September 10 Update: GAO Individual Market Report
On September 9, 2015, the Government Accountability Office released a report, dated August 10, 2015, describing the availability and premiums of health insurance plans available on the marketplaces and in the individual market generally for 2014 and 2015. The report notes that individual market consumers generally had access to more health plans in 2015 than they did in 2014.
In both years the lowest-cost plans were available through exchanges in most of the 1,886 counties GAO analyzed in the 28 states for which it had reliable data for plans offered in both markets. Consumers in most of the counties analyzed had six or more plans to choose from in each of the bronze, silver, and gold tiers in both 2014 and 2015. The percentage of counties with six or more plans in those metal tiers increased from 2014 to 2015. Consumers had fewer platinum plan options available, although the availability of platinum plans generally also increased from 2014 to 2015.
The range of premiums available to consumers in 2014 and 2015 varied among the states and counties GAO analyzed. In the 28 states GAO analyzed for both 2014 and 2015, the minimum premiums for silver plans available to a 30-year-old increased in 18 states, decreased in 9 states, and remained unchanged in 1 state. At the county level, GAO found that premiums for the lowest-cost silver option available for a 30-year-old increased by 5 percent or more in 51 percent of the counties in the 28 states. In general, states that had higher minimum premiums in 2014 were likelier to see decreases for 2015, while those that had lower minimum 2014 premiums were likely to see increases.
The report also found that the range of premiums — from the lowest to highest cost — differed considerably by state. For example, in Rhode Island, 2014 premiums for silver plans available to a 30-year-old ranged from a low of $241 per month to a high of $266 per month, a difference of 10 percent, and in 2015 ranged from a low of $217 per month to a high of $285 per month, a difference of 32 percent. By contrast, in Arizona, 2014 premiums for these plans ranged from a low of $147 per month to a high of $508 per month, a difference of 244 percent, and in 2015 ranged from a low of $147 per month to a high of $545 per month, a difference of 270 percent.
In general, states where counties had more plans available had more variation in premium levels. The range of premiums at the county level generally widened between 2014 and 2015.
The GAO also released an interactive graphic reporting for both years by state and county the minimum, median, and maximum premium values for all individual market plans (either on or off the exchange) and for exchange-only plans.
Original Post
On September 9, 215 Judge Rosemary Collyer of the federal district court for the District of Columbia entered an order refusing to dismiss the complaint of the House of Representatives in House v. Burwell. While Judge Collyer dismissed several of the claims in the House’s case, she refused to dismiss the central claim — that the administration is illegally, indeed unconstitutionally, paying out billions of dollars to insurance companies that are reducing cost-sharing for low-income marketplace plan enrollees, as the insurers are required to do under the Affordable Care Act.
As will be explained further below, while the premium tax credits that were at issue in the Supreme Court’s King v. Burwell decison make health insurance affordable for low-income Americans, the cost-sharing reductions (CSRs) make health care services affordable for them. Should the House ultimately succeed in their challenge — and Judge Collyer’s ruling does not decide whether they will — access to health care for millions of Americans would be at risk.
Background
This lawsuit originated in an attempt by the House of Representatives to hold President Obama responsible for what it views as abuses of presidential power. Since 2010, the House of Representatives has been held by a substantial Republican majority. The House has been at loggerheads with the President on many issues, but in particular on health care reform. The House has voted over 50 times to repeal the President’s signature policy initiative, the ACA.
Frustrated by the difficulty of implementing an incredibly ambitious and complicated law, and by the unwillingness of Congress to help by adopting technical amendments, the administration has on a number of occasions acted unilaterally to make adjustments it believes to be necessary to implement the law. It has also interpreted the law differently than the House. The House has taken strong exception to what it perceives as actions in excess of presidential authority and in violation of the law. In 2014, the House decided to call upon the judiciary to aid it in its disputes with the President.
On July 30, 2014, the House voted along party lines to file a lawsuit challenging the President. Twice private counsel that it hired to bring the case resigned, but the House finally succeeded in engaging Jonathan Turley, a conservative professor at George Washington University, to file the action.
The Issues
The complaint, filed on November 21, 2014, focused on two issues: the decision by the administration in 2013 to delay the implementation of the employer mandate for a year, and the funding by the administration of the ACA’s CSR payments, arguably without an explicit appropriation.
The second issue needs a little explanation. The ACA offers low and moderate-income Americans premium tax credits to help make insurance affordable. These are offered through the tax system and are funded through a permanent appropriation for tax refunds. But the silver (70 percent actuarial value) plans whose premiums set the benchmark for premium tax credits are high cost-sharing plans. The average deductible for an individual in 2015 is over $2,500. For many low-income Americans the deductibles and coinsurance imposed by these plans would leave health care unaffordable without additional assistance.
