Health Reform WK-EDGE Executive Order supports ACA and Medicaid, but Supreme Court rules soon
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Monday, March 8, 2021

Executive Order supports ACA and Medicaid, but Supreme Court rules soon

By Cathleen Calhoun, J.D.

One Executive Order plus two U.S. Supreme Court decisions will equal what?

The Biden-Harris Administration has demonstrated its commitment to the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) and Medicaid in these early weeks of the Administration but soon, another branch of government, the U.S. Supreme Court, will have a strong say in the future of both programs. With two cases that will be decided this year, the future of the ACA and Medicaid work requirements will be determined in part by the rulings of the High Court. This Strategic Perspective examines the Biden-Harris Administration’s continuing efforts to promote, protect, and expand the ACA and Medicaid, and looks prospectively, with expert input, to what the Administration may do in the future and what the U.S. Supreme Court may decide.

Biden-Harris Administration actions to strengthen the ACA and Medicaid

Executive Orders (EOs) are often used early on in an administration to make changes quickly, and 2021 is no exception.

Executive Order. On January 28, 2021, just eight days into his administration, President Biden signed the Executive Order on Strengthening Medicaid and the Affordable Care Act . The EO noted that millions of people who are potentially eligible for coverage under the ACA or other laws remain uninsured and that obtaining insurance benefits is more difficult than is necessary. As a result, the policy of the Biden-Harris Administration is to protect and strengthen Medicaid and the ACA and to make high-quality health care accessible and affordable, according to the EO. The EO asked HHS to create a special enrollment period for the ACA, which it did, from February 15, 2021 through May 15, 2021. Under the special enrollment period, uninsured and under-insured Americans who need health care coverage during the current COVID-19 pandemic may sign up for coverage through the federally facilitated marketplace (see 15M uninsured expected to shop for coverage during upcoming special enrollment period, February 1, 2021).

The EO also called for agencies to review regulations that relate to the ACA and Medicaid. Specifically, agencies are required to review demonstrations and waivers under Medicaid and the ACA that may reduce coverage or undermine the programs, including work requirements. Agencies are directed to reexamine policies that:

  • undermine protections for people with pre-existing conditions, including complications related to COVID-19;
  • undermine the health insurance marketplace or other markets for health insurance;
  • make it more difficult to enroll in Medicaid and the ACA; and
  • reduce affordability of coverage or financial assistance, including for dependents.

The results of the review of the regulations are unknown. Although the review is required, the EO does not specify action beyond the review. Agencies may or may not find that changes are needed (see Executive Order on health care signed by President Biden, January 29, 2021). Michael Clark, of Counsel at Baker Donelson, commented that while President Biden directs key Executive Branch agency administrators to review and identify agency actions that can be revised or removed so that his policies can be implemented more efficiently, the new Administration faces greater challenges when it comes to regulations already promulgated pursuant to the Administrative Procedures Act. "Those that have not been fully implemented should be easier to cancel or modify," Clark said.

Letter to U.S. Supreme Court. On February 10, 2021, Deputy Solicitor General Edwin Kneedler wrote a two-page letter to the U.S. Supreme Court about the case California v. Texas (known as Texas v. U.S. in the lower courts) that the High Court heard in November 2020 and will rule on later this year, as early as March. In that letter, Kneedler stated that "the Department of Justice has reconsidered the government’s position" and "no longer adheres to the conclusions in" the brief that former President Donald Trump’s solicitor general, Noel Francisco, filed in 2020. The letter goes on to say that the government now takes the position that the individual mandate, the portion of the ACA requiring virtually all Americans to buy health insurance, or pay a penalty, is constitutional and that if the "Court nevertheless concludes that Section 5000A(a) is unconstitutional, that provision is severable from the remainder of the ACA."

CMS. CMS took action to roll back states’ Medicaid work requirements though a letter sent on February 12, 2021. In the letter to multiple states, CMS communicated that it does not think that their programs’ work requirement and community engagement foster the objectives of Medicaid. Affected states will have 30 days to send information explaining any disagreement. Letters were sent to Arkansas, New Hampshire, Utah, Arizona, Georgia, Indiana, Nebraska, New Hampshire, Ohio, South Carolina, and Wisconsin.

Two upcoming U.S. Supreme Court decisions

A couple of significant health care cases are in the hands of the U.S. Supreme Court.

