Setbacks to the Trump Administration’s Health Care Initiatives

The Trump Administration has undergone setbacks recently in its attempt to reshape the health care landscape. Since the 2017 failure to repeal the Affordable Care Act (ACA) through Congress, the Administration has attempted to use agency power to affect changes to provisions of the ACA. Such changes have been inspired from Republican proposals to limit federal involvement in health care and granting significant discretion for states to run their own programs.

The Centers for Medicare and Medicaid Services (CMS) has directly dismantled many of the provisions of the ACA through expanded approval of state waivers for Medicaid compliance. Under Section 1115 of the Social Security Act, the Secretary of Health and Human Services (HHS), through CMS, can grant states waivers on Medicaid requirements to allow states greater flexibility in shaping their health care programs. This effort has been one of the cornerstone programs under Seema Verma, the CMS Administrator. Administrator Verma previously oversaw the expansion of Indiana’s Medicaid program in 2015. Then-Governor Mike Pence made a deal that Indiana would accept Medicaid expansion in exchange for requirements that enrollees contribute monthly payments to offset some of the cost to the state. That was a unique arrangement at the time, but some in the Obama Administration felt that it would be the only way to get reluctant states to accept an expanded Medicaid program. Once the Trump Administration came into office, CMS began to examine the ability to grant Section 1115 waivers in relation to mandating work requirements for Medicaid recipients. In January 2018, Kentucky became the first state to tie Medicaid expansion to work requirements for enrollees. Seven other states have since successfully applied for waivers to require employment to receive benefits. These waivers have been challenged in court a number of times; Kentucky in particular lost twice. A District Judge in Kentucky blocked implementation of the work requirements in June 2018, holding that HHS had failed to properly consider the request and remanded it back for further examination. The waiver was reconsidered and granted for a second time. However, last week, the same judge once again blocked Kentucky’s program as well as blocked Arkansas’ work requirement waiver, holding that the waivers go against the spirit of Medicaid’s goals.

Eight states in total have expanded Medicaid with the condition that enrollees be employed or seeking work. Utah passed a referendum in the 2018 elections that expanded Medicaid access but the Utah Legislature limited that expansion by requiring enrollees to be employed and raising the income threshold for eligibility. Virginia’s 2018 Medicaid expansion was approved after several years of negotiation as the Republican controlled Virginia General Assembly would only support expansion in exchange for limited work requirements. Georgia has most recently accepted a very limited Medicaid expansion that forbids complete expansion and sets a June 2020 deadline to agree to a waiver or the expansion will be voided.

The most recent legal setback for the Administration has been the rejection of the Department of Labor’s (DOL) association health plan rules (AHPs). These rules allowed for small businesses to join together to purchase health plans, similar to how large employee plans are already structured. The AHPs would not have to abide by many of the coverage requirements the ACA mandates, but would require insurance to cover individuals with pre-existing conditions. Eleven states, led by Pennsylvania, filed a lawsuit against the DOL, alleging that the AHPs violate both the ACA as well as well as violating ERISA guidelines on allowing for groups to join together in AHPs even though they do not have any business connection. Last week, a District Judge invalidated the DOL rule, holding that DOL’s interpretation goes against the language of ERISA.

One legal success for the Administration was the December 2018 ruling by a Texas District Judge finding the ACA was unconstitutional. In NFIB v. Sebelius, the Supreme Court found that the individual mandate, which requires individuals to maintain health insurance and penalizes them if they don’t, was constitutional under Congress’s taxing power because the penalty was treated as a tax. The Texas District Court Judge’s ruling found that because the penalty under the individual mandate was reduced to zero as part of the Tax Cuts and Jobs Act of 2017, the mandate could no longer be justified as a tax and the whole law was thus unconstitutional. Many court watchers do not believe the lawsuit will ultimately succeed at the appellate level, but the Department of Justice (DOJ) recently reversed its position in a brief filed with the U.S. Court of Appeals for the Fifth Circuit, refusing to defend any part of the ACA, believing it to be unconstitutional in whole. The DOJ’s previous position was that only the individual mandate was unconstitutional but the rest of the law could be upheld if the mandate was not. Recognizing the political implications of such a change, the Republican attorneys general of Ohio and Montana filed an amicus curiae with the Fifth Circuit urging them to reject the conclusion that the entire ACA is unconstitutional and limit scrutiny to the individual mandate.

The legal setbacks on a narrowing of provisions of the ACA have once again put a spotlight on health care within the political sphere. President Trump recently declared that, “The Republican Party will soon be known as the party of health care.” Republicans in particular are concerned that this reexamination of the ACA will endanger their 2020 reelection prospects and thus, are blocking attempts to reexamine the ACA. Senate Majority Leader Mitch McConnell has rejected any new attempt to repeal the ACA, viewing any opportunity impossible with the Democrat controlled House of Representatives. The issue of health care will continue to be a pressing political issue as the House of Representatives examines various proposals for ‘Medicare for All’ programs and the Republicans focus on many of their initiatives to bring down health care costs through drug pricing issues and other non-coverage focused initiatives.

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