By Todd Ruger, CQ Roll Call

November 7, 2014 -- President Barack Obama's health care law is once again at risk before the Supreme Court, which has agreed to hear a challenge to a key provision in the overhaul.

Oral arguments in the politically charged case could be scheduled as early as January, at the same time that a Republican-controlled Congress likely will be proceeding with legislative attacks on the law.

The case—King v. Burwell—questions whether the law should provide subsidies to low- and middle-income residents who buy health insurance in the 37 states that did not establish a state-run marketplace.

The central debate is about what Congress intended when crafting the health care overhaul law ( PL 111-148 , PL 111-152). A decision against the health care law would take away subsidies and make insurance unaffordable for millions of Americans.

The result would throw the health care system and the law's implementation into chaos, insurance experts and Democrats say.

"To say this was a catastrophe in terms of the insurance markets does not understate it," insurance consultant Bob Laszewski of Health Policy and Strategy Associates said at a recent panel discussion on the case. "The debate would then quickly move on to who broke it. And, folks, it would be broken in spades."

Supporters of the law immediately reacted with dismay.

Ron Pollack, executive director of the health advocacy group Families USA, called the Supreme Court's acceptance of the case "an unusual political act."

In a statement, Pollack said there is no serious constitutional issue presented in this case, no current conflicting decisions by a federal appeals court and that two appeals courts—the D.C. Circuit and the 10th Circuit—have arguments set on similar challenges.

"Clearly, therefore, at least four justices of the Supreme Court have decided to put aside the normal guidelines for accepting a case, and they have decided to jump the usual process about which cases they should hear," Pollack said.

"This is a clear indication that at least some of the justices are determined to enter the political fray about the Affordable Care Act," Pollack said.

The case marks the third time the justices have considered the legality of the health care law. The justices upheld the heart of the law in a 5-4 decision in June 2012. The high court struck down the law's contraception mandate as it applies to family-owned businesses in a 5-4 ruling in June.

The decision to accept the King case out of the U.S. Court of Appeals for the 4th Circuit comes as similar challenges are still moving through the lower courts. Those cases would likely be put on hold now, since the high court has agreed to hear the issue.

"We're very gratified," said Michael A. Carvin, a partner at Jones Day law firm who represents the challengers in several cases. "We made it very clear that wherever you come out on this case, it should be settled sooner rather than later."

Carvin said he thinks the justices also took the case because they recognize an Internal Revenue Service rule on the health care law runs contrary to the plain language of the statute.

The case comes out of Virginia. In it, four Virginia residents argue that only the Supreme Court could decide on the subsidies, and that it was imperative for the justices to do so as soon as possible.

The case challenges an IRS rule that authorizes the subsidies for those who enroll in the federally-run insurance marketplace, healthcare.gov.

Challengers say in their petition to the court that Congress precluded the IRS from providing tax subsidies to residents of states that rely on federally-facilitated marketplaces.

The government argues in its brief that such a reading would be contrary to the law's text and structure, and would render the law "unrecognizable to the Congress that passed it."

The 4th Circuit correctly ruled that Congress determined the subsidies at issue are essential to the law's goals of making affordable health coverage available to all Americans, the government brief states.

White House spokesman Josh Earnest in a recent statement said the lawsuits "won't stand in the way of the Affordable Care Act and the millions of Americans who can now afford health insurance because of it."

"This lawsuit reflects just another partisan attempt to undermine the Affordable Care Act and to strip millions of American families of tax credits that Congress intended for them to have," Earnest said. "We are confident that the Supreme Court will recognize both the clear reading of the entire law, and the certain intent of Congress in crafting it."

Tennessee Republican Rep. Diane Black, a member of the House Ways and Means Committee, supported the justices' decision to take the case in a statement.

"If the President has been overstepping his authority as the text of the ACA suggests, this means that his administration has been misrepresenting the true costs of Obamacare to millions of Americans across the country," Black said.

"This administration has repeatedly ignored Congress and the legislative process in order to fit their agenda and it is long past time for this president to uphold his oath to enforce the laws as written," Black said.

Rep. Sander M. Levin of Michigan, the top Democrat on the Ways and Means Committee, said in a statement that the lawsuit misconstrues the intent of the law's authors.

