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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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The Latest Health Wonk Review


March 4th, 2015

David Williams has the tenth anniversary edition of the Health Wonk Review up at Health Business Blog. David’s interesting review includes Tim Jost’s series of Health Affairs Blog posts unpacking the final 2016 Notice of Benefit and Payment Parameters rule and final 2016 Letter to Issuers in the federal exchange.

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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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Implementing Health Reform: Beginning The Cadillac Tax Regulatory Conversation And Other ACA News (Updated)


February 24th, 2015

The Cadillac high-cost health plan excise tax, which goes into effect in 2018, is one of the last-to-be-implemented provisions of the Affordable Care Act (ACA). It was one of the most controversial provisions of the ACA, which contributed to its delayed effective date. But 2018 is now getting closer, and the Internal Revenue Services (IRS) is beginning a discussion about implementation of the Cadillac plan tax.

The Cadillac plan provision of the ACA will impose a 40 percent excise tax on the cost of employer-sponsored health plans when that cost exceeds certain thresholds. It is projected to be one of the biggest sources of revenue under the ACA; the Congressional Budget Office (CBO) in its 2015 Budget and Economic Outlook Report estimated that it would account for $149 billion in revenue between 2018 and 2225. Of this, however, only one quarter will come from the tax itself, while three quarters will come from increases in taxes on income as employers shift compensation from health benefits to taxable wages.

While the tax will affect few plans initially, it is likely to affect many more plans over time as the cost of health care continues to grow faster than inflation generally. The tax is expected to reduce health care expenditures by individuals, as it will drive employers to increase employee cost sharing as they cut the cost of coverage, and employees are likely to spend less on health care if they have to purchase it out-of-pocket rather than drawing on insurance coverage.

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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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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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King v. Burwell: Congressional Intent And The Statutory Language Are Aligned


February 5th, 2015

On March 4, 2015, the Supreme Court will hear oral arguments in King v. Burwell. That suit was filed by opponents of the Affordable Care Act (ACA) to stop tax-credit premium subsidies from being provided to moderate-income people in 34 states where the federal government is running health insurance exchanges in lieu of the states. According to the Urban Institute, it could result in the withdrawal of such subsidies for 9.3 million moderate-income people by 2016, and, according to the Rand Corporation, enrollment in coverage could drop by 9.6 million.

Some believe the King lawsuit is a contest between, on the one hand, congressional intent that premium subsidies should be provided in all states, versus, on the other hand, statutory language that says the opposite. Those who believe this formulation are half right: they are correct that Congress clearly intended subsidies to be provided to moderate-income families irrespective of whether their state of residence chose to run its marketplace directly instead of leaving it to the federal government; however, they are mistaken about the ACA’s language, which equally clearly indicates that subsidies should be provided in all states.

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Last Year Was A Wild One For Health Law — What’s On The Docket For 2015?


January 22nd, 2015

Everywhere we look, we see the tremendous impact of new legal developments—whether regulatory or statutory, federal or state—on health and health care. These topics range from insurance to intellectual property to religion to professionalism to civil rights. They remain among the most important questions facing Americans today.

This post is the first in a series that will stem from the Third Annual Health Law Year in P/Review event to be held at Harvard Law School on Friday, January 30, 2015. The conference, which is free and open to the public, brings together leading experts to review major developments in health law over the previous year, and preview what is to come.

The event is sponsored by the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School and the New England Journal of Medicine, and co-sponsored by Health Affairs, The Hastings Center, and the Center for Bioethics at Harvard Medical School. Below, we will highlight a few themes that have emerged so far. The conference’s speakers will author a series of posts that follow on more specific topics.

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The Lame Duck Device Tax?


January 5th, 2015

In a recent Health Affairs Blog post, I explored the types of changes that might be made to the Affordable Care Act (ACA) if and when Congress decides to revisit the law in a bipartisan manner. While that day is likely still some years away, Republican control of the Senate next year does raise the probability we’ll see action on some more central elements of President Obama’s signature domestic policy achievement.

While there has been considerable scrutiny, and bipartisan concern, about the employer mandate and the manner in which full-time employees are calculated for purposes of compliance with the ACA, for example, there has arguably been no steadier drum beat for repeal of a section of the health care law than for the medical device tax.

Senators Hatch, Coburn, and Burr, for example, in their influential repeal and replace proposal, would strike the medical device tax (along with others under the new law). Perhaps more telling, however, is the fact that 34 Democrats, including Senate leadership members Schumer, Durbin, Murray, Klobuchar, and Warren, cast a nonbinding vote to repeal the policy as recently as September 2014.

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Rethinking The Gruber Controversy: Americans Aren’t Stupid, But They’re Often Ignorant — And Why


December 29th, 2014

M.I.T. economist Jonathan Gruber, whom his colleagues in the profession hold in very high esteem for his prowess in economic analysis, recently appeared before the House Committee on Oversight and Government Reform. Gruber was called to explain several caustic remarks he had offered on tortured language and provisions in the Affordable Care Act (the ACA) that allegedly were designed to fool American voters into accepting the ACA.

