2020 OPEN ENROLLMENT ENDS (most states)

Time: D H M S

Trump's DOJ changes stance on #TexasFoldEm *again*, now "only" wants the #ACA killed in red states.

Last summer, there was a hell of a bombshell dropped on the judicial system when the U.S. Dept. of Justice, under then-Attorney General Jeff Sessions, announced that instead of defending the Affordable Care Act against the Texas vs. U.S. lawsuit (which is their job, after all), they were effectively throwing the case by not only refusing to defend the law in court, but actively agreeing with the plaintiffs that the absurd premise of their lawsuit was correct:

  • Here's the brief. As expected. The Justice Department believes the crucial insurance reforms of the Affordable Care Act are unconstitutional and will not defend them. This is an enormous blow to the integrity of DOJ.
  • The Justice Department doesn't think an injunction is immediately warranted. But on no uncertain terms, it argues that the federal courts should invalidate the crucial operative provisions of the ACA.
  • I am at a loss for words to explain how big of a deal this is. The Justice Department has a durable, longstanding, bipartisan commitment to defending the law when non-frivolous arguments can be made in its defense. This brief torches that commitment.
  • ...By the way, the administration invites the court to enjoin the preexisting condition rules on January 1, 2019. And they've pulled a right-wing judge to rule on the case. Good luck with getting insurers to enroll under a cloud of uncertainty like that.

Bagley was, understandably, primarily concerned with the devastating precedent this sets for the entire U.S. Dept. of Justice.

For this site's purposes, however, I'm obviously more concerned with the last bullet.

The state plaintiffs in the Texas vs. U.S. case--originally 18 Republican state Attorneys General and 2 Republican Governors, although this has since been reduced to 18 states total, as both Maine and Wisconsin have withdrawn from the case--are calling for the entire ACA to be struck down. All of it. The exchanges, the subsidies, Medicaid expansion, pre-existing condition protections, etc etc.

The Dept. of Justice, however, oddly enough, only partly agreed with the plaintiffs at the time: They were "only" requesting that the federal court strike down the guaranteed issue, community rating and essential health benefits portions of the ACA, while leaving the rest of it intact.

On the one hand, these three provisions are incredibly important, and stripping them out would be devastating for tens of millions of people, while also causing havoc with the insurance market (the individual market in particular) in the process, for a simple reason:

  • The ACA subsidy formula...that is, the amount of premium subsidies that people are eligible for...is primarily based on what the unsubsidized premium is for the "benchmark plan".
  • The benchmark plan is defined as the second lowest-cost Silver plan available for the enrollee (SLCSP).
  • Under the ACA, the SLCSP is priced identically for everyone of the same age in the same rating area.
  • The reason it's priced the same for everyone is because the carriers can't vary the price based on anything other than age and rating area (they can add a 50% surcharge for smokers, but that's it).

However, what happens if all of a sudden the carriers can vary prices based on other factors like medical history, current health condition and so forth? Suddenly, instead of 2 exactly-defined variables (age and geography), premiums would vary for everyone individually...but the ACA subsidies would still have to be calculated so as to keep premiums below a given percentage of their household income (as long as they earn less than 400% FPL).

This would cause a logistical nightmare. Someone with, say, hemophilia might rack up $1 million in medical claims per year. That means the insurance carrier might end up, after medical underwriting (reviewing their medical history), offering them, say, a Bronze plan at $60,000/month, Silver plan at $70,000/month or Gold at $80,000/month. If they earn $40,000/year (320% FPL), they'd only have to pay 9.86% of their income ($329/month), so they'd receive $69,671 per month in subsidies.

Meanwhile, a healthy person would see their premiums drop from the current $600/mo average down to perhaps $200/month or whatever...which is fantastic as long as their healthy. If they became sick, as long as they're under the 400% FPL threshold, they'd still be covered by fat subsidies kicking in...but what if they're over 400% FPL?

Suddenly, instead of paying $600/mo (which is already pretty steep for someone earning $50,000...that's over 14% of their income), they'd go to paying $1,000/month, $2,000month or potentially as high as the insane $80,000/month in the example above...or 19 times as much as their gross income. Since that's impossible, millions of middle-class people would be kicked to the curb and left to suffer and die.

EVEN WITH ALL OF THIS, the DoJ's original position was still not nearly as bad as the plaintiff's position, since that would also strip over 13 million people off their Medicaid coverage, re-open the Medicare Part D donut hole and a whole slew of other stuff...so while I was horrified by the DoJ's position, it could have been worse.

This past March, it got worse:

The Trump Administration Now Thinks the Entire ACA Should Fall

In a stunning, two-sentence letter submitted to the Fifth Circuit today, the Justice Department announced that it now thinks the entire Affordable Care Act should be enjoined. That’s an even more extreme position than the one it advanced at the district court in Texas v. Azar, when it argued that the court should “only” zero out the protections for people with preexisting conditions.