"As the ranking member of one of the committees that shaped and debated the healthcare law, I am confident that the Supreme Court will recognize both the letter and intent of the law to ensure that financial assistance remains available in every state," Levin said.

The Supreme Court did not issue any comment with its order to hear the case.

Earlier this year, a three-judge panel of the D.C. Circuit ruled in favor of the challengers in a similar case. But the D.C. Circuit vacated that panel's decision in September and agreed to decide the case with all 11 judges. Oral arguments are scheduled for Dec. 17, which would set up a decision early next year.

Michael Cannon of the libertarian Cato Institute, who has long advocated this legal strategy, wrote in a recent blog post that the case could now "bring an end to the greatest domestic-policy scandal of this administration."

"The Supreme Court's decision is a rebuke to the Obama administration and its defenders, who dismissed as frivolous the plaintiffs' efforts to defend their right not to be taxed without congressional authorization," Cannon wrote.

Sen. John Cornyn of Texas and other Republican lawmakers filed an amicus brief in the case urging the Supreme Court to hear the case. The IRS regulation at issue rewrites the law and improperly encroaches upon Congress's lawmaking function and is costly, the brief states.

"The executive should not be able to accomplish through grasping agency rulemaking, and friendly judicial review, what it could not accomplish in legislative negotiations," the brief states.
Republican lawmakers who joined the brief were Sen. Ted Cruz of Texas; Sen. Orrin G. Hatch of Utah; Sen. Rob Portman of Ohio; Sen. Marco Rubio of Florida; Rep. Dave Camp of Michigan; and Rep. Darrell Issa of California.

Oregon Democrat Sen. Ron Wyden, chairman of the Senate Finance Committee, said in a statement that the lawsuits are contrary to Congress' intent and the best interest of millions of Americans who now have insurance.

"If successful, these lawsuits would return our nation to the days when health care was reserved primarily for the healthy and wealthy," Wyden said. "An honest reading of the law and Congress' intent will prevent that from happening."

By Rebecca Adams, CQ HealthBeat Associate Editor

November 5, 2014 -- The Medicaid expansion won't gain momentum from the outcome of the recent midterm elections. None of the gubernatorial candidates in key states who would have shifted policy to support a broadening of Medicaid eligibility won.

The state watched most closely was Maine, where GOP Gov. Paul LePage was the projected winner. LePage led with 48 percent of the vote against Democratic Rep. Michael Michaud, who got 44 percent by Wednesday afternoon, with 85 percent of the vote in. Eliot Cutler had complicated the race by running as an independent. The Maine legislature has passed a Medicaid expansion five times, but LePage vetoed each of those bills.

The race was tighter in Florida, where former Gov. Charlie Crist, running as a Democrat, lost 47 percent to 48 percent against incumbent GOP Gov. Rick Scott, with 98 percent of the vote in. Even if Crist had won, he would have faced a difficult challenge in getting the Florida House to accept an expansion. Crist had suggested he would try to take executive action to expand Medicaid, but experts in the state said it would have been a risk because he doesn't have clear authority to do so.

The legislature's opposition to an expansion would have been a problem in other states, including Kansas, Wisconsin and Georgia. Republican incumbents who have not embraced expansion won re-election.

On health-related state ballot initiatives that had received attention, Arizona voters passed a measure that would let drug companies give terminally ill patients treatments that the Food and Drug Administration has not approved.

Two other insurance-related measures in California did not pass. Proposition 45 would have given the state insurance commissioner the right to reject insurers' proposed rate increases. Proposition 46 included a long list of changes backed by consumer advocates, including an increase in medical malpractice awards and a requirement that physicians be tested for drug and alcohol use.

By Melissa Attias, CQ Roll Call

November 5, 2014 -- A quick look at how GOP control of the Senate changes the dynamic on major health care issues:

Health Law

The issue: Republicans have been trying to repeal the health care law (PL 111-148, PL 111-152) since its enactment in March 2010. Although they continue to campaign on repeal, GOP lawmakers have acknowledged that it's essentially impossible as long as President Barack Obama is in the White House.

