Health Reform WK-EDGE State government group health plans must help fund reinsurance program
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Monday, January 18, 2016

State government group health plans must help fund reinsurance program

By Kayla R. Bryant, J.D.

All group health plans, including government health plans, are required to contribute to the Transitional Reinsurance Program (TRP). An Ohio district court held that section 1341 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) and the related statutes confirm Congress’s intention. The court went on to affirm that the legislature and HHS did not violate the Tenth Amendment by requiring state and local government health programs to fund the TRP (Ohio v. U.S., January 5, 2016, Marbley, A).

TRP. Under the ACA, insurers must provide coverage to all consumers regardless of health status and are prohibited from increasing the price of coverage due to illnesses. Congress was concerned that high-risk individuals would purchase coverage and low-risk ones would not, causing a spike in premiums. In an effort to curb this effect, Congress established the TRP, a three-year effort that required insurers and group health plans to contribute to a fund that would be distributed to individual-market issuers covering high-risk, high-cost enrollees. The state of Ohio along with some local groups argued that their plans were not “group health plans” under the ACA, but paid the required 2014 benefit year contributions “under protest.” They collectively sued for recoupment of the money and an injunction preventing the federal government from collecting TRP funds from state and local governments.

What is a group plan? In deciding whether the government plans were in fact group health plans for the purposes of the TRP, the district court looked to the Public Health Service Act (PHSA) (42 U.S.C. §6A). The ACA provides that definitions from the PHSA generally apply to the ACA. The PHSA defines a group health plan to mean a plan that provides care to employees or dependents directly or through insurance, reimbursement, or other methods. The district court also pointed out that the PHSA defines “non-federal governmental plans” as a subset of group health plans. The court found that Congress understood non-federal government plans to be group health plans, and intended these plans to pay into the TRP.

State sovereignty. The state of Ohio also argued that the TRP violates the Tenth Amendment, which establishes that power not delegated to the U.S. is reserved for the states. The district court pointed to U.S. Supreme Court decisions stating that Congress can hold state employers to the same standards as private employers without violating the Tenth Amendment. The district court also relied on Supreme Court decisions to strike down Ohio’s argument that Congress “commandeered” state legislative powers. The case was dismissed in its entirety.

The case is No. 2:15-cv-321.

Attorneys: Frederick D. Nelson, Ohio Attorney General's Office, for The State of Ohio, Warren County, Ohio and The Ohio Department of Administrative Services. Steven A. Myers, United States Department of Justice, for United States of America and United States Department of Health and Human Services.

Companies: The State of Ohio; Warren County, Ohio; The Ohio Department of Administrative Services; United States Department of Health and Human Services

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