Tag Archives: Federalism

ERISA: A Bipartisan Problem For The ACA And The AHCA

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http://healthaffairs.org/blog/2017/06/02/erisa-a-bipartisan-problem-for-the-aca-and-the-ahca/

The Supreme Court has once again been called on to mediate the boundaries of a far-reaching, infamously complex, federal employee benefits law. And once again this law may have an important and unanticipated effect on health care.

The main goal of this law, the Employee Retirement Income Security Act of 1974 (ERISA), was to provide uniform, federal regulation of pensions and employee benefit plans (including health care). But the law has had a far more dramatic impact on health policy beyond what Congress ever contemplated. Because ERISA pushes aside state regulation of these plans, it has impeded the states’ ability to partner with the federal government to achieve key health policy goals. ERISA has also stymied some of Congress’s goals under the Affordable Care Act, and may prove an even greater obstacle to Republican efforts to return more authority over health policy to the states.

ERISA and health reform have not meshed well. For instance, the ACA’s attempt to create greater uniformity of benefits is at odds with the way ERISA creates a special class of protected plans and blocks states efforts to regulate them. When you ask yourself why the ACA’s guarantee of essential health benefits applies to some health plans but not to others, the answer is deference to ERISA. When you ask yourself why some health plans are subject to state-mandated benefit laws but some remain exempt, the answer is ERISA.

The US Supreme Court has not helped. The Court decided two important ERISA cases last term and has another one in the term about to conclude. Those interested in health care should watch this case closely. Last term, even as the Court acknowledged ERISA’s tensions with the ACA, it ruled that ERISA blocked Vermont’s attempt, through an all-payer claims database, to partner in the ACA’s efforts to make health care spending more transparent. States, including Alaska for example, struggle in the wake of this ruling to make an all-payer claims database work. In the second case, the Court indicated that ERISA might thwart a compromise in a dispute between the federal government and Christian nonprofit organizations over the ACA and contraception coverage.

This term, the fight involves the intersection of religion, health, and ERISA once again. And again, the Court must say how far ERISA reaches. ERISA exempts “church plans” from its broad regulation. The Supreme Court will decide whether the exemption for church plans, defined as plans “established and maintained” by houses of worship, applies narrowly to plans created by churches or, more broadly, also to those created by church-affiliated organizations. The three plans in this litigation and many plans in question are pension plans for employees at Catholic hospitals and health systems. In Advocate Health Care Network v. Stapleton, consolidated with two other cases, the Court will determine whether Catholic hospitals—which now care for one in six patients in the U.S.—must guarantee the security of their employees’ pensions. Billions of dollars of pension shortfall and the financial security of 300,000 hospital workers are at stake.

We review the recent and upcoming ERISA jurisprudence below and conclude it is time for the Court, or Congress, to cabin ERISA’s reach when it comes to health care.

Federalism and the End of American Healthcare Act

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http://www.yalelawjournal.org/forum/federalism-and-the-end-of-obamacare

Federalism and the American Health Care Act

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Republicans may talk the talk of devolving health care policy to the states, but that’s not what the American Health Care Act does. Instead, it starves health reform of the funding upon which it depends.

Most significantly, Republicans intend to phase out the Medicaid expansion and to impose a hard cap on federal contributions. If a recession forces a state to exceed its cap in a given year, any overruns will come out of its Medicaid payments the following year. With that kind of shortfall, the states will have to make savage Medicaid cuts to make ends meet.

Republicans also want to slash the subsidies that make insurance affordable in the private market. Under the ACA, no one making less than four times the poverty level has to devote more than 10 percent of her income toward private coverage; most pay much less. The American Health Care Act would erase that affordability guarantee and, instead, extend age-based subsidies that would be much too meager for most people to afford coverage.

If federal money is withdrawn, states will be stuck. Because of the countercyclical trap and ERISA, they won’t be able to enact and sustain coverage expansions on their own. The end result will not be the diversity that federalism celebrates. It will be a uniformly crappy system that leaves millions of the sick and poor without coverage.