What to expect: Republicans may symbolically pursue legislation to repeal the overhaul, including through budget reconciliation, but that would face Obama's veto pen. They're also likely to go after the law through the appropriations process and by targeting provisions some Democrats have opposed, such as the 2.3 percent excise tax on medical devices and the 30-hour definition of full-time work. While they may talk about proposals to replace the law, there's skepticism that they could be able to coalesce behind legislation.

Device Tax

The issue: The medical device industry has continued to lobby for repeal of the 2.3 percent excise tax on devices that took effect last year in the health care law, but it could come with a hefty price tag. The Congressional Budget Office estimated in June 2012 that eliminating the tax would cost about $29 billion over 10 years, although a 2014 Treasury Department inspector general report found that its collections were less than expected. The device industry says the tax has led to job losses and hurts innovation.

What to expect: Republicans are likely to try to repeal the tax, which could serve as a bargaining chip in a broader package. Some Democrats, particularly those from states with a sizable industry presence, oppose the tax and will support repeal, and more may join in if Republicans come up with palatable offset.

Mental Health

The issue: Lawmakers took a renewed interest in mental health after the December 2012 school shooting in Newtown, Conn., but only a couple of targeted measures have become law. Rep. Tim Murphy, R-Pa., introduced wide-reaching legislation (HR 3717) in late 2013 that has attracted some pushback and Rep. Ron Barber, R-Ariz., has competing Democratic legislation (HR 4574).

What to expect: Murphy has been energetically promoting his bill throughout the country and Republicans could try to move it forward in the new Congress if they decide it has enough support. The current measure has more than 100 cosponsors, including three dozen Democrats. But expect some mental health groups to fight the bill, including its support for court-ordered community treatment.

CHIP

The issue: Funding for the Children's Health Insurance Program (CHIP) expires at the end of September and advocates are pushing Congress to pass a four-year extension as part of legislation in the lame duck. They say states need to have certainty as they prepare their upcoming budgets and that many children would have no coverage if CHIP goes away.

What to expect: While CHIP has had bipartisan support, Republicans don't seem to be in a rush to renew the funding in the lame duck. A House Energy and Commerce spokeswoman has said any legislative action will occur next year. The top Republicans and Democrats on the Energy and Commerce and Senate Finance panels wrote to governors in July asking for feedback on their programs, which Republicans may use to propose changes before the funding expires.

IPAB

The issue: The Independent Payment Advisory Board, perhaps one of the most-criticized provisions of the health care law, is charged with making annual cost-cutting recommendations if Medicare spending exceeds a target growth rate. But it has yet to be triggered—it may be years before that happens—and Obama hasn't appointed any of its members.

What to expect: Although it's been out of the spotlight, Republicans could renew their efforts to repeal the board, whether on its own or part of a larger package, and some Democrats would likely support them. That may require an offset since the Congressional Budget Office estimated in 2012 that repeal would cost a few billion dollars over a decade. Republican control of the Senate also makes it almost impossible for Obama to get any nominees confirmed if the need arises, however unlikely that is.

Doc Fix

The issue: Congress passed a one-year patch to temporarily protect Medicare physicians from scheduled cuts after lawmakers were unable to agree on a way to pay for a permanent policy compromise. It expires at the end of March and several senior lawmakers want to use the lame duck to act.

What to expect: Doctors groups will fiercely lobby for Congress to pass a permanent fix ahead of the March expiration date. Although lawmakers came to a policy agreement in early 2014, finding a way to pay for its significant price tag—estimated in February to be about $138 billion over 11 years—will continue to be no easy lift and could result in Congress passing its 18th patch since 2003.

By Melissa Attias, CQ Roll Call

November 5, 2014 -- Republican control of the Senate means the health care overhaul is more vulnerable to GOP attacks and modifications than ever before. But precisely what Republicans can accomplish will depend on the legislative strategy they adopt—and whether President Barack Obama agrees to give any ground around the edges.

The power shift will put Obama in a more defensive position without Majority Leader Harry Reid, D-Nev., able to block bills reopening the law (PL 111-148, PL 111-152). Republican leaders, meanwhile, will have to decide how much they want to accommodate demands from conservative members eager to use the House and Senate majorities to take a stand against the law.

