At the beginning of the second day of the bipartisan Senate Health, Education, Labor, and Pensions (HELP) Committee hearings on short term market stabilization, committee chair Lamar Alexander (R-TN) summarized what he thinks is needed to achieve stabilization. His list began with funding of the cost-sharing reduction program. He also acknowledged widespread support for short-term reinsurance funding, although he suggested that states should have a role in providing it. In other news, on September 5, a federal trial court judge denied motions to dismiss in a case claiming discrimination in violation of section 1557 of the Affordable Care Act, section 504 of the Rehabilitation Act, and provisions of Louisiana state law.

Senator Alexander called for changes in section 1332 of the ACA, which allows states to obtain waivers from certain Affordable Care Act provisions with the approval of the Departments of Health and Human Services and Treasury. However, the changes he suggested for 1332 were exclusively procedural:

  • shortening the approval period,
  • allowing states to file “me too” applications based on applications approved for other states,
  • letting governors or insurance commissioners apply rather than requiring legislative action,
  • providing the states with planning funds, and
  • broadening the definition of budget neutrality to allow combining savings from Medicaid 1115 waivers with 1332 waiver savings.

Notably, Senator Alexander did not mention lowering or removing the “guardrails” to allow proposals that reduced consumer protections. Finally, he mentioned the possibility of allowing higher-deductible “copper plans.”

Senator Patty Murray (D-WA), the ranking minority member, supported funding for cost-sharing reductions, stability funding, and added support for enrollment and outreach for the open enrollment period.

The witnesses on the second day of the HELP hearings were five governors, three Republicans— Baker (MA), Haslam (TN), and Herbert (UT)—and two Democrats—Bullock (MT) and Hickenlooper (CO). Three of these states (MA, MT, and CO) have expanded Medicaid, two (UT and TN) have not. Two have states exchanges (MA and CO), the other three do not. Governors Hickenlooper and Bullock recently signed a letter including other Democratic and Republican governors calling for bipartisan action to stabilize insurance marketplaces.

The governors prepared comments reflect different perspectives on the Affordable Care Act and its effects on their states. Governor Bullock praised the ACA’s expansion of coverage in his state, and in particular the improved coverage of Native Americans, a feature of the ACA too seldom recognized. Governor Hickenlooper also praised briefly the coverage expansions that the ACA had accomplished in his state, but proceeded to also acknowledge insurer exits and premium increases, which have left health care unaffordable for individuals who do not qualify for premium tax credits. Governor Baker noted that 96 percent of Massachusetts residents are now insured, although he noted that much of this success was due to state efforts antedating the ACA.

Governor Haslam, on the other hand, emphasized lack of choice and high costs in Tennessee’s individual market, while Governor Herbert simply asked Congress to let Utah chart its own course.

All five governors agreed that Congress should take action to ensure payments to insurers for reducing cost sharing for low income exchange participants. Governors Herbert, Haslam, and Hickenlooper specifically asked that they be funded through 2019. All governors also asked that Congress create a temporary “stability fund” federal reinsurance program, something that Senator Alexander has not embraced. There was also general concern expressed about rising health care costs, which are the underlying driver of health care premium increases, although there were differing perspectives on how they should be controlled.

Not surprisingly, the governors generally supported greater flexibility for states to govern their own insurance markets, and most called for changes in the 1332 state innovation waiver program. Governor Herbert went the furthest, calling for allowing states to define the essential health benefits and providing alternative incentives for continuous coverage, as well as allowing insurers to exclude coverage of preexisting conditions and broaden “bands of risk.” Governor Hickenlooper, on the other hand, called for more limited changes in the 1332 process that would expedite it and provide more flexibility for determining budget neutrality, while Governor Haslam called for an expedited process and more flexibility in applying the guardrails, for example regarding age bands and plan design.

Governor Baker had the most specific suggestions as to how states might use greater 1332 flexibility. He noted that the mandate that health insurers cover pediatric dental benefits, for example, has caused problems in Massachusetts. This should not be a  problem on the exchange where standalone dental plans are available, but it is a problem on the off-exchange individual and small group market. He also suggested that states should be allowed to permit health plans with lower maximum out-of-pocket caps for high-value care and higher out-of-pocket caps overall, and to combine 1115 Medicaid waivers and 1332 innovation waivers in determining budget neutrality. The problem, of course, is cabining flexibility to avoid simply turning 1332 into a block grant program where states can do anything they want using federal money, a result Senator Alexander is apparently not calling for.

Finally, a number of the governors had specific recommendations to Congress. Governor Herbert called for ending the medical device and health insurance taxes and broadening reliance on health savings accounts. Governor Baker endorsed congressional action on pharmaceutical costs and continuing federal support for the Medicaid program and for family planning. Governor Bullock called for continued enforcement of the individual mandate and federal support for education and enrollment. Finally, Governor Hickenlooper called for tax incentives for insurers that enter counties with only one insurer and for allowing access for consumers living in those counties to the Federal Employee Health Benefit Program.

Judge Refuses To Dismiss Discrimination Claim

On September 5, Judge Lance M. Africk of the United States District Court for the Eastern District of Louisiana denied motions to dismiss in a case brought by Kimberly Esparza claiming discrimination in violation of section 1557 of the Affordable Care Act, section 504 of the Rehabilitation Act, and provisions of state law. The motions were filed by the Louisiana State University Board, the University Medical Center Management Corporation, and the Louisiana Children’s Medical Center. The plaintiff, who is deaf, alleged that the defendants failed to provide her with a qualified in-person sign language interpreter when she visited their hospital on a number of occasions to receive medical care.

The LSU Board moved to dismiss claiming that sovereign immunity under the Eleventh Amendment, which generally prohibits lawsuits brought by private parties against states in the federal courts, barred the claim. Before reaching this assertion, however, the court addressed the question of whether 1557 in fact creates a right enforceable through a private lawsuit. Judge Africk held, as have other judges who have addressed the question, that Congress intended to allow private parties to sue to enforce section 1557. Congress clearly identified the persons who were to benefit from the statute’s protection as those protected by the civil rights laws that section 1557 references, and in fact expressly incorporated the remedies afforded by those laws, including private rights of action.

Judge Africk next concluded that the Eleventh Amendment does not bar lawsuits against state entities under section 1557. Federal law expressly provides that states that accept federal money in federal spending programs are subject to lawsuits under federal statutes prohibiting discrimination, including section 1557. States are on notice, the judge held, that if they accept federal money they are subject to federal discrimination lawsuits and cannot claim sovereign immunity. Section 1557 applies to states if “any part” of a state “health program or activity,” including the LSU board, is the recipient of “Federal financial assistance.”

The court next held that the LSU board could potentially be held liable under section 504 even though it did not manage the hospital because of its contractual relationship with the management corporation. It further held that the defendants could be held liable for compensatory damaged for intentional discrimination without the plaintiff having to prove “discriminator animus.” Finally, the court refused to dismiss a state human rights act claim, holding that a state law requiring review of malpractice cases before filing did not apply, as the case was not a malpractice case.