...Even apart from that, the sheer reckless irresponsibility is hard to overstate. The notion that you could gut the entire ACA and not wreak havoc on the lives of millions of people is insane. The Act is now part of the plumbing of the health-care system. Which means the Trump administration has now committed itself to a legal position that would inflict untold damage on the American public.

And for what? Every reputable commentator — on both the left and the right — thinks that Judge O’Connor’s decision invalidating the entire ACA is a joke. To my knowledge, not one has defended it. This is not a “reasonable minds can differ” sort of case. It is insanity in print.

Yes, that's right...three months after Judge O'Connor sided with the plaintiffs entirely, Donald Trump's Dept. of Justice changed their minds and decided that they fully agree with the plaintiffs: The entire ACA should be scrapped.

This would mean losing not just the pre-existing condition protections, but the subsidies as well...and Medicaid expansion, and the donut hole closure, and much, much more. A good 20 million people would lose their healthcare coverage, while the states would lose a whopping $135 BILLION per year in federal funding (mostly for the subsidized ACA enrollee and Medicaid expansion populations).

This was the Trump Administration's stance from March up through July. However, just before the oral argument hearing by the 5th Circuit Court of Appeals on July 9th, the US DoJ apparently changed their stance again. via Emily Curran, Dania Palanker & Sabrina Corlette of the Center on Health Insurance Reforms:

Now, DOJ is changing its position again. In supplemental briefings to the Fifth Circuit Court of Appeals, DOJ states that any invalidation of the ACA should “not extend beyond the plaintiff states….” As a remedy, DOJ argues that the court should invalidate the ACA only in the states that brought suit. In effect, if the court were to follow DOJ’s scheme it would mean striking down the ACA in the eighteen plaintiff states, but allowing it to remain intact in the thirty-two other states.

I'm not sure how this development escaped my attention at the time...in fact, I seem to recall discussing this possibility with a few fellow wonks in July, but I remember it as being just a "what if?" scenario, not something which was being seriously argued by any of the involved parties. I've also heard about another possible ruling: The 5th Circuit might strike down the entire law, but only in the states it has jurisdiction over (Texas, Mississippi and Louisiana). For the record, the 18 states remaining in the lawsuit make up 36% of the U.S. population, while TX, MS & LA make up 11%.

On the surface, this sounds better than tearing the law down nationally...64% of a loaf is better than none, right (or 89% of a loaf, in the "5th Jurisdiction Only" scenario)?

However, while this would certainly be a relief to the millions of people on ACA exchange plans or Medicaid expansion in the other 32 states + DC, it would still be devastating to those in the 18 plaintiff states (or 3 in the latter scenario).

Beyond that, though, as explained at the CHIR blog post, there would be additional carnage caused by the ACA being struck down in even a single state:

This proposed remedy is illogical on many levels, in part because the ACA includes provisions that touch on almost every aspect of our health system, including the federal Medicare program, which is not operated on a state-by-state basis, Food and Drug law governing the review and approval of prescription medicines sold nationwide, as well as several federal taxes designed to pay for the new spending under the law. However, here we focus on how DOJ’s suggested “solution” would upend our system of employer-based coverage – the primary source of insurance for approximately 158 million people.

The CHIR blog goes on to explain how the ERISA law (in place long before the ACA was signed), and how striking the ACA down in some states while leaving it in place in others would cause...problems, to put it mildly:

If DOJ has their way, ERISA requirements would vary by state. This is a fundamental change not only to the ACA, but also to decades-old ERISA regulation...Consider an employer based in Texas with employees in California. Do the employees in California retain all of the ACA protections because they are residents of California, leaving an employer based in Texas having to provide those protections to some employees but not others? ...What if all the employees live in Texas, but some dependent children have moved out of state?

Beyond ERISA, there are plenty of other massive regulatory and legal problems which would be caused:

...the Biologics Price Competition and Innovation Act (BPCIA), which is included in the ACA, creates a regulatory pathway for biosimilars...would this regulatory pathway “cease to exist”? ...The ACA also phased in coverage adjustments to Medicare Part D’s “donut hole” to reduce enrollees’ out-of-pocket spending and close the coverage gap. Under DOJ’s remedy, will beneficiaries in the eighteen plaintiff states still be subject to higher spending? What happens if a beneficiary moves to a plaintiff state mid-year?

These are just a handful of the headaches which would have to be dealt with. Lawsuits would abound. Chaos and confusion would reign. People would suffer and die.

All of which is to say, it's an insane lawsuit with zero legal merit which should've been thrown out of court the moment it was brought a year and a half ago...but thanks to GOP Attorneys General, GOP Governors, a GOP Dept. of Justice and a GOP-appointed judge....here we are.