"It's much easier being in the minority," said George Washington University political science professor Sarah A. Binder, who also serves as a senior fellow in governance studies at the Brookings Institution.

Republicans are likely to hold symbolic votes in both chambers on legislation fully repealing the law, though any measure that receives the 60 votes needed to overcome a filibuster will be destined for a date with Obama's veto pen.

Joseph Antos, a health care scholar at the American Enterprise Institute, said newly elected members who campaigned on repealing the law will want to get their positions on the record. He sees the vote coming fairly early in the new Congress, to get the exercise out of the way.

But Dan Holler, communications director for Heritage Action for America, said his group will be pushing for Republicans to use reconciliation to repeal the law, which would have to come later in the session after both chambers agree on a budget blueprint. The procedure allows the Senate to advance budget-related legislation with a simple majority vote, potentially allowing a narrow GOP majority to get policies to the president's desk without help from Democrats.

"There is something incredibly powerful about forcing President Obama to veto repeal," Holler said. It reaffirms Republicans are in favor of full repeal and makes it an issue for the 2016 presidential race, he noted.

Although there are limits on what the reconciliation process can be used for, Holler insists Republicans can find a way to a full repeal if they're committed. Still, Antos questioned what the GOP would gain from using the complicated process for repeal.

Once the issue of full repeal is settled, Republicans are expected to pass narrower bills targeting specific aspects of the law that could attract some Democratic crossover votes.

One potential target for repeal is the 2.3 percent excise tax on medical devices that some Democrats oppose but may require an offset. Utah Republican Orrin G. Hatch, the top Republican on the Senate Finance Committee, has identified the tax as a top priority for the 114th Congress.

Another effort could involve changing the law's definition of full time from a 30-hour workweek to 40 hours, part of the broader debate over the law's mandate that most employers provide workers coverage or face fines. The overhaul generally requires employers with at least 50 full-time workers to offer health plans or pay a penalty, and critics say the 30-hour threshold creates an incentive for employers to cut their workers' hours to avoid the requirement.

John Barrasso of Wyoming, chairman of the Senate Republican Policy Committee, wrote on FoxNews.com that Republicans also would vote to repeal the broader employer mandate, as well as the requirement that most individuals maintain coverage or pay a penalty. Antos said he personally would suggest legislation exempting people from the individual mandate for several years and making Obama's policy allowing the continuation of plans not compliant with the law's coverage requirements permanent.

Other potential targets include repealing the "risk corridor" program – one of three provisions included in the law designed to limit insurers' financial losses that critics call an insurer bailout – and an as-yet-unappointed Medicare cost-cutting board.

Which provisions Republicans ultimately pursue will depend on whether they find it more advantageous to focus on messaging or enacting changes.

Adjusting the 30-hour threshold, for example, is something Antos thinks an average person could understand because they consider the traditional workweek to be 40 hours. The device tax may resonate less with everyday voters, he said, while the risk corridor program is complicated to understand and may be hard to get through Congress because it matters to insurance companies.

Holler, on the other hand, sees the risk corridor as a worthy target, saying it highlights who benefits from the law and who does not.

Whichever changes Obama decides to swallow – if any – will likely depend on how many Democrats support the move and how integral the provision is to the goals of the overhaul. While the device tax is largely a funding mechanism, other provisions could have more wide-reaching effects.

Antos said he could easily see two phases of legislative efforts. Early on, he thinks Republicans might vote on stand-alone measures which would allow them to test support with their own caucuses. That way, he said, they'll know what lawmakers are ready to line up behind when they want a bargaining chip in broader legislation later on.

The bigger threat, according to Drexel University's Robert I. Field, is for Republicans to incorporate repeal provisions in must-pass bills that are more difficult for Obama to veto. That could include appropriations bills, where many expect Republicans to try to cut funding for the law or attach policy riders.

"There is no excuse with a Republican-controlled Senate not to use the appropriations process," Holler said.

Antos said he could see Republicans inserting a ban or restriction on the IRS using money to penalize people who didn't have health insurance, particularly given the technical problems with the federal exchange website that have hindered the insurance enrollment process. He doubts the administration will be ready to enforce the penalties next year and said Democrats could support the move so they're not blamed for taking money out of low-income people's refund checks.