To make health care affordable, the ACA requires insurers to reduce cost sharing for individuals and families with incomes below 250 percent of poverty. This works in two ways. First, it reduces the out-of-pocket maximum — the most that an individual or family has to pay for in network services before the insurer takes over all cost. For 2015, the maximum out of pocket for an individual is $6,600, but for an individual with an income up to 200 percent of poverty it is reduced to $2,250. For individuals with incomes between 200 and 250 percent of poverty, the out-of-pocket maximum is cut to $5,200. (For families, out-of-pocket maximums are twice these amounts).
Second, the CSRs increase the actuarial value of silver plans, from 70 percent to 73 percent for enrollees with incomes between 200 and 250 percent of poverty, 87 percent for enrollees with incomes between 150 and 200 percent of poverty, and 94 percent for individuals with incomes between 100 and 150 percent of poverty. (The actuarial value of an insurance plan refers to the percentage of medical costs of a standard population that is covered by the insurer through payments to providers rather than by enrollees through deductibles or other forms of cost sharing.) According to a Kaiser Family Foundation paper, the average annual deductible for standard silver plans in 2015 was $2,559, but was $2,078 for CSR73 plans, $737 for CSR87 plans, and $229 for CSR94 plans. The average copayment for a primary care physician visit for plans with copayments was $28 for standard silver plans, $23 for CSR73 plans, $17 for CSR87 plans, and $14 for CSR94 plans
As of the end of June 2015, 5.5 million Americans were receiving CSRs, 56 percent of all marketplace enrollees. It is believed that as many as 2 million more marketplace enrollees could be eligible for CSRs if they enrolled in silver plans.
The CSRs are obviously not free. The ACA requires the Treasury to reimburse insurers that reduce cost sharing for eligible individuals and families as they are required to do. This reimbursement is made on a monthly basis. The House, however, claims that Congress failed to include an explicit appropriation in the ACA to cover these costs, and has not appropriated funds to cover the cost of the CSRs since the ACA was adopted. Indeed, as Judge Collyer notes, the administration requested an appropriation to cover the CSRs in 2013, which was never acted on. (The administration claims that it decided no appropriation was needed).
The Constitution provides at article 1, section 9, clause 7: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law . . . .” The House claims that since no money has been appropriated for the CSR payments, they are unconstitutional.
This is not a trivial matter. If the CSR payments to insurers stopped, the insurers would still be legally required to reduce cost sharing—at a cost of $5 billion this year and $136 billion over the next ten years without reimbursement. Burdened with this cost without reimbursement through the CSR payments, many insurers would cease to offer marketplace coverage. Those that remained would have to raise rates dramatically to ensure solvency. Although much of the increase would be covered by the premium tax credits for low-income individuals, higher-income enrollees could face unsustainable increases. This could well put the marketplaces into a death spiral, where healthy people would drop coverage leaving only high cost patients behind.
Alternatively, insurers would turn to Congress, and possibly to the courts. They could sue in the Court of Claims to be reimbursed by the government for money that they had been promised, but they might also sue claiming that the government could not constitutionally require them to reduce cost sharing without reimbursement.
As mentioned earlier, the case also raises a second issue, a claim the Obama administration had illegally delayed the effective date of the employer mandate and modified its terms. As the employer mandate delay is almost over, and as the House only sought a declaration of the law, not to force the government to do anything, this was a much less important claim.
Judge Collyer’s Opinion
After the filing of the case, the administration moved to dismiss the complaint for lack of standing. The plaintiffs, on the other hand, moved for a judgment in their favor on the legal issues. Judge Collyer asked the parties to first brief the motion to dismiss, and the September 9 decision addresses this motion.
Her opinion is long and very technical. She focuses on three issues:
- Does the House have standing to challenge the administration’s actions (that is, has the House been injured in a particular way by those actions)?
- Does the House have a legal basis for its claim?
- Is the House’s claim justiciable (that is, appropriate for resolution by a court)?
Standing
Under the Constitution, the federal courts cannot hear a case unless the case is brought by someone who has standing, that is, someone who has “suffered an injury in fact that is both (a) concrete and particularized and (b) actual or imminent, as opposed to conjectural or hypothetical.” In its leading modern case on the issue, the Supreme Court held that members of Congress could not sue to challenge executive action because they were not injured in a particular individual way by it. But the Supreme Court in that case suggested that it might be significant that the action was only taken by individual members, not the whole Congress.
In subsequent cases, lower courts have heard actions brought by Congress to demand information from the executive, and in a recent case the Supreme Court allowed the Arizona legislature to sue to challenge a redistricting initiative. In the end, however, Judge Collyer asserts there is no binding precedent governing the case, and thus she must decide it based on the parties’ arguments.
