October 25 Updates
AARP Challenges Penalties For Employees Who Don’t Provide Health Data To Wellness Programs
In May of 2016, the Equal Employment Opportunity Commission (EEOC) released final rules governing the application of the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA) to employment based wellness programs. The ADA permits employers to solicit disability-related information from employees—for example through wellness program risk assessment questionnaires—only if the employee’s provision of the information is “voluntary.” GINA similarly prohibits an employer from requiring the involuntary provision of health information on family members.
The EEOC rule determined that provision of health information to an employment-related wellness programs could be considered “voluntary” even though the program imposed penalties of up to 30 percent of the full-cost of self-only coverage on employees who refused to provide health information, and an additional 30 percent of the cost of sole employer coverage where both the employee and spouse refused to provide health information.
On October 24, 2016, AARP (formerly the American Association of Retired Persons) filed a lawsuit in the federal district court in the District of Columbia; AARP asserts that the EEOC’s ADA and GINA rules permitting penalties to be imposed on employees and their spouses for failing to disclose health information are “arbitrary, capricious, an abuse of discretion, and not in accordance with the law.” The organization asked the court for a preliminary injunction to halt the implementation of the rule.
AARP argues that the Draconian penalties that the EEOC rule allows employers to impose on employees who refuse to provide health information make the provision of that information involuntary. If self-only coverage costs $6,000, an employer could impose an $1,800 penalty on an employee who refused to provide health information and an additional $1,800 penalty if a spouse’s information was not provided. AARP characterizes this as both an irrational interpretation of the term “voluntary” and an unjustified departure from the EEOC’s long-standing prior position that employers could not penalize employees at all for refusing to provide health information. AARP argues that the EEOC rules will cause irreparable harm to employees who must disclose private medical information, and asks the court to enjoin the implementation of the rule.
Court decisions in earlier litigation brought by employers have allowed employers to impose penalties on employees who refuse to provide information for wellness programs. The EEOC now allows such penalties, but must answer to the court as to how it can justify this position.
CMS Reaches Out To Those In ‘Gig” Economy About Marketplaces
Keeping up its steady drumbeat of announcements of new initiatives leading up to the launch of open enrollment on November 1, CMS announced on October 25 that it is partnering with seventeen “gig economy” companies that will connect freelance professionals, entrepreneurs, and customers with information and resources to encourage them to enroll through the marketplaces during the open enrollment period. Secretary Burwell discussed the development in an interview with Recode. The list of companies includes some like Uber and Lyft that provide direct services to consumers, but more companies like FlexJobs, the Freelanceers Union, or WeWork that primarily provide services and opportunities to freelancers. The companies are committed to informing the 15 million professionals with whom they work of opportunities for coverage available through the marketplaces.
On October 24, 2016, the Department of Health and Human Services Secretary Sylvia Burwell and Treasury Secretary Jacob Lew filed their initial brief in their appeal of House v. Burwell in the Court of Appeals of the District of Columbia Circuit. On October 24, Healthcare.gov also opened for consumers to window shop for 2017 plans. To accompany the opening of window shopping, the HHS Assistant Secretary for Planning and Evaluation released a report on Health Plan Choice and Premiums in the 2017 Health Insurance Marketplace. (press release) This post discusses first the House v. Burwell brief and then the ASPE report.
The Government’s Brief In House v. Burwell
House v. Burwell was filed in November of 2014 following a July 2014 party-line vote by the House of Representatives to sue the administration for what Republicans in the House viewed as abuses of presidential power. The lawsuit 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 Affordable Care Act’s (ACA) cost-sharing reduction (CSR) payments, arguably without an explicit appropriation.
The Legal And Policy Background
The administration moved to dismiss the House’s complaint, contending that the federal courts have no jurisdiction to hear lawsuits by members of Congress challenging the actions of the executive. In an order entered on September 9, 2015, Judge Rosemary Collyer dismissed the House’s complaint regarding the employer mandate delay issue, which she regarded as a routine dispute over interpretation of the law and thus inappropriate for a lawsuit by the House. Judge Collyer refused, however, to dismiss the House’s claim that the funding of the CSRs without an explicit annual appropriation infringed on the constitutional authority of Congress to appropriate funds. In October Judge Collyer denied the government’s request for an expedited appeal from her decision.