Binder said there are challenges to using the appropriations process because of the limited amount of discretionary funding used to implement the law. As with other legislation, she said the 60-vote threshold in the Senate factors in as well, particularly because some red state Democrats who could have provided votes will have lost their re-election races.

As for advancing a replacement to the law, Barrasso said Republicans will offer step-by-step bills. But many are skeptical that the GOP will move legislation next Congress and instead think the party will allow its 2016 presidential nominee to shape a replacement plan.

Control of the Senate also gives Republicans an additional weapon: oversight authority. Republicans will set the hearing agenda in both the House and Senate, which they will use to put administration officials in the hot seat and hone in on any implementation problems.

By John Reichard, CQ HealthBeat Editor

November 6, 2014 -- Rural areas are likely to see bigger premium hikes for the most popular health law exchange plans than big cities, according to a new study by the Urban Institute.

The analysis of 2015 premiums also found that in most rating areas, premiums either will drop for the type of plan studied or will increase less than five percent.

The study examined data from 17 states plus the District of Columbia. The areas were the first to review and approve rates for 2015 coverage sold in insurance marketplaces under the health law (PL 111-148, PL 111-152).

Many of the small increases or premium reductions in 2015 will occur in such cities as Baltimore, Cincinnati, Cleveland, Denver, Detroit, Minneapolis, New York City, Portland, Ore., Seattle and Washington, D.C., the study stated.

But rural counties in Tennessee will see a 21.4 percent increase in the average cost of silver plans, the most popular of the metal tiers of plans offered in exchanges, "Premiums will increase in the study's selected rural counties in Michigan by 6.7 percent, in New York by 7.9 percent, and in West Virginia by 9.0 percent," according to the study by John Holohan, Linda Blumberg, Erik Wengle, Megan McGrath and Emily Hayes.

People in many areas are going to have to switch carriers to pay the lowest rates for silver coverage. Of 39 rating regions, 26 will see a change from 2014 in the carriers offering the lowest silver premium.

The findings show that many of the lowest cost carriers in 2014 have fairly low premiums and believe that they can increase those rates, while other carriers are responding to competitive pressure in the marketplaces and will cut premiums in 2015. "This change is a desirable and direct outcome of market competition, but individuals will need to change plans to minimize their share of their premium payments," the study found.

Changing plans means braving a visit to the exchanges, where individuals will have to sign up for a new plan rather than be automatically reenrolled. But government and industry officials predict exchanges will be much easier to use in the upcoming enrollment period compared to their disastrous debut last fall.

People staying in their current plans will have to go to the exchange anyway to update their income-related information to calibrate their subsidies.

Price competition is driven by different insurers in different markets. Blue Cross Blue Shield plans "are highly competitive and will remain so in Connecticut, Delaware, Maine, Maryland, Michigan, Tennessee, Virginia, West Virginia and Washington, D.C.," the study said. "They are less competitive in Colorado, Ohio, Minnesota, Montana, and New York."

Researchers added that Kaiser Permanente generally will have premium reductions or small hikes in 2015 and become more competitive in Colorado, Maryland, Virginia and Washington, D.C.

By John Reichard, CQ HealthBeat Editor

November 3, 2014 -- A top lobbyist for community health centers said congressional Republicans are coming around to the idea of preventing a possible 70 percent drop in federal funding to the facilities set to hit next fall.

"What we've gotten in talking to both Democrats and Republicans is a complete understanding—'Yes, we know that we've got to find a way to fix this problem,'" Dan Hawkins of the National Association of Community Health Centers (NACHA) said in an interview. Supporters of the centers are trying to insert language to stabilize funding in a larger legislative package during the lame duck session or early next year, said Hawkins, the association's senior vice president.

The outcome will be influenced by broader debate and discussion about the health care law (PL 111-148, PL 111-152). The centers are part of a primary care infrastructure the White House is counting on to help make sure people can actually get health care under the overhaul.