Judge Collyer decides that the House does have standing under what she calls its “non-appropriation theory” — its theory that the administration is spending money that has not been appropriated. To quote:
Once the nature of the Non-Appropriation Theory is appreciated, it becomes clear that the House has suffered a concrete, particularized injury that gives it standing to sue. The Congress (of which the House and Senate are equal) is the only body empowered by the Constitution to adopt laws directing monies to be spent from the U.S. Treasury. . . .Yet this constitutional structure would collapse, and the role of the House would be meaningless, if the Executive could circumvent the appropriations process and spend funds however it pleases. If such actions are taken, in contravention of the specific proscription in Article I, § 9, cl. 7, the House as an institution has standing to sue.
Judge Collyer rejects all of the administration’s responses to this argument. When money is spent without an appropriation, the House as an institution is injured in a particular way not shared by the public as a whole, or even by an individual member. The dispute is not about implementation of a law, but about the constitutional role of Congress. Although Congress has its own means of enforcing its will, this does not bar it from resorting to the courts in constitutional disputes.
Based on this reasoning, Judge Collyer concludes that the House does have standing to protect its constitutional prerogatives with respect to question of whether the cost-sharing reduction payments have been appropriated. The challenge to the implementation of the employer mandate, on the other hand, is a mere statutory implementation question, not a constitutional question. Under long-standing judicial precedent, members of Congress cannot sue to challenge the implementation of a law. The challenge to the employer mandate, therefore, is dismissed.
The distinction to me seems a bit facile. The House argued that the challenge to the implementation of the employer mandate also involved the protection of a constitutional power — the power to legislate. Judge Collyer contends this is not enough; under the House’s theory, Congress could challenge any executive action interpreting a statute. But why is the constitutional appropriation power uniquely subject to protection? Moreover, the administration did not argue that it could make the CSR payments without an appropriation; it argued that there was an appropriation. So the court will have to decide a question of statutory interpretation, just as it would have to in the dispute involving the employer mandate.
Legal Basis
Having decided that the House had standing to challenge the CSR payments, Judge Collyer concludes that the House could find legal bases for its claim, under the Declaratory Judgment Act, the Administrative Procedures Act, or under the Constitution itself. Of course, she does not decide these claims, but concludes that they are legitimate legal claims.
Justiciability
Finally Judge Collyer decides that the challenge to the CSR payments is justiciable. In particular it is not barred by separation of power considerations.
Curiously, while discussing the Supreme Court’s recent Arizona redistricting case earlier in the opinion, Judge Collyer references a footnote in that case; the note distinguishes the situation in that case, where the Arizona legislature had been granted standing, from a case involving the federal Congress where, the Supreme Court noted, separation of power considerations would be present. At that point in her opinion, Judge Collyer dismisses the footnote, stating that it concerned justiciability, not standing. But when her opinion finally gets to the separation of powers issue, the footnote is not mentioned. Neither is Justice Scalia’s cogent dissent in the Arizona case on the issue of legislative standing.
In any event, Judge Collyer decides, this is the sort of dispute over constitutional requirements that the courts have long decided; it is justiciable. She concludes:
The court is also assured that this decision will open no floodgates, as it is inherently limited by the extraordinary facts of which it was born. The Secretaries note that this case is a “novel tactic” by the House and “entirely without precedent.” The House agrees that this “case is the result of an historic vote by plaintiff House of Representatives.” The rarity of these circumstances itself militates against dismissing the case as non-justiciable.
What Comes Next?
So the case will proceed.
At this point under the normal course of business, Judge Collyer would ask for briefs on the merits of the case. This is not a normal case, and it is likely that the government will ask for an immediate appeal to the D.C. Circuit on the standing issue. As Nick Bagley explains:
The government can, however, ask Judge Collyer to certify her order under 28 U.S.C. §1292(b). Such a certification is appropriate, the statute says, when an order involves “a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” If the court of appeals agrees that the judge’s order meets that standard, an appeal could proceed immediately.
The case will certainly be decided ultimately by the D.C. Circuit, perhaps by the Supreme Court. In the meantime, however, insurers that participate in the marketplaces will be subject to considerable uncertainty, and if there is anything that health insurance markets do not need now, it is uncertainty.
A win for the House would not mean that the ACA is unconstitutional, as would have been the case had the NFIB litigation succeeded; or even that the ACA would have to be amended, as would have been the case had King v. Burwell succeeded. It would merely mean that Congress would have to appropriate funding for the CSRs to function. The appropriation process is a perpetual battleground, and this year’s is shaping up to be as bad as ever. In the end, this would merely become one more appropriation for the administration and Congress to fight over, and one more reason why the fate of the ACA might turn on who is in charge of the next administration.
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