Many of these linguistic contortions, however, were designed not so much to fool voters, but to force the Congressional Budget Office into scoring taxes as something else. But Gruber did call the American public “stupid” enough to be misled by such linguistic tricks and by other measures in the ACA — for example, taxing health insurers knowing full well that insurers would pass the tax on to the insured.

During the hearing, Gruber apologized profusely and on multiple occasions for his remarks. Although at least some economists apparently see no warrant for such an apology, I believe it was appropriate, as in hindsight Gruber does as well. “Stupid” is entirely the wrong word in this context; Gruber should have said “ignorant” instead.

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Sovaldi, Harvoni Payment Issues Lead Health Affairs Blog November Most-Read List


December 24th, 2014

A piece by Laura Fegraus and Murray Ross on the challenges of paying for lifesaving but high-priced drugs like Sovaldi and Harvoni from was the most-read Health Affairs Blog post for November. This was followed by a critical analysis of workplace wellness programs from Al Lewis, Vik Khanna, and Shana Montrose.

Next came a post on the 2016 Notice of Benefit and Payment Parameters Proposed Rule from Tim Jost, and then a look at health care policy after the mid-term elections from James Capretta.

The full top-ten list for November is below.

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Implementing Health Reform: Beneath The Hood Of The ‘Cromnibus’


December 12th, 2014

The “Consolidated and Further Continuing Appropriations Act, 2015” or “Cromnibus” legislation moving through Congress contains a number of provisions that relate to the implementation of the Affordable Care Act (ACA).

Risk Corridors

The provision that has been most widely noted so far requires the risk corridor program to be budget neutral for 2014. The risk corridor program moves funds from qualified health plans (QHPs) that have lower than anticipated allowable costs to those with higher than anticipated allowable costs. Section 1342 of the ACA, which creates the risk corridor program, contains no explicit appropriation.

A report issued earlier this year by the Government Accountability Office (GAO), which is the final authority on the legitimacy of government expenditures, determined that the continuing resolution for 2014 permitted the Centers for Medicare and Medicaid Services (CMS) to fund the risk corridor program for 2014 both from payments collected from plans with lower than anticipated costs, which were properly characterized as user fees, and from funds transferred from other CMS accounts. No risk corridor payments were in fact payable in 2014, however, as risk corridor payments will first be made in 2015 for 2014.

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Two Theologies Have Blocked Medicare-For-All


December 11th, 2014

Editor’s note: This post is part of a series of several posts stemming from presentations given at “The Law of Medicare and Medicaid at Fifty,” a conference held at Yale Law School on November 6 and 7.

In the 50 years since Medicare was enacted, Congress has never seriously considered extending Medicare to all Americans, nor even lowering Medicare’s eligibility age below 65. This pattern persisted even during those periods when national health insurance was at the top of the national agenda. This is not what the original advocates of Medicare anticipated when Medicare was enacted in 1965. They saw Medicare as the cornerstone of a national system of health insurance that would eventually cover all Americans.

Two Myths that Undercut Medicare-for-All: Managed Care and Competition

In the paper we presented at the Yale conference, we reviewed short- and long-term factors affecting the debate about Medicare over its lifetime, and then turned to a discussion of two long-term factors: the rise of what came to be called the managed care movement, and the resurgence of a longstanding campaign promoting the idea that competition can right the wrongs of American medicine.

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The Council On Graduate Medical Education (COGME)—Not Yet Ready For End-Of-Life Care


December 4th, 2014

In November, 1985, twenty-nine years ago, members of the first session of the 99th Congress addressed growing concern and controversy regarding Graduate Medical Education (GME). Although Medicare had financed GME for the previous twenty years, Congress began to recognize that our rapidly evolving health care system could require significant changes in the composition of our physician workforce, and that these changes could impact the appropriate governance and funding of GME.

In this setting, the Council on Graduate Medical Education (COGME) was conceived and underwent rapid gestation, with its birth achieved via enactment of authorizing legislation in 1986. Its charter charged the Secretary of Health and Human Services (HHS), under Title VII of the Public Health Service Act, with responsibility for taking national leadership in the development of policies related to GME, and in the research, development, and analysis of such policies that impact on the health workforce needs of the nation. COGME was instructed to provide advice and make policy recommendations to the Secretary and committees of the House and Senate within their jurisdiction.

Contrary to a sunset provision in the legislation, COGME still survives. While continuing to function on very limited support, it recently issued a noteworthy report entitled “Improving Value in Graduate Medical Education” in 2013. COGME presently is preparing its 22nd Report, which addresses the need for change in GME due to changes in the U.S. health care system and focuses on opportunities to improve training through more effective targeting of public resources.

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Medicare, Medicaid, And Pharmaceuticals: The Price Of Innovation


November 20th, 2014

Editor’s note: This post is part of a series of several posts stemming from presentations given at “The Law of Medicare and Medicaid at Fifty,” a conference held at Yale Law School on November 6 and 7.

Through much of the last half century, Medicare and Medicaid (MM) have not for the most part supported research intended to lead to new drugs. For their role in drug development, we need to look to infrastructure and incentives. The record of the National Institutes of Health (NIH) illustrates the potential of both for pharmaceutical innovation. The current budget of NIH, the big elephant in the zoo of the federal biomedical enterprise, is $30 billion, but apart from a dozen small programs devoted to targeted drug development, most of these billions are not aimed directly at pharmaceutical innovation (See page 234).