It doesn’t have to be this way. A group of Republican senators led by Bill Cassidy (R-LA) and Susan Collins (R-ME) has floated an alternative, the Patient Freedom Act of 2017, that retains the ACA’s funding streams while giving the states more room to choose how to use that money. That’s a model that deserves serious attention from both Republicans and Democrats. It might enable partisans on both sides move past the rancorous debate over the ACA.

For now, however, the Republicans seem intent on dismantling coverage gains across the entire United States. Their proposals trade on the rhetoric of states’ rights, but they would have the perverse effect of inhibiting state power. That’s bad for federalism — and bad for the country.

 

Federalism and the End of Obamacare

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http://www.yalelawjournal.org/forum/federalism-and-the-end-of-obamacare

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Federalism has become a watchword in the acrimonious debate over a possible replacement for the Affordable Care Act (ACA). Missing from that debate, however, is a theoretically grounded and empirically informed understanding of how best to allocate power between the federal government and the states. For health reform, the conventional arguments in favor of a national solution have little resonance: federal intervention will not avoid a race to the bottom, prevent externalities, or protect minority groups from state discrimination. Instead, federal action is necessary to overcome the states’ fiscal limitations: their inability to deficit-spend and the constraints that federal law places on their taxing authority. A more refined understanding of the functional justifications for federal action enables a crisp evaluation of the ACA—and of replacements that claim to return authority to the states.

The upshot of the piece is that there’s much to be said—more than the ACA’s supporters generally acknowledge—for returning power to the states. That’s so even with respect to some of the ACA’s most sacrosanct provisions:

[C]onsider the ban on medical underwriting. The ACA reflects the judgment that it is unfair to deny coverage to the sick or to ask them to pay more for their coverage. The ACA thus embraces policies—in particular, the much-maligned individual mandate—that its drafters thought necessary to cope with the risk that people will wait until they got sick to purchase coverage. For the ACA’s supporters, the individual mandate is a reasonable price to pay to prevent discrimination against the sick. But many people don’t see it the same way. Some reject the claim that the government should be in the business of guaranteeing coverage for everyone. Others don’t think that medical underwriting, however distasteful, warrants a heavy-handed purchase obligation. Still others doubt that the individual mandate is strictly necessary to prevent adverse selection, and would prefer less-intrusive alternatives. If those who disagree with the ACA’s approach command the levers of political power within a state, why shouldn’t those states be allowed to try something different?

The argument can be generalized to most of the ACA’s insurance reforms. And I can already hear the response: Because this “something different” will not work. The ACA’s opponents are completely unrealistic about the tough tradeoffs that health-care policymaking entails. They will take federal money and squander it, leaving millions of people without coverage.

That might be right; indeed, I suspect it is right. But that’s my judgment. Lots of smart people do not share that judgment. And if federalism means anything, it is that national judgment should not supersede state judgment, absent a good reason for federal intervention. Yes, federal money might be squandered in a state that adopts stupid insurance rules. People could go bankrupt and even die as a result of the lack of coverage. But that’s an issue between the state and its voters. If other states use the money more effectively, the state with the stupid rules will come under pressure to improve them. And what if it turns out that what seemed stupid is not so stupid after all?

Democracy rests on the conceit that we all have an equal voice in determining what the good is, which is why Michigan voters don’t get to tell Ohioans how to spend their tax dollars, even if Wolverines know in their hearts that they make better decisions than Buckeyes. And while the federal government can make decisions for Ohio, it should not do so just because it doubts the wisdom, intelligence, or values of Ohio residents. “The states have bad ideas” is a poor justification for federal law (unless, again, those bad ideas turn on views about the inferiority of minority groups). Federalism thrives when we recognize the limits of what we know, appreciate that good people can hold views that many others find repugnant, and acknowledge that our own misconceptions and prejudices can blind us. Sometimes federalism means letting the states wave their crazy flags.

I’d welcome any suggestions and criticisms. And a big thank you to the Yale Law Journal, which has moved with stunning speed to get the piece up.