House v. Burwell Case Threatens Health Care for Millions
Beside the threat posed by Republican plans to repeal the federal health reform law, there’s another threat to the Affordable Care Act looming in February. A legal case, House v. Burwell, now before the Circuit Court of Appeals for the District of Columbia, challenges part of the ACA that gives people financial assistance to pay for health insurance.
This suit, filed by Republican members of the House of Representatives in 2014, charges that the Obama administration lacked authority to pay for cost-sharing reductions that reduce health plan deductibles and other out-of-pocket costs for low- to middle-income residents – even though these cost sharing reductions are an explicit part of the law.
So far, the Obama administration has been defending the case. If the Trump administration decides not to continue defending it, the health care system could immediately be thrown into disarray, making care unaffordable to millions of Americans.
However, there are a few possible paths to a happier outcome:
- The House could drop its challenge and allow cost-sharing reductions to continue.
- The administration could defend the case.
What is House v. Burwell about?
House v. Burwell is a case about cost-sharing reductions. Right now, people who buy marketplace plans and have incomes below 250 percent of the poverty line ($29,700 for an individual; $50,400 for a family of three) get help that reduces the most they will have to pay for covered medical care in a year if they get really sick (that is, it reduces their out-of-pocket maximum cost sharing.) About 6.4 million people get these cost-sharing reductions, called “extra savings on out-of-pocket costs in silver plans.”
For working poor families, cost-sharing reductions can also significantly reduce deductibles (the amount that they pay up-front for care before their health plan kicks in). Such help is one reason that more people are able to afford health care than were seven years ago.
For example, David, who earns about $20,000 in a year, could only afford high-deductible, catastrophic coverage before the Affordable Care Act. Now, thanks to premium assistance and cost sharing reductions, he is able to afford a plan with a deductible of $500; his out-of-pocket expenses for care are capped at $700 per year. With this help, he is able to get regular treatment for a gastrointestinal disorder and heart condition, treatment he would not have been able to afford before. Families USA and other consumer organizations, in an amicus brief, have explained that without the extra help of cost-sharing reductions, many people would not be able to afford their insurance and medical costs.
House v. Burwell is a dispute about whether or not the Obama administration (and in the coming year, the Trump administration) is allowed to spend money for the cost-sharing reductions. The House argues that the administration should not be reimbursing insurers for these cost sharing reductions without a formal and explicit appropriation; the Obama administration has argued strongly that the law provides for that spending, because it is tied to the permanent appropriation for premium tax credits.
The case is now before the D.C. Circuit Court of Appeals, which has put the case on hold until February 21 when it will be up to the Trump administration to decide whether it will continue to defend the case, and up to the House to decide whether to continue to pursue it.
A decision not to pay for cost-sharing reductions would throw the nation’s health care system into disarray, threatening care for millions.
The law requires marketplace insurers to reduce costs for low to middle income consumers, so would they do that without reimbursement? No. Insurers point out that if they had to depend on uncertain annual Congressional appropriations for cost sharing reductions, they could not feasibly participate in the marketplaces.
Furthermore, if the court rules against Burwell or if the administration drops the case and the intervenors don’t prevail, there would be immediate negative impacts:
- If insurers stayed in the marketplace, they would likely have to raise premiums to recoup the cost of providing cost-sharing reductions, but this is probably not feasible: Many consumers who are above the income limits for premium assistance would drop coverage rather than pay higher premiums, especially if they felt healthy enough to risk going uninsured. This would leave marketplace insurers with fewer enrollees and a higher proportion of enrollees with high medical claims.
- To avoid this scenario, many insurers would likely leave the marketplace instead, terminating plans for the millions of consumers who buy marketplace coverage and leaving some areas of the country with no plans that provide premium assistance or cost sharing reductions.
- A mid-year decision not to reimburse for cost-sharing reductions would wreak even further havoc. As insurers point out, laws and regulations prohibit them from raising premiums mid-year. A sudden loss of funds to insurers to pay for health care could destabilize the entire individual health insurance market.
Besides leaving consumers without health insurance and throwing insurers into crises, this sort of chaos would affect health providers. For instance, under long-standing laws, hospitals must provide at least life-saving emergency care to patients before asking about payment. Hospitals do not have the resources to suddenly care for millions more uninsured consumers, as they explained in their brief.
What can consumers and their advocates do?
Now is the time for consumers and their advocates to weigh in. You can tell your representative in Congress that the financial help low- and middle-income consumers get to reduce their deductibles, other cost-sharing, and premiums is essential. You can send a clear message to the Trump administration that health care and coverage must continue and must be affordable, including for low and middle income consumers. You can share your stories about why premium credits and cost sharing reductions, called “extra help”, are important.
Meanwhile, consumers should go about the business of enrolling in health plans. January 15 is the deadline for coverage that begins February 1, and January 31 is the deadline for coverage that begins in March. After January 31, most people will not be able to enroll in a plan in 2017. Unless and until things change, the marketplace offers affordable coverage and silver plans that provide extra savings to many enrollees. Enrolling during this open enrollment season gives consumers the best chance of getting the care they need.