) the 2017 amendment undermined any ability to characterize the individual mandate as a tax because the provision no longer generates revenue, a requirement for a tax.

Then, in February 2018, Republican State Officials from twenty (20) different states filed the case entitled Texas, et al v. United Stateset al, Civil Action No. 4:18-cv-00167-O. (The case is generally known as “Texas v. Azar”).

That federal district court struck down the entire ACA on the grounds that the individual mandate requiring people to buy health insurance was unconstitutional and the rest of the law could not stand without it. Judge O’Connor specifically held that the individual mandate requiring people to have health insurance “can no longer be sustained as an exercise of Congress’s tax power.”

On December 18, 2019, the Fifth Circuit Court of Appeals agreed with this reasoning and affirmed the finding that the individual mandate was unconstitutional.  But, it sent the case back to the district court to determine if the rest of the ACA could pass the constitutionality test without the individual mandate.

Can the ACA pass constitutional muster without the mandate?

The remaining seminal question is can the individual mandate be severed from the ACA or is it so inextricably intertwined with the remaining provisions that the ACA cannot stand on its own.

The Supreme Court has said that the “standard for determining the severability of an unconstitutional provision is well established.”  First, if a court holds a statutory provision unconstitutional, it then determines whether the now-truncated statute will operate in “a manner consistent with the intent of Congress.” Alaska Airlines, 480 U.S. at 685 (emphasis omitted). This first step asks whether the constitutional provisions—standing on their own, without the unconstitutional provisions— are “fully operative as a law.”

Second, even if the remaining provisions can operate as Congress designed them to, the court must determine if Congress would have enacted the remaining provisions without the unconstitutional portion. If Congress would not have done so, then those provisions must be deemed inseverable. Alaska Airlines, 480 U.S. at 685 (“[T]he unconstitutional provision must be severed unless the statute created in its absence is legislation that Congress would not have enacted.”)

“Severability analysis is at its most demanding in the context of sprawling (and amended) statutory schemes like the one at issue here. The ACA’s framework of economic regulations and incentives spans over 900 pages of legislative text and is divided into ten titles.”

As the Fifth Circuit Court of Appeals noted, “ …  this issue involves a challenging legal doctrine applied to an extensive, complex, and oft-amended statutory scheme. All together, these observations highlight the need for a careful, granular approach to carrying out the inherently difficult task of severability analysis in the specific context of this case.”

Health care for millions of United States citizens hangs in the balance. Health insurance policy and individual decisions are life and death decisions. The ACA is a complex, vast piece of legislation. As such, the Court of Appeals sent back the remaining portions of the case to the district court to make detailed determinations as to what parts, if any, of the ACA can survive separate and apart from the individual mandate.

Since the district court already made an initial determination that the ACA could not stand without the individual mandate, it is not a stretch to presume that the district court will make the same ruling but this time, will set forth a legion of supporting facts and legal analysis supporting the ruling.

The ramifications of this decision if affirmed by the Supreme Court could be catastrophic.

Ramifications

The impact on the mental health and eating disorder industries and communities could be catastrophic.

The following table sets for those states which have implemented plans, or have contingency plans in place should the ACA be held unconstitutional:

ACA Protection Bills Enacted Since February 2018

State Annual or lifetime limits prohibited Community rating* Essential health benefits Guaranteed issue Maximum out-of-pocket limit Non-discrimination Preexisting conditions Preventive services without cost-sharing
Connecticut
Delaware
Florida ✔*
Hawaii
Indiana
Louisiana ✔* ✔* ✔* ✔* ✔*
Maine
Nevada
New Hampshire
New Mexico
Oregon
Vermont
Washington

Only thirteen (13) states would protect those persons with preexisting conditions. As for the other 37 states in the Republic?

Clearly, the most catastrophic loss would be coverage for people with pre-existing conditions, a condition which is prevalent amongst those suffering from eating disorders. Treatment centers and counselors would necessarily become even more dependent on private pay patients as insurance coverage would be denied or limited. This could result in the growing manifestation of the self-fulfilling perception that eating disorders are merely a “rich little, white girl’s disease.”

Despite the passage of the ACA and Mental Health Parity Act of 2008, insurance providers have been carefully scrutinizing residential treatment for eating disorders for medical necessity. Weekly peer-to-peer reviews are not unusual. Insurance guidelines independent from those set forth in generally accepted standards of care are adopted in insurance policies.

With the harsh reality that the individual mandate of the ACA has now been ruled unconstitutional by two courts, we face the new reality … that is, insurance providers will increase their scrutiny of claims for treatment, that they will rely upon the Court’s holding that the ACA is unconstitutional and will phase back in their denying claims because of pre-existing conditions or and will remove the cap on the maximum amount of out-of-pocket expenses incurred by insureds.

The Texas v. Azar decision constitutes a grave crisis impacting all Americans. This crisis could shake the very foundation of the Republic at a time when both major parties are more intent on promulgating the power of their own party and tearing apart the other party. Confidence in our political leaders is non-existent. Collaboration is non-existent.

And yet, the only possible long-term solution is to rediscover that collaboration and come up with a bipartisan plan that results in health care being made available to all Americans at a cost which is affordable. Unfair insurance practices must be curtailed. The most vulnerable of our citizens must be provided with health care which is both substantive and affordable.

The crisis is here. The Visigoths are at the gates.

 

 

 

 

 

 

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