Yet the NIH investment in biomedicine has indirectly fueled drug development in the private sector to a huge degree. It has paid for the training of biomedical scientists and clinicians, many of whom went on to staff the drug industry, especially its laboratories. NIH-sponsored research has also generated basic knowledge and technologies and it has encouraged universities to spin out their potentially useful findings into the industry by allowing for the patenting and licensing of the findings.

Like NIH, MM has helped fuel drug development indirectly by supporting selected experimental cancer treatments, medical education, and some clinical research and training. But investment in these activities has been small and their impact on drug development apparently very limited. In contrast to NIH, the MM stimulus to drug innovation has resided not in the production of new scientists or the patented uses of new knowledge, but principally in markets and pricing.

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Dear Governor-Elect: Some Health Policy Counsel


November 18th, 2014

Congratulations on your election on November 3. It is a mandate for your vision and leadership.  Now, like the proverbial dog who has caught the meat truck — where to begin with this business of governing?

As you contemplate the work in front of you, I would like to offer some (unsolicited) advice about a possible state health policy agenda, borne from my own work and observing states across the country. The recommendations are non-ideological and substance-neutral.  You will look hard to find a reference to the Affordable Care Act (ACA) here. The challenges states face in health care are so large they defy simple solutions and require collaboration across our widening ideological divide; energy spent attacking the ACA is energy diverted from these challenges.

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Challenges For People With Disabilities Within The Health Care Safety Net


November 18th, 2014

Medicare and Medicaid were passed to serve as safety nets for the country’s most vulnerable populations, a point that has been reemphasized by the expansion of the populations they serve, especially with regards to Medicaid. Yet, even after 50 years, the disabled population continues to be one whose health care needs are not being met. This community is all too frequently left to suffer health disparities due to cultural incompetency, stigma and misunderstanding, and an inability to create policy changes that cover the population as a whole and their acute and long-term needs.

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Medicaid At 50: From Exclusion To Expansion To Universality


November 14th, 2014

Editor’s note: This post is part of a series of several posts stemming from presentations given at “The Law of Medicare and Medicaid at Fifty,” a conference held at Yale Law School on November 6 and 7.

For almost five decades, Medicaid has been a safety net with gaping holes. Medicaid has provided invaluable health care access for the “deserving poor”—the impoverished blind, disabled, children, pregnant women, and elderly—but they only comprise approximately 40 percent of the nation’s poor. The Patient Protection and Affordable Care Act (ACA), as part of its comprehensive insurance coverage architecture, rendered all Americans earning up to 138 percent of the federal poverty level (FPL) eligible for Medicaid. Through the effort to “provide everybody … some basic security when it comes to their health care,” the ACA adopted a universal approach to health care access. Universality is a fundamentally different philosophical approach in American health care, and an important progression away from the stigmatizing rhetoric of the “deserving poor.”

The Supreme Court nearly thwarted the possibility of universality by holding the Medicaid expansion unduly coercive and rendering expansion optional for the states. Ever since, states have been exercising that option, deciding whether to expand in a highly dynamic dialogue that has occurred both intrastate and extra-state with the Secretary of the Department of Health and Human Services (HHS). This dialogue has resulted in four waves of Medicaid expansion, each of which has exhibited greater boldness on the part of the states in their proposals to HHS, and greater flexibility on the part of HHS in accepting state ideas for expansion. On a spectrum of federalism, the waves move from cooperation to assertions of state sovereignty. But, Medicaid’s new universality provides an absolute backstop for HHS in these negotiations, a point at which federal policy should not accommodate the rent-seeking behavior of the states.

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Health Care Policy After The Mid-Term Elections


November 7th, 2014

As President Obama said in his post-election news conference, Republicans had a good night on November 4. They increased their majority in the House to a level not seen since the 1920s and may hold as many as 250 seats in the lower chamber. In the Senate, Republicans defeated at least three incumbent Democratic Senators, and are likely to defeat two more when all of the voting and counting is over.

The most likely scenario is that the GOP will hold 54 seats in the Senate come January — an increase of nine seats from the current Congress. It is noteworthy that half of the Democratic Senators who voted to pass the Affordable Care Act (ACA) nearly five years ago will no longer be in the Senate in 2015. Despite some commentary to the contrary, the ACA was a big issue in the election. To a person, the successful GOP Senate candidates ran strongly against the ACA. In the middle of October, anti-ACA ads were among the most frequently-aired political advertisements from Republican Senate candidates. By and large, these candidates won their races.

The conventional wisdom is that the ACA, now heading into its second year of full-scale implementation, cannot be rolled back in any substantial way at this point. That’s certainly the view of major corporate players and the health care industry. But it is decidedly not the view of the newly-elected Republican members of the House and Senate, or their constituents. They believe voters sent them to Washington to do their best to push back against the perceived excesses of the ACA and to begin replacing it with a reform plan that is less expensive, less damaging to the economy, and less reliant on federal regulation and control.

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