Opponents can prevent the law's mandatory federal funding of the centers from continuing past Sept. 30, 2015, shutting off the billions of dollars in extra money the government has been paying to build new centers and expand existing ones. By doing so, they would also be able to force sharp cuts in the 8,000-strong cadre of enrollment counselors on center staffs helping to expand coverage under the health law.

But Hawkins said he sees important signs of progress in the association's campaign to keep center budgets from being slashed.

Under current law, the centers will only receive federal funding through discretionary spending starting in fiscal 2016. In fiscal 2015, they are slated to get $5.1 billion in federal grants to support some 1,300 centers serving some 23 million people. Of that, $3.6 billion is mandatory federal funding.

Losing that amount next fall—a tumble NACHC refers to as the "primary care funding cliff"—would be devastating, Hawkins says.

A letter last month from 66 senators, 17 of them Republicans, to Senate leaders warned that the fiscal 2015 falloff "could result in the closure of health center sites, layoffs of providers and staff, and most importantly, a loss of access to primary and preventive care for millions of patients who often have no other place to turn."

Centers "employ more than 150,000 people, and generate an economic impact in the billions in some of the nation's most economically deprived communities." the letter stated.

Two hundred and fifty House members, 71 of them Republicans, signed an identical letter to leaders of that chamber. An Oct. 28 letter to congressional leaders from some 100 provider, business, academic, consumer, and economic development groups similarly urged lawmakers to act during the lame duck "to address the looming shortfall."

At this point, support hasn't gelled for any specific proposal. "It's more conceptual," says Hawkins.

Negotiators searching for common ground face sobering budget constraints and, beyond their general expressions of support for centers, deep skepticism among Republicans about mandatory spending for the centers established by the health law.

"Republicans have historically supported community health centers, but we will have a hard time saving them from budget cliffs created as part of the ACA--a bill we had nothing to do with," said a Senate GOP aide. "It is difficult, though not impossible, to envision a scenario that received Republican support."

Falling back to discretionary spending of $1.5 billion would drop federal funding well below the level centers received before passage of the health law in 2010. That year, centers got $2.2 billion in discretionary spending. That sum was pared to $1.5 billion to fit under caps set by the 2011 budget control law (PL 112-5).

Getting back to $2.2 billion in discretionary spending in fiscal 2015 would require lifting budget caps or trimming $700 million from elsewhere in the budget. The changes would come at a time when the Ebola outbreak could persuade Congress to add more to the budget of the Centers for Disease Control and Prevention and find a way to hike spending for the National Institutes of Health.

The news may not be all bad for the centers. Coverage expansion under the health law means centers have more paying customers. Another piece of good news is that the $3.6 billion in mandatory funding this year is a sharp increase over fiscal 2014, when it stood at $2.2 billion.

But Hawkins says the reality is that without congressional action, centers will see a 70 percent drop in federal grants in fiscal 2016 from the loss of the $3.6 billion. That translates to about a fifth of the average health center's budget and would force closures and layoffs. "Tens of thousands" would lose their jobs, he said, and centers will be able to serve seven million fewer people.

Hawkins noted that centers not only deliver care but have staff that help people sign up for health coverage and other assistance programs. The 8,000 staff members involved in those activities comprise up to one quarter of navigators, assisters, and counselors who helped people line up coverage during last fall's first open enrollment period under the health law, he said.

The Obama administration has proposed continuing the mandatory funding mechanism of the health law for three more years. Mandatory funding would total $2.7 billion annually through fiscal 2018.

Another possible solution is to create a dedicated fund, outside of the health law, to direct mandatory spending. It could also address the expiration next fall of mandatory funding streams created by the health law for the National Health Service Corps and for primary care training in programs called Teaching Health Centers. The doctors who are part of the National Health Service Corps make up much of the staffing of community health centers, and that program does not have a separate funding stream of discretionary spending.

A third option on the table is relying purely on discretionary spending for community health centers, the National Health Service Corps and Teaching Health Centers.

It all adds up to a complex budget challenge with major political considerations—virtually every congressional district has a health center that constituents rely on for care. Hawkins says right now Hill offices aren't saying which of the approaches they prefer.

"They're interested and want to know more, but nobody is saying, 'Oh, that's the silver bullet right there,'" Hawkins said.