Friday, April 20, 2012

Jonathan Cohn tells the justices: the ACA has catastrophic coverage options

Jonathan Cohn, one of the foremost bloggers on the U.S. healthcare system and healthcare reform, has taken up the cudgels regarding the Supreme Court justices' apparent ignorance of catastrophic coverage options provided in the Affordable Care Act.  While Cohn is wary of catastrophic coverage on the merits, he regards the "bronze" plans, the cheapest option in the subsidized healthcare exchanges, as providing it, noting too that the ACA allows people under 30 (and others exempt from the mandate, I would add, e.g. those showing financial hardship) to buy catastrophic coverage more strictly construed.

Cohn does not think that the availability of catastrophic coverage in the ACA ought to matter on the legal merits, and there I would take partial issue with him. He writes:
Even if the Affordable Care Act didn’t have a catastrophic coverage option and established a higher standard for benefits, you could make the same constitutional arguments for it—that the law is a perfectly reasonable exercise of federal power to tax, regulate interstate commerce, and do what is “necessary and proper” for carrying out its duties.  
That might be true in a depoliticized legal vacuum.  But the plaintiffs' arguments plainly made a deep impression on Alito, Robert, Scalia -- and, somewhat more equivocally, on Kennedy, all of whom voiced various aspects of those arguments. And Michael Carvin's brief on the individual mandate hammered home relentlessly the claim that the mandate was "forcing healthy individuals to immediately start paying inflated premiums that exceed their actuarial risk" (p. 38); that the mandate would "compel the uninsured into engaging in economic activity that is harmful for them but beneficial to third parties" (p. 1), etc. etc. -- and the conservative justices seem to have bought this argument.

Moreover, Carvin's assertion that "the uninsured neither interfere with commerce or its regulation, nor engage in economic activity by failing to purchase insurance" (p. 29) hinges in part on his insistence that the uninsured are being forced to buy more insurance than they personally need, and to buy it when they don't need it, e.g., when they're young and healthy. But since everyone is at risk of serious illness and so needs some insurance if they are not to pass their healthcare costs to the general public, this argument is weakened if it can be shown that the insurance citizens are mandated to buy does not exceed the real or perceived needs of anyone.

It is therefore germane that Congress erected several hoops to limit the mandate to the minimum necessary, e.g., expanded Medicaid eligibility, the catastrophic option for those under 30 and those who can show hardship, and the quasi-catastrophic bronze plans, which cover only an estimated 60% of the average person's medical costs. The judges asked Verrilli for a "limiting principle" putting boundaries on Congress's power to compel activity from citizens. As I have argued before, the ACA is self-limiting insofar as the drafters minimized the mandate.

It is also possible that the notion of a minimal mandate could induce Justice Kennedy to preserve the ACA by