Insurance Exchanges Upheld in Court

Diana Fancher, DNP, MBA, RN

Review

. N Engl J Med.

Gluck AR. A legal victory for insurance exchanges2013:896-899.

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New England Journal of Medicine

he emerging health insurance marketplaces, or exchanges, created within the Affordable Care Act (ACA) experienced a victory in court on January 15, 2014. In the March 13, 2014, issue of the ’s “Perspective” section, Abbe R. Gluck, JD, associate professor of law at Yale Law School, examined the implications of a federal judge’s rejection of a challenge to the health care marketplaces. This decision supported one of the essential goals of the ACA: to make insurance more affordable. If the challenge had succeeded, restricting subsidies to state exchanges would have denied more than 12.5 million Americans substantial tax subsidies needed to purchase health insurance through the federally run exchanges.

Halbig v Sebelius,

There are challenges ahead, however, because although the government won the case, ¹ the ruling was swiftly appealed. The Washington, DC, Federal Court of Appeals heard the case on March 25, 2014. Several states currently have cases citing identical claims proceeding through their courts, and if one of these courts rejects federal exchange subsidies, another major ACA case may reach the Supreme Court this year, according to Gluck.¹ The stakes are high for the ACA and the recipients of the subsidies. It is expected that a majority of eligible people, seeking insurance through the use of exchanges, will access the large subsidies being offered to offset the cost. The subsidies are offered on a sliding scale based on income. The Congressional Budget Office (CBO) estimates that in 2014, 6 million people will receive subsidies averaging $4400 per person, with a slight decrease in 2015 and increases of an estimated 6% each year thereafter.¹ The subsidies are intended to give as many Americans as possible access to health care by offsetting the cost of insurance.

The challenge is related to the operation of the exchanges contained in the ACA’s division of labor between the federal government and the individual states. This was an issue during the drafting of the ACA, with the House of Representatives wanting federal control and the Senate supporting states’ right to choose whether to operate the exchanges. The end result was that each state has the right to operate its own exchange, and if this does not materialize, the federal government operates the exchange for the state. It was not expected that 34 states would decide not to develop exchanges, and the federal government is now performing this function. Due to the unanticipated federal presence in the marketplace and ambiguous wording in the ACA, challengers are making the argument that subsidies are meant to apply to Americans only in state-run operations. This would disqualify eligibility for many participants already signed up in the federal exchanges.

The statute calls for subsidies to be calculated on the bases of the costs of the plans enrolled “through an Exchange established by the State under section 1311” of the ACA, fueling the argument of the challengers of the ACA, who assert that this text excludes participants from receiving subsidies if they are enrolled in a federally operated exchange. Gluck states that the courts were corrected in rejecting this argument, as the provision cannot be read in isolation. The Supreme Court historically applied a rule that statutes are to be interpreted as a whole and in context in order to support Congressional intent. The court upheld the ACA, stating that there are many provisions that make it clear that the intention was for subsidies to be available to state and federal exchanges.

The Supreme Court historically upheld the rule that statues are to be interpreted as a whole and in context. In this case the court concluded that additional provisions in the ACA demonstrate that Congress intended for subsidies to be available to both state and federal exchanges. The budget estimates used during the drafting process reflected amounts needed for state and federally run exchanges. In addition, the Court rejected the assumption that the subsidies were intended as a “carrot” to encourage states to run exchanges.

The case is driven by politics, with many legal cases en route to the Supreme Court. The ACA has survived myriad political attempts to shut it down. Ms Gluck feels this case belongs in Congress, and not the Courts.

CommentaryHere to Stay, at Least for Now

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he ACA is a massive law intended to improve cost, access, and quality in health care for millions of Americans. Advocates of health care reform won a great victory in March 2010 when the ACA was signed into law. Subsequently, the political line in the sand was drawn, as opponents of the bill readied themselves to deconstruct the ACA before it could be implemented. The final arrangement, consisting of a system with state and federal designs, has opened the door to creating a system with unintended consequences related to social justice, equality, delivery, and access.

Considering that the intent of the ACA’s proponents was to increase access to health insurance by the nation’s uninsured, a successful argument against individual subsidies for the federally run exchanges would potentially have great impact on the concept of social justice. The very people the ACA was designed to assist would be left, once again, without the ability to pay for or access health care. According to Gluck, a large majority of people seeking subsidies to offset the cost of health insurance would be responsible for the $5000+ cost per person needed to purchase the insurance in states with federally run exchanges. The cost for individuals would be more than the penalties imposed for not purchasing insurance; therefore one could assume many will choose not to purchase the insurance. The political opposition and continued attempts to dismantle the ACA would have a far-reaching effect on social justice and equality in this county.

Gluck outlines in her article that the ACA has withstood a major Supreme Court challenge, a government shutdown, states’ refusal to expand Medicaid, and more than 40 attempts by the House of Representatives to repeal it. She makes a valid point: these technical arguments use government resources in unintended ways and create a distraction from the Act’s implementation. The health care arena must be focused on delivery and access. There is a pointed need to urgently create systems that can care for the millions of newly insured patients and educate the licensed health care providers needed in order to deliver timely, high-quality care.

There are additional implications for people of states that opted out of running an exchange and defaulted to the federal government. The consumers in these markets are now being faced with large, disproportionate deductibles that they presumably will not be able to pay. In a recent discussion with health care executives, there was a conversation related to the impact this is having on access for those individuals who have purchased insurance in these states (personal communication with Frank Dominguez, president and CEO of El Paso First Health Plan, April 29, 2014).

Conversely, the insurance purchased in a state-run exchange optimizing the Medicaid expansion operates like traditional Medicaid, and insured users accessing health care are not billed a deductible and have great access to health care. At what point will consumers realize the inequity in the extraordinary differences from state to state for health care costs, and begin migrating to states with substantially better, less expensive plans? Without subsidies and with inequitable deductibles, consumers with a substantial need for frequent health care will realize that financially, medically, and socially there would be a benefit to residing where there is access to a state-run exchange. Health care providers would benefit from living in areas where the patients do not have to pay large deductibles, and eventually migrate to areas of the country perceived as having patients with better insurance.

The embattled ACA appears to be here to stay, at least for now. Regardless of which side of the line in the sand we stand on, one must ask at what point the nation comes together to find workable solutions and focus resources on improving the health care system. Will arguments continue, even though the nation is aging and health care demands are increasing dramatically with each passing decade? If health care is not made more affordable, and access not improved, the system will not be sustained and will deteriorate further, and the original intent of this law will be lost in the technicalities.

References

1. Halbig v. Sebelius, Civ. No 13-0623 (Jan 25, 2014).

N Engl J Med

2. Gluck AR. A legal victory for insurance exchanges. . 2013:896-899.

3. Congressional Budget Office. Updated estimates of the effects of the insurance coverage provisions of the Affordable Care Act, April 2014. http://www.cbo.gov/publication/45231.

About the Author

is chief nursing officer at the University Medical Center of El Paso in El Paso, TX, where she administers, directs, and coordinates patient care services and operations in this 394-bed acute care facility/Level 1 Trauma Center/academic teaching hospital. Dr. Fancher has over 20 years of experience in health care and is a member of the hospital’s senior executive team in planning, policy formation, strategic decisions, and implementation, and is directly responsible for an $85-million operational budget and $2-million capital budget.

Diana Fancher, DNP, MBA, RN,