2018: The Year of Renewed Affordable Care Act Litigation
Faced at the end of 2017 with the reality that Congress would not repeal the Affordable Care Act (ACA), the Trump administration in 2018 aggressively issued regulations and guidance that effectively undermine many of the ACA’s key safeguards and benefits. The year also brought a barrage of litigation by states, cities, advocates, and health plans challenging these administrative initiatives, as well as a lawsuit intended to invalidate the entire ACA.
In this post, I review the status of each of these challenges and what we can expect in 2019.
The Global Affordable Care Act Challenge
Last February, 20 Republican attorneys general and governors and two individuals brought a lawsuit claiming that the 2017 Tax Cut and Jobs Act’s reduction of the individual responsibility tax penalty to zero rendered the individual mandate unconstitutional, and that the entire ACA was invalid without the tax penalty. In June the Trump administration agreed that the individual mandate was unconstitutional but argued that this only invalidated the ACA’s preexisting condition protections and not the remainder of the ACA. Seventeen Democratic attorneys general intervened to defend the entire ACA.
In December, Texas federal court judge Reed O’Connor accepted the Republican states’ argument and entered a judgment that if upheld would invalidate the entire ACA. In a separate later order, he clarified that his judgment was final and appealable while delaying its effect until an appeal was concluded. With his second order, Judge O’Connor also released a 30-page opinion summarizing his earlier arguments and elaborating on why the two individual plaintiffs are injured by the vestigial individual mandate even though they will suffer no practical consequences from ignoring it. The Democratic attorneys general and the Trump administration have appealed Judge O’Connor’s decision to the Fifth Circuit. The U.S. House of Representatives has also moved to intervene in both the district court and Fifth Circuit proceedings to defend the ACA. However the Fifth Circuit rules, the loser is likely to seek review by the Supreme Court, possibly as early as late 2019. In the meantime, the ACA remains fully in effect.
The state of Maryland has filed what is effectively a countersuit, seeking to declare the ACA constitutional and fully effective. The Trump administration has asked the court to dismiss this case, arguing that Maryland’s claim that the administration will not enforce the ACA is speculative and that Maryland is not suffering an injury that justifies federal court protection.
The judge in the Maryland case has asked the parties to address how Judge O’Connor’s decision to stay his judgment in the Texas case affects Maryland’s position in this litigation.
Litigation Challenging Trump Administration ACA Initiatives
In the meantime, a series of ongoing lawsuits are challenging the Trump administration’s regulatory initiatives. These have included regulations that encourage the marketing of association health plans that do not comply with ACA individual and small-group requirements, and of short-term limited duration plans that can last nearly a year and be renewed for up to 36 months but are completely exempt from all ACA consumer protections. Proposed regulations would allow employers to help finance coverage for their employees in the individual market through health reimbursement arrangements.
Association Health Plans. A lawsuit brought by New York and several other states challenges the administration’s association health plan rule, claiming that the rule violates the ACA, the Employee Retirement Income Security Act of 1974 (which regulates group health plans), and the Administrative Procedures Act. The case is set for oral argument before a judge in the federal district court for the District of Columbia in January 2019.
Short-Term Health Plans. A health plan association and a number of patient advocacy groups have filed a lawsuit seeking to block the administration’s short-term limited duration insurance rule, claiming that it violates the Administrative Procedures Act, the ACA, and the Health Insurance Portability and Accountability Act (an earlier insurance reform law). A federal court judge effectively rejected the plaintiff’s request that the regulation be blocked immediately but set the case for argument in February 2019. It has now been delayed pending the end of the government shutdown, which affects the funding of the U.S. Department of Justice.
A “Take Care” Lawsuit. Another lawsuit brought by several cities and individuals challenges a number of Trump administration regulatory initiatives, including much of the administration’s 2019 Benefit and Payment Parameter’s rule, as violating the Administrative Procedures Act and the ACA. The regulations challenged undermine the navigator program and reduce federal regulation of qualified health plans while increasing requirements imposed on individuals seeking premium tax credit assistance through the exchanges. The plaintiffs also claim that the Trump administration’s ACA actions contravene the president’s constitutional duty to “take Care that the Laws be faithfully executed.” The administration has asked the court to dismiss this lawsuit and briefing will continue over the winter.
Transgender Protections. There is also movement again in a case in which a Texas federal judge in 2016 blocked the enforcement of an Obama-era rule protecting transgender individuals and individuals who have had an abortion from discrimination by insurers and health care providers. The Trump administration had sought to rewrite the rule in response to the court’s order but had failed for almost two years to do so. The organizations opposing the rule are asking the court to permanently eliminate the antidiscrimination provisions to which they object, but antidiscrimination advocates continue their attempts to intervene in the litigation to defend the rule. In the interim, several federal courts have held that the ACA protects transgender individuals.
Religious and Moral Exemptions for Contraceptive Coverage. Lawsuits brought by Democratic states challenging the Trump administration’s 2017 interim final rules dramatically broadening the religious exemption and creating a moral exemption to the requirement that insurers and group health plans cover contraceptives are at various stages of litigation in the district and appellate courts. Two courts had blocked these temporary rules. Attempts by state attorneys general to block the administration’s subsequent final rules ahead of their January 14, 2019, effective date are also proceeding in federal courts in California and Pennsylvania, with arguments scheduled for early January.
Insurer Lawsuits Seeking Damages
Finally, a series of lawsuits brought by insurers to recover damages caused by claimed violations of the ACA are moving forward in the federal courts. The Federal Circuit held in June 2018 that insurers were not entitled to the recovery of losses attributable to Congress’s partial defunding of the ACA risk corridor program in 2015; a rehearing was refused in November. The insurers are likely to seek review by the Supreme Court. Meanwhile, the federal government is appealing two Court of Claims judgments that insurers are entitled to damages for the Trump administration’s 2017 termination of the ACA’s cost-sharing reduction payments, while litigation in other cost-sharing reduction cases is proceeding in the Court of Claims.
This year we are likely to see a resolution of some of these lawsuits while others progress to higher courts for review. 2019 is also likely to bring more administrative action by the Trump administration as it implements its vision for the American health care system, and more litigation challenging this vision insofar as it deviates from that of the ACA.