Both the administration and the House then asked the court to decide the case on the merits. In May, 2016, Judge Collyer ruled for the House, holding that insurers could not be reimbursed by the government for the CSRs without an explicit appropriation and that the House had never explicitly appropriated funding for the CSRs.
The CSRs are an essential element of the ACA’s program for making health insurance affordable and health care available to low and moderate-income Americans. The ACA offers these individuals premium tax credits (APTC) to help make insurance affordable. 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 2016 is over $3,000. 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 itself affordable, the ACA requires insurers to reduce cost sharing for individuals and families with incomes below 250 percent of poverty. CSRs work in two ways. First, they reduce 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 costs. For 2016, the maximum out of pocket for an individual is $6,850, but for an individual with an income up to 200 percent of poverty it is reduced to $2,250.
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.) As of the second quarter of 2016, 5.9 million Americans, or 56 percent of all marketplace enrollees were receiving CSRs.
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. If the CSR payments to insurers stopped, the insurers would still be legally required to reduce cost sharing—at a cost of $7 billion this year and $130 billion over the next ten years—without reimbursement. The House suit argues, and Judge Collyer held, that the money for the CSR payments was never appropriated and that payments to insurers to reimburse them for the CSRs are unconstitutional.
A Separation Of Powers Argument Against The House’s Right To File Suit
The government’s brief is a full-throated protestation that it is the House’s lawsuit—and not the administration’s expenditures for the cost-sharing reduction payments—that violates the Constitution. The brief begins:
For the first time in our Nation’s history, the district court allowed one House of Congress to invoke the jurisdiction of an Article III court to resolve a disagreement between the political branches over the Executive Branch’s execution of a federal statute. Such disagreements are routine, but they have always been resolved through the give-and-take of the political process—not by resort to the Judiciary. That unbroken history reflects the fundamental separation-of-powers principles embodied in Article III’s case-or-controversy requirement and the “restricted role for Article III courts” in our constitutional structure. . . . It also reflects the distinct powers of the Legislative and Executive Branches under the Constitution. As this Court and the Supreme Court have made clear, the House’s belief that the Executive Branch is misinterpreting a federal statute does not confer Article III standing or create a case or controversy fit for judicial resolution. The district court’s contrary conclusion cannot be reconciled with the structure of the Constitution, controlling precedent, and historical practice, and would “improperly and unnecessarily plunge[ ]” the Judiciary into a host of disputes between the political branches.”
The brief argues that allowing the House lawsuit to succeed would contravene fundamental separation of power principles in three ways. First it would allow one house of Congress to use litigation to circumvent the legislative process. If the House believes an expenditure is improper it can, as it has done with respect to the risk corridor program, adopt an appropriations rider blocking expenditures. But that would require concurrence of the Senate and the President. The House is trying to avoid this by suing to accomplish the same end unilaterally.
Second, the suit would allow the House and the courts to usurp executive authority over the execution of the laws. And third, the suit “unmoors the Judiciary from “the traditional understanding of a case or controversy,” by using the courts to referee a political dispute between the other two branches of the government.
Because of the case and controversy requirement, which mandates that a party be injured in fact by the defendant’s action before a lawsuit can be brought in the federal courts, the courts have no jurisdiction over the House’s claims, the brief states. The House has simply not been injured by the administration’s actions.
Judge Collyer’s decision drew a distinction between the House’s claim that the administration had unlawfully delayed the employer mandate, which Judge Collyer saw as a routine dispute over the interpretation of the law, and the House’s claim that the expenditure of funds was without an appropriation, which she saw as a constitutional dispute portending an injury to the House’s constitutional authority. But, the HHS brief points out, both are really disputes about the interpretation of the law—in this case about the scope of an appropriation—and virtually any dispute involving the interpretation of the law involves some appropriation.