Medicaid. On March 29, 2021, the High Court is scheduled to hear oral arguments on the issue of Medicaid work requirements in the case of Cochran v. Gresham (consolidated with Arkansas v. Gresham). The Social Security Act authorizes the Secretary of HHS to approve "any experimental, pilot, or demonstration project" proposed by a state that, "in the judgment of the Secretary, is likely to assist in promoting the objectives" of the Medicaid program (Soc. Sec. Act §1115 and 42 U.S.C. 1315(a)). Using that authority, the HHS Secretary approved demonstration projects in Arkansas and New Hampshire designed to test whether new requirements promote those objectives by requiring certain working-age, nondisabled adults to engage in work or skill-building activities (such as job-skills training or general education) as a requirement for them to continue to be eligible for Medicaid benefits. The appellate court for the District of Columbia affirmed the district court’s judgment vacating the Secretary’s approval of Arkansas’ demonstration program on the basis that it was arbitrary and capricious. The question before the U.S. Supreme Court is whether the court of appeals erred in concluding that the Secretary may not authorize demonstration projects to test requirements that are designed to promote the provision of health care coverage by means of facilitating the transition of Medicaid beneficiaries to commercial coverage and improving their health (see Approval of Arkansas’ Medicaid demonstration was arbitrary, capricious, February 21, 2020).

Thomas Barker, partner and co-chair of the health care practice of Foley Hoag LLP, noted that the case could be moot if CMS revokes the waivers referenced in its February 12 letter to states. "On the other hand, it may be that CMS wants to defend the use of 1115 waivers more generally so may choose to proceed with the arguments." He noted, however, that the DC Circuit decision was relatively narrowly focused on the question of whether work requirements promoted the objectives of Medicaid and did not call into question the broader use of 1115 waivers. "So, for that reason, I would not be surprised to see the government withdraw from the case." As Mr. Barker predicted, on February 21, 2021, the government moved in that direction—the Department of Justice asked the U.S. Supreme Court to cancel next month’s oral argument on the legality of Medicaid work requirements: "The work-related requirements were the principal focus of the litigation and decisions below. HHS has now made a preliminary determination that allowing work-related requirements to take effect in Arkansas and New Hampshire would not promote the objectives of the Medicaid program and has commenced a process to determine whether to withdraw its approvals of those requirements...The government respectfully submits that the appropriate course for the Court in such greatly changed circumstances is to vacate the judgments of the court of appeals and remand."

ACA. A decision on the ACA case California v. Texas is expected this year. In a two-hour U.S. Supreme Court oral argument on November 10, 2020, the questioning suggested that the Court is unlikely to strike down the entire ACA. The case came to the U.S. Supreme Court following a Fifth Circuit decision in December 2019. The Fifth Circuit, in a 2-1 opinion, upheld the Texas federal district court’s ruling that the individual mandate in 26 U.S.C. 5000A was unconstitutional. The ACA individual mandate provision gives individuals a health care choice—either purchasing health insurance or paying to the IRS what is called in the law a "shared responsibility payment," but Congress reduced the "shared responsibility payment" to zero in 2017 without repealing the ACA (see ACA individual mandate unconstitutional; remanded for further study of severability, December 19, 2019).

The questioning in November, especially by Chief Justice Roberts and Justice Kavanaugh, signaled that the ACA would remain in some form, since those two justices are considered more conservative. Chief Justice Roberts raised doubts about the repeal of the entire law. He mentioned that it is hard to say that Congress intended to repeal the whole law when it did not. He added, "Would Congress want the rest of the law to survive if the unconstitutional provision were severed? Here, Congress left the rest of the law intact…" Justice Kavanaugh noted that from severability precedents, it looked like it would be proper to sever a portion and asked how the court could get around that. He added, "It does seem fairly clear that the proper remedy would be to sever the mandate provision and leave the rest of the law in place…" (see Health law takes center stage at U.S. Supreme Court, October 4, 2020; ACA individual mandate case heard before U.S. Supreme Court, November 10, 2020).

What’s next?

Through the actions by the Biden-Harris Administration already, the future of the ACA and Medicaid appears strong. Although the U.S. Supreme Court may make decisions affecting both the ACA and Medicaid, the changes are not likely to strike down the entire ACA or to change Medicaid fundamentally, especially with the possibility of the government withdrawing from the case. And the Biden-Harris Administration has not yet achieved all of its goals regarding health care. The goals of augmenting the ACA with a public option and expanding the ACA to those with lower incomes in non-Medicaid expansion states are still before the new Administration.

Attorneys: Thomas Barker (Foley Hoag, LLP) and Michael Clark (Baker Donelson).

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