Health Reform WK-EDGE Supreme Court to hear ACA case, and predictions keep coming
Wednesday, December 2, 2020

Supreme Court to hear ACA case, and predictions keep coming

By Cathleen Calhoun, J.D.

The American Health Law Association (AHLA) Health Plan Law and Compliance Institute looked at federal health care policy, including the upcoming ACA case. So what do the experts think might happen?

The Affordable Care Act (ACA) has been on the minds of many as the U.S. Supreme Court comes closer to hearing oral arguments on the issue of severability on November 10, 2020. In a session of the AHLA Health Plan Law and Compliance Institute on November 5, 2020, "Federal Update and Political Environment on Health Care Policy," the upcoming ACA case, California v. Texas, was reviewed and discussed, along with other federal health care policy issues. Session speakers David Schwartz, Head of Global Public Policy at CignaMichael Kolber, Partner at Manatt, Phelps & Phillips, LLP, and Wendy Krasner, Senior Vice President, Pharmaceutical Care Management Association, shared their expert knowledge.

Road to the U.S. Supreme Court. The case of California v. Texas had a multi-year journey, until the U.S. Supreme Court granted writ of certiorari. The case was referred to as Texas v. U.S. in the lower courts. The experts provided the timeline:

  • Plaintiffs (Texas) alleged the ACA’s individual mandate is unconstitutional after the associated penalty was zeroed out in the Tax Cuts and Jobs Act of 2017.
  • 2018: United States District Court for the Northern District of Texas agreed and invalidated the entire law but did not analyze the issue of severability.
  • 2019: The Fifth Circuit Court of Appeals issued a decision, Texas v. U.S., a 2–1 opinion, upholding the Texas federal district court’s ruling that the individual mandate in section 5000A of the ACA was unconstitutional, but did not decide on severability and remanded the case to the lower court for severability analysis.
  • 2020: The U.S. Supreme Court intervened and placed the case on the docket, and it is currently known as California v. Texas .
  • November 10, 2020: The U.S. Supreme Court will hear oral arguments on the case and granted extended time:

– 30 minutes for California (states defending the ACA)

– 10 minutes for the House of Representatives

– 20 minutes for the Solicitor General

– 20 minutes for Texas (states challenging the ACA)

Analysis. David Schwartz noted that the ramifications for undoing the entire law are significant, especially for insurance market reforms and exchanges, Medicaid expansion and programs, Medicare and Medicare Advantage, and health insurance coverage for millions. Michael Kolber said, "There are fascinating interactions between Congress and this case. At any point before the case is decided, Congress could enact legislation that would moot the case. Even after the case is decided, Congress would be free to re-enact every operative provisions of the ACA. And, at Judge Barrett’s confirmation hearing, several Republican senators appeared to say that they believe the rest of the ACA should remain in place if the individual mandate is unconstitutional. But in this weird house-of-mirrors moment, though many on both sides—and nearly all health industry stakeholders—want the case simply to go away, the case plows ahead."

The experts’ concerns reflected some consequences of a repeal of the ACA brought up by the Kaiser Family Foundation in a study released in September (see What happens if the entire ACA is found unconstitutional? September 28, 2020). The report noted four areas of expanded healthcare eligibility that will have changes should the law be repealed—Medicaid eligibility expansion, subsidies for nongroup health insurance, dependent coverage through age 26, and health insurance marketplaces.

340B. Although not mentioned in the AHLA presentation, in a separate interview for Wolters Kluwer, Helen Pfister, partner with Manatt Health, noted other implications. "If the court strikes down the entire ACA, all of the ACA’s 340B-related provisions would be struck down as well. That includes the ACA’s expansion of 340B eligibility to additional categories of hospitals, including freestanding cancer hospitals, sole community hospitals, rural referral centers, and critical access hospitals. It includes increases in Medicaid drug rebate percentages, which impact 340B discounts. It includes the requirement that HRSA establish a 340B ceiling price website so that covered entities can determine what the 340B ceiling price should be. And it may well include HRSA’s rule-making authority over the 340B program, since federal courts have ruled that HRSA has such authority in only three areas, all of which are derived from the ACA."

Other federal policy concerns. Beyond the upcoming ACA case, the AHLA presentation discussed other federal health policies. "The world I’ve lived in the past several years has been a totally different landscape…main areas fit in that arena," Wendy Krasner said. Some of those areas, according to Krasner, are:

  • use of Executive Orders;
  • use of CMMI (Center for Medicare and Medicaid Innovation) and Section 402 Demonstration Authority;
  • use of interim final rules (due to the COVID-19 public health emergency); and
  • good guidance practices initiatives.

Krasner noted that Executive Orders can only instruct agencies to do something under existing statutory authority and are not enforceable without statutory authority and agency action, which often involves rulemaking.

Companies: Cigna; Manatt, Phelps & Phillips

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