Even if the court were to conclude, the government argues, that it has jurisdiction, it should exercise its equitable discretion to require the House to first pursue available legislative remedies. The House clearly has its own power to address inappropriate expenditure of funds, and should use that power rather than trying to use the courts.
The government next argues that Congress has no “cause of action” to bring the suit. No law authorizes a lawsuit of this kind. In other situations, Congress has passed laws explicitly allowing a lawsuit, but here there was no such law, only a resolution passed by one house of Congress. Indeed, an explicit attempt in 2014 by the House to adopt a law creating a right for it to sue the executive branch failed when the Senate rejected it. The brief quotes from briefs in earlier cases in which the House explicitly acknowledged its lack of authority to file lawsuits to enforce the general laws. The government’s brief further contends, moreover, that neither the Declaratory Judgment Act, nor the Administrative Procedures Act, nor the Constitution provides any authority for the lawsuit.
The Merits Of The Dispute: The Government Relies For Authority To Reimburse Insurers For CSRs On The Statute Covering APTCs
Finally, the brief turns to the merits. It offers the clearest articulation the government has offered so far as to why it believes it can reimburse insurers for the CSRs without an explicit appropriation. Everyone agrees that funds for the APTC are covered by section 1324 of the Internal Revenue Code, the tax “refund” statute, which was amended by the ACA to cover refunds due for credits under section 36B. The government argues that eligibility for CSRs is determined under section 36B, just as is eligibility for APTC. Both are part of the same program—and both involve payments to insurers, not “refunds” as the term is generally understood. Section 1324 thus provides an appropriation for both the CSRs and APTC.
The government bolsters this argument by pointing to other provisions of the ACA, the absence of appropriations language that normally accompanies statutory provisions when Congress intends to appropriate funds for them later, and the Congressional Budget Office analysis of the CSRs. It argues, moreover, that if funds for CSRs were eliminated, insurers would have to raise their premiums to cover the cost of the CSRs, which in turn would result in greater—much greater—expenditures for APTC. In holding that funding for the CSRs had not been appropriated, therefore, the district court’s interpretation of the law would increase federal expenditures by billions of dollars, clearly not what Congress intended. In sum, the court of appeals should dismiss the case for lack of jurisdiction and lack of a cause of action, but also because the district court’s judgment was wrong on its understanding of the law.
The House must file its brief by November 23. The government will then reply and the court of appeals will hear oral arguments this winter. A decision will come early next year.
Health Plan Choice and Premiums in the 2017 Health Insurance Marketplace
The ASPE brief contains a great deal of information on 2017 premiums and plan choice. CMS released with the brief more granular “landscape” data on individual and family plans, as well as their premiums and cost sharing features, by county in the states served by HealthCare.gov.
The ASPE brief emphasizes several findings. First, as has been widely reported, after two years of moderate premium increases (2 percent for 2015 and 7 percent for 2016 for the second-lowest cost benchmark silver plan), premiums are going up sharply for 2017. (The report focuses on the second-lowest-cost benchmark silver plan premiums on which premium tax credits are based). Across the 39 states using the HealthCare.gov platform, the median second-lowest cost plan premium will increase 16 percent, while the average increase is 25 percent. (If four state-based exchanges for which data are available are added in, the average increase is 22 percent). The brief argues, as HHS has on other occasions, that the increases simply bring the premiums up to where the CBO predicted they would be in 2009 when the ACA was adopted and that they are still below the cost of employer coverage.
Premiums Increases Vary Geographically
Second, premium increases vary sharply from state to state. In ten states, premium increases are 7 percent or less. In Indiana and Massachusetts premiums are actually decreasing. In seven states premiums for the second-lowest cost plan have increased over 50 percent. ASPE notes that some of the states that have seen the largest premium increases are states that began with the lowest premiums in 2014 and with premiums especially far below the cost of employer-based plans. There is reason to hope that as the market matures, premium increases will calm down.
