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Who Authored Obamacare’s Exchanges? King v. Burwell And Justice Kagan’s Law Clerks


March 6th, 2015

Editor’s note: Watch Health Affairs Blog for more posts on King v. Burwell and the Supreme Court oral arguments in the case by Tim Jost, Grace-Marie Turner, Sara Rosenbaum, Bill Sage, and others.

Despite all the media hubbub and intense scrutiny, we didn’t learn all that much from the oral argument in King v. Burwell. The four liberal justices—Ginsburg, Breyer, Sotomayor, and Kagan—clearly believe that an exchange established “for” or “in” a state by the federal government is the same as an exchange “established by the state” (or at least that it’s ambiguous and the tie goes to the IRS). Justices Scalia and Alito—and presumably the silent Thomas—equally believe that words mean what they say.

So the case, as expected, turns on the views of Chief Justice Roberts and Justice Kennedy, who gave very little away. Indeed, I’ve never seen John Roberts so quiet at an oral argument—holding his cards so close that they risk being permanently imprinted on his vest—while Anthony Kennedy was characteristically inscrutable. In other words, 4-3 in the government’s favor with two wild cards.

That’s exactly what everyone knew going into the argument, and 85 minutes later if anyone tried to tell you that they knew what the outcome would be, they were engaging in spin or wishful thinking. To put an even finer point on it: whichever side you thought had the better chance of winning, downgrade your expectations to 50-50.

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King v. Burwell: Finding A Path Forward After An Executive Overreach


March 5th, 2015

Editor’s note: Watch Health Affairs Blog for more posts on King v. Burwell and the Supreme Court oral arguments in the case by Tim Jost and others.

The Supreme Court justices had a lively discussion today during arguments in King v. Burwell about who Congress intended to get health insurance subsidies and under what conditions.

The central question is whether the Internal Revenue Service had the authority to write a rule authorizing subsidies to go to millions of people in the 37 states now operating under federal exchanges.

The plaintiffs say the language of the law is clear:  Subsidies are allowed in “an Exchange established by the State under [section] 1311of the Patient Protection and Affordable Care Act.” It doesn’t just say this once, but nine times in various linguistic forms.

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King v. Burwell: Unpacking The Supreme Court Oral Arguments


March 5th, 2015

Editor’s note: Watch Health Affairs Blog for more posts by Grace-Marie Turner and others on King v. Burwell and the Supreme Court oral arguments in the case.

One March 4, 2015, the United States Supreme Court heard oral arguments in King v. Burwell.  As every reader of this Blog knows, the issue in the case is whether the Internal Revenue Service rule that allows the federally facilitated marketplaces to grant premium tax credits is valid.

If it is not, millions of individuals in the 34 states served by the FFMs will lose their tax credits.  Without the credits, they will no longer be able to afford health insurance.  The cost of insurance to those remaining in the nongroup market will rise precipitously, causing even more Americans to lose coverage.  As the number of uninsured increases, providers will bear an increased burden of uncompensated care.  A decision for the plaintiffs, that is, will be disaster for the American health care system.

The challengers argue that this is a result Congress intended.  They contend that the subsection of the Affordable Care Act dealing with the calculation of premium tax credits limits the credits to individuals enrolled in an “Exchange established by the State.”  The government argues that this is a term of art — that Congress intended this phrase to include the federally facilitated exchanges that the ACA requires the Department of Health and Human Services to create as a fallback where the states elect not to operate their own exchange.  Dozens of other provisions of the ACA support the government’s position.

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Health Affairs’ March Issue: The Benefits And Limitations Of Information


March 2nd, 2015

The March issue of Health Affairs contains papers focusing on the benefits—and the limitations—of information-gathering processes as a way to solve health system problems. Studies in this variety issue examine US hospital rating systems, disclaimers on dietary supplements, state prescription drug monitoring programs, the value of US versus Western European cancer care and other topics.

National hospital rating systems show little agreement — what’s a consumer to do?

Matt Austin of Johns Hopkins Medicine and coauthors compared four well-known national hospital rating systems designed for use by US consumers: U.S. News & World Report’s Best Hospitals; HealthGrades’ America’s 100 Best Hospitals; Leapfrog’s Hospital Safety Score; and Consumer Reports’ Health Safety Score. They analyzed ratings covering the time period from July 2012 to July 2013.

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How Many Americans Will Lose Coverage If The Supreme Court Kills The ACA Tax Credits?


March 2nd, 2015

In March, the U.S. Supreme Court is slated to hear King v. Burwell, a case that challenges the authority of the federal government to provide tax credits and other financial assistance to people who buy Affordable Care Act (ACA) coverage through the federal health insurance marketplace. The federal government runs the health insurance marketplace in 34 states where states chose not to set up a state-based exchange.

Estimates on how many people could lose tax credits in these 34 states vary widely from 4.5 million to 13 million. After talking to executives and lobbyists for health care related entities in 20 of the 34 states affected, I believe that about 6.5 million people who have tax credits in 2015 will lose them. The difference in these numbers will be important to policymakers, since politicians are likely to make decisions on how to respond to a Court ruling based on the actual number of their constituents who are receiving tax credits or other support.

In addition, the impact of a Court ruling will be affected by state action. Some observers have questioned whether states will set up exchanges if the Court eliminates tax credits from the federal exchange. These observers have said that establishing a state exchange is costly and time consuming and that most federal exchange states will not take this step. I argue in the following post that setting up a state exchange could be easy and inexpensive if the federal exchange operations are used.

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What Happens When A Retail Pharmacy Decides To Stop Selling Cigarettes?


February 26th, 2015

Editor’s note: This post is part of a series stemming from the Third Annual Health Law Year in P/Review event held at Harvard Law School on Friday, January 30, 2015. The conference brought together leading experts to review major developments in health law over the previous year, and preview what is to come. A full agenda and links to video recordings of the panels are here.

The sale of cigarettes and tobacco products at retailers with pharmacies has received considerable attention over the past year. The national debate reignited in February 2014, when CVS/pharmacy announced that we would quit the sale of cigarettes and tobacco products in our 7,800 pharmacies nationwide. In September 2014, we announced we were officially tobacco free — one month earlier than planned. This was met with kudos from the media, public health officials, and even the President of the United States.

But one question that did not receive anywhere near that level of attention was whether or not our actions would make a difference in the prevalence of smoking and, ultimately, in the public health.

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State Expectations: Setting The Record Straight In King v. Burwell


February 25th, 2015

On Wednesday, March 4th, the Supreme Court will hear the latest attack on the Affordable Care Act (ACA): the case King v. Burwell. The King petitioners allege that the Internal Revenue Service overstepped its authority by issuing regulations authorizing residents of states with federally run exchanges to access premium tax credits. The petitioners claim that Congress intentionally limited access to premium tax credits to residents of state-based exchanges as a way to encourage states to run their own exchanges.

In support, some state officials claim that they interpreted the law in this manner and that it impacted their state’s decision not to operate a state-run exchange. These assertions, like their analysis of the statutory language, fall flat under any serious scrutiny, however.

Between October 2012 and March 2013, with the support of the Commonwealth Fund, the Center on Health Insurance Reforms (CHIR) conducted a comprehensive review of publicly available information in 50 states pertaining to their decisions to operate either a state or federally run exchange.

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How Menu Labeling Could Spark Change Beyond The Menu Board


February 24th, 2015

If there’s one thing we’ve learned about catalyzing changes that prevent illness in the first place, it’s that passage of a single policy can be like lighting a match — illuminating the way towards strategies with greater impact and igniting the energy of leaders. The success of a menu labeling might be the match needed to inspire further policy change to shift the trend of increased diet-related chronic disease in the United States.

In November, the Food and Drug Administration released the final rule guiding calorie labeling of menu items at chain food service establishments with 20 or more outlets nationally. The rule will apply to fast-food and sit-down restaurants, supermarkets, convenience stores and movie theaters, and will take effect on December 1, 2015.

Once implemented, calorie counts will be posted for all items (including alcoholic drinks) on menus and menu-boards, and on display tags for salad bars, bakery items, and soda dispensers. A companion rule requiring calorie labeling for vending machines will take effect one year later.

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Indirect Effects From Menu Labeling Can Improve The Public’s Health


February 24th, 2015

Just this past November, the U.S. Food and Drug Administration (FDA) released sweeping final rules requiring that calorie information be posted on menus, menu boards, and vending machines. The regulations expand the proposed rule to include a wide variety of food outlets with more than 20 locations: quick service and table service restaurants, grocery stores and superstores, movie theaters, amusement parks, ice cream shops, takeout and delivery, vending machines, and even alcoholic beverages.

In the press release for the final rule, FDA Commissioner Margaret Hamburg stated, “making calorie information available on chain restaurant menus and vending machines is an important step for public health that will help consumers make informed choices for themselves and their families.”

Although the scientific evidence linking menu labeling to consumers’ purchasing behavior is weak, indirect effects may contribute more to incremental gains in public health. We highlight a few in the following blog post.

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Putting Humpty Dumpty Together Again: Consolidating Regulatory Authority Over Food Safety


February 23rd, 2015

The fragmented nature of regulatory authority over food in the United States is well known. More than a dozen federal agencies are responsible for the safety of the nation’s food supply. The Food and Drug Administration (FDA) and the Department of Agriculture (USDA) have the lion’s share of responsibility, together overseeing over 80 percent of the nation’s food safety.

Generally, the USDA regulates meat, and the FDA regulates everything else, but overlaps, exceptions, gaps, and therefore examples of resulting absurdities abound: the FDA regulates frozen pizza, unless it has pepperoni. The FDA regulates seafood, unless it’s catfish. The USDA has jurisdiction over packaged open-face meat sandwiches, but if the sandwiches are closed, authority shifts to the FDA.

This division in regulatory authority is neither planned nor rational. It is instead a historical accident, originating in the early twentieth century. When the Pure Food and Drug Act and Meat Inspection Act were passed on the same day in 1906, both targeting the adulteration of the food supply, their oversight was assigned to different departments within the USDA. The fissure widened when the FDA was moved out of the USDA in 1940. This divided regulatory framework is not the only reason for the fragmentation of regulatory authority over food in the US, but it is a main driver.

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Implementing Health Reform: Final 2016 Letter To Federal Exchange Issuers


February 22nd, 2015

Each year the Centers for Medicare and Medicaid Services (CMS) releases a letter to issuers (insurers) in the federally facilitated marketplace (FFM) setting out the ground rules for coverage through the FFM for the coming year.  A draft letter is published for comments, followed by the final letter.  The letter addresses insurers that issue qualified health plans (QHPs) in the FFM, including stand-alone dental plans (SADPs), and covers the small business (FF-SHOP) marketplace as well as the individual marketplace.

On December 19, 2014, CMS  published the draft 2016 letter which I covered here.  On February 20, 2015, CMS published the final letter to issuers in the federally facilitated marketplace.  Not surprisingly, since it  covers the third year of operation of the marketplace, the 2016 letter is quite similar to those of preceding years.   The letter is based on previously published rules governing QHPs and the marketplaces, as well as on the final 2016 Benefit and Payment Parameters Rule, covered here (CITE) and here (CITE), from which it incorporates many provisions.

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Implementing Health Reform: 2016 Benefit And Payment Final Rule, Insurance Provisions


February 22nd, 2015

On November 21, 2014, the Centers on Medicare and Medicaid Services of the Department of Health and Human Services released its final 2016 Benefit and Payment Parameter (BPP) Rule.  (Fact sheet here.)  My first post examined the provisions of this rule that relate to consumers and providers.  This post will analyze the parts of the rule that deal with the insurance market reforms; the reinsurance, risk adjustment, and risk corridor programs; health insurance rate review; and the individual and SHOP exchanges.

New Definitions Of ‘Plan’ And ‘State’

The regulation begins with a modified definition of the term “plan.”   The new definition defines a “plan” as the pairing of a set of health insurance benefits under a “product” with a particular cost-sharing structure, provider network, and service area.  A “product” is a set of plans sharing a network type (HMO, PPO, etc.), package of benefits, and service area.  Under this new definition, plans that differ in their cost-sharing structure (deductibles, copayments, or coinsurance) or provider networks are different plans, even if they are offered at the same metal tier.  Plan variations for different cost-sharing subsidy levels are not different plans under this definition.

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Implementing Health Reform: 2016 Benefit And Payment Final Rule, Consumer & Provider Provisions


February 22nd, 2015

On February 20, 2015, the Centers for Medicare and Medicaid Services (CMS) of the Department of Health and Human Services published its massive Notice of Benefit and Payment Parameters (BPP rule) for 2016 Final Rule, accompanied by a fact sheet.  This rule addresses a host of issues involving the continuing implementation of the Affordable Care Act for 2016.  A few provisions, however, affect the 2015 year as well and a number of provisions will not be implemented until 2017.

The BPP rule amends and updates existing rules; thus, it must be read in tandem with rules that have been promulgated earlier, which are catalogued in the preface to the rule.

CMS released also on February 20 its Final 2016 Letter to Issuers (Insurers) in the Federally-Facilitated Marketplace (FFM).   This letter sets the ground rules for insurer participation in the FFM for 2016 and covers many of the same topics covered by the BPP rule.

These documents are very lengthy and will be covered in three posts over the next few days.  This first post will focus on issues in the BPP rule that directly affect consumers.  The second post will focus more on issues that affect health plans.  The third post will examine the letter to issuers.

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Implementing Health Reform: New Enrollment Opportunity For Those Subject To 2014 Penalty


February 20th, 2015

In our Health Affairs Blog post of November 7, 2014, Brian Haile and I recommended that the Department of Health and Human Services (HHS) create a special enrollment period to allow individuals who had to pay the individual responsibility penalty for being uninsured for 2014 to enroll in coverage for 2015 so that they would not have to pay a higher penalty for being uninsured for 2015. Other advocates subsequently joined in this call. On February 20, 2015, HHS announced that it is creating such a special enrollment period.

The special enrollment period will run from March 15 to April 30, 2015 and will allow individuals who live in states served by the federally facilitated marketplace website, Healthcare.gov, to enroll in coverage for 2015 if they:

  • Are not currently enrolled in coverage through the Federally Facilitated Marketplace (FFM) for 2015;
  • Attest that when they filed their 2014 tax return they paid the fee for not having coverage in 2014; and
  • Attest that “they first became aware of, or understood the implications of, the Shared Responsibility Payment after the end of open enrollment (February 15, 2014) in connection with preparing their 2014 taxes.”

Coverage will be effective on the first day of May for those who enroll by April 15 and the first day of June for those who enroll thereafter. Individuals who apply will have to pay the penalty for months they were uninsured in 2015 unless they otherwise qualify for an exemption. Centers for Medicare and Medicaid Services (CMS) has also launched a new online tool to help consumers determine who might otherwise be subject to the penalty to see if they are covered by another exemption.

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In Regulating E-Cigarettes, No Easy Fix For The FDA


February 20th, 2015

Sometime in the next few months, the Food and Drug Administration (FDA) is expected to issue the so-called deeming regulations, which will open the door to the federal regulation of e-cigarettes. In considering whether to issue the regulations, which were first published for notice and comment rulemaking last April, the FDA faces a formidable challenge: it must decide whether and how to regulate in the midst of scientific uncertainty and limited statutory flexibility.

By subjecting e-cigarettes to its regulatory regime, the FDA risks retarding the growth of what may prove to be a powerful new tool for harm reduction. But by failing to act, the agency risks undermining decades of progress in tobacco control. In either case, the public health impact is apt to be significant.

It is a victory that was made possible, in large measure, by a constellation of state and federal regulatory interventions: laws regulating the marketing and sale of cigarettes, barring sales to youth, banning indoor smoking, and taxing cigarette sales have all played a role in reducing rates of smoking.

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Implementing Health Reform: Preliminary 2015 Enrollment Numbers; Guidances


February 19th, 2015

As probably every reader of this blog knows by now, the Department of Health and Human Services released preliminary totals for plan selection for the 2015 open enrollment period on February 18, 2015. Over 1 million individuals enrolled through the federally facilitated marketplace in the final week, bringing the total enrolled in the FFM to 8.8 million, and the total enrolled through all marketplaces, federally facilitated and state-operated, to 11.4 million. Florida had by far the most enrollees in the FFM with 1.6 million, although Texas also had over a million enrollees.

The 11.4 million number includes up to 200,000 individuals who are being dropped from the rolls because they have not provided adequate documentation of immigration or citizenship status, but does not include up to 150,000 individuals who were “in line” when enrollment closed and who have up to February 22 to enroll. Although there will be some attrition over the next weeks of individuals who do not pay their premiums or find other coverage, HHS seems to have met its goal of 9.1 to 9.9 million effectuated enrollments.

Premium payment arrangements. The Internal Revenue Service continues to struggle with the question of how the Affordable Care Act affects various arrangements through which employers attempt to pay premiums for employees to purchase health insurance coverage in the individual market. The federal agencies have already issued four guidances on this issue over the past two years in January of 2013September of 2013November of 2014, and December of 2014.  On February 18, 2015, it released yet another guidance on this issue, this one focused on small employers.

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Engaging Health Care Consumers: The Lowe’s Experience


February 18th, 2015

Time will tell, but it appears that employers are not giving up on providing health insurance to their employees — even with the availability of health care exchanges. That’s at least what the results of a new study sponsored by the National Business Coalition on Health (NBCH) suggest.

Brian Klepper, CEO of the NBCH, speculated in his recent Health Affairs Blog post: “…there is an alternative view of what is possible in health care, and that self-funding and a willingness to continue trying to control the health care value monster remains alive and vibrant.”

As self-funded employers strive for a value-based health care marketplace, they’re looking at ways to drive value at an individual level — through strategies to engage employees as better consumers and managers of their own health care.

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In The Debate About Cost And Efficacy, PCSK9 Inhibitors May Be The Biggest Challenge Yet


February 17th, 2015

The American health care system is far and away the most costly in the world. Health care reform is intended to lower costs, but they are still rising, albeit less steeply than in the past. Moderation is not however the case in the area of specialty pharmacy. The medications to treat Hepatitis C are the most cited examples of a general inflationary trend, but the pipeline of expensive medications is extensive.

Yet, policymakers and payers appear unwilling to undertake significant cost controls on medication pricing. Indeed the controversy over the $84,000 price tag for Sovaldi (sofosbuvir) has largely faded, suggesting a certain resiliency in our system’s ability to absorb costs.

We believe that resiliency is about to be challenged in a manner unlike we have seen in the past, at least in the area of pharmaceuticals. A number of pharmaceutical manufacturers are developing a new class of medication to manage high cholesterol — the PCSK9 (proprotein convertase subtilisin/kexin 9) enzyme inhibitors.

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Implementing Health Reform: Open Enrollment Closes, But Doors Remain Ajar


February 16th, 2015

The 2015 open enrollment period is now closed, but the marketplace doors are still cracked open.  On February 15 and 16 the Centers for Medicare and Medicaid Services offered additional assistance for those not enrolled before February 16.

CMS has first addressed a very specific issue.  For a period of time on Saturday, February 14, some individuals applying for coverage at the federally facilitated marketplace (FFM) were unable to submit their applications because the FFM could not verify their income with the Internal Revenue Service.  This problem was promptly resolved, but CMS is reportedly reaching out to individuals who were unable to enroll during the period that enrollment was not possible and encouraging them to come back to the FFM and enroll.

The second guidance creates a special enrollment period for consumers “in line” on February 15, 2015.  The guidance acknowledges more generally that “certain circumstances across consumer enrollment channels (such as HealthCare.gov and the Marketplace call center) leading up to the February 15, 2015 deadline have kept some consumers from completing the enrollment process despite their efforts to meet the deadline.”

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Implementing Health Reform: Enrollment Figures, Tax Forms, And More


February 13th, 2015

We are rapidly reaching the end of the 2015 open enrollment period, and the pace of enrollment seems to be picking up a bit. On February 11, 2015, the Centers for Medicare and Medicaid Services (CMS) released their enrollment snapshot for week twelve, covering the federally facilitated marketplace from January 31 to February 6.

During that time period, 275,676 individuals selected plans, bringing of enrollees in the federal exchange up to 7,749,375. The Department of Health and Human Services (HHS) reportedly announced on a press call on February 11, however, that 200,000 individuals will be dropped from enrollment in February for failure to satisfactorily document compliance with citizenship or residency requirements.

Enrollment is expected to continue to pick up during the final ten days of open enrollment, as it did last year. CMS has said that if an individual cannot get through at the call center or online on February 15, CMS will make sure that he or she can apply for coverage, but the agency has not announced any further relief nor any new special enrollment periods for 2015. I continue to urge CMS to provide a special enrollment period for people who were subject to the individual responsibility penalty for 2014 to allow them to avoid the penalty for 2015.

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