Also, all of the states with increases at 7 percent or below are Medicaid expansion states while four of the states with the highest premium increases have not yet expanded Medicaid. ASPE has noted before that states that have not expanded Medicaid have premium increases 7 percent in excess of states that have expanded.
Advance Premium Tax Credits Will Ameliorate Premium Increases For Many
Third, most marketplace enrollees will receive ATPC that will substantially reduce their premiums. Seventy-two percent of marketplace enrollees will be able to find a plan for $75 or less after the application of APTC. Seventy-seven percent will be able to find a plan for $100 or less. After the application of APTC, the cost of plans for many people eligible for APTC will be virtually identical to their cost last year. Moreover, more people will be eligible for APTC for 2017 than in 2016 because the cost of the benchmark plans which determine the value of APTC is increasing. ASPE estimates that 22 percent of the 1.3 million HealthCare.gov enrollees who did not qualify for APTC in 2016 will be eligible in 2017.
ASPE notes that 84 percent of 2016 marketplace enrollees were eligible for APTC. It estimates that 84 percent of the remaining uninsured who are eligible for tax credits through the marketplace may be eligible for APTC, as well as 2.5 million individuals who are enrolled in off-marketplace plans, although these estimates are probably high. But millions of Americans, including all individuals with incomes above 400 percent of the federal poverty level (FPL), undocumented aliens, individuals with an “affordable” offer of minimum value employer coverage who in fact cannot afford it, and individuals who remain enrolled in an off-marketplace plan, will not receive APTC and will have to deal with premium increases. Only 2 percent of marketplace plan selections are from households with incomes at 400 percent of FPL, while 81 percent have incomes at or below 250 percent of the FPL
It Can Pay To Shop Around
Fourth, the ASPE brief documents once again the benefits of shopping around. In 2017, 76 percent of marketplace enrollees can find a lower-cost plan than their 2016 plan in the same metal level by returning to the marketplace and shopping. The average lowest-cost silver plan available to current silver plan enrollees is $433 per month for 2017 before APTC. By switching to this plan, 2016 enrollees could save $691 a year. If all returning consumers nationwide chose the lowest-cost plan available in their current metal level, average premiums would decrease $28 or 20 percent compared to 2016 premium levels, taking APTC into account.
Shopping raises several issues, however. The lowest cost plans are likely narrow network plans and may not include in-network many of the providers covered by more expensive plans. Many enrollees will be reluctant to switch plans if it means losing providers with whom they have established relationships. There are also questions about the capacity of the lowest cost plans. Do they have enough providers in their networks to serve all marketplace enrollees if they all chose to switch to the lowest-cost plan? For many enrollees, cost may be the primary consideration, but there are good reasons why individuals choose not to switch. In 2016, 70 percent of enrollees returned to the market to shop but only 43 percent switched plans.
Fewer Insurers …
Fifth, as has been widely known, there will be fewer insurers in the marketplaces this year. There will be 228 state-licensed insurers participating in HealthCare.gov states and state-based marketplaces for which data are available and 167 in HealthCare.gov states. The average consumer can choose between 3 insurers; 79 percent will have a choice of two or more insurers and 56 percent three or more. But 83 state-licensed insurers who offered plan in 2016 are not returning in 2017 (United and Aetna account for 43 of these) and only 15 new insurers are offering plans.
… But Not Necessarily Fewer Plans
But, sixth, lack of choice of insurers does not mean lack of choice of plans—that is, different combinations of premiums, cost-sharing arrangements, and networks. South Carolina, for example, has only one insurer in its marketplace, but it offers on average per county 25 plans. Wyoming’s one insurer offers on average 28 plans. On the other hand, Arizona’s two insurers only offer 4 plans and Alaska’s one insurer only one.
On average, consumers in HealthCare.gov states can choose from 30 different plans (down for 47 in 2016), an average of 10 plans per insurer. This is far more choice than most employees get; 83 percent of employers offer only one type of plan, and many employers offer only one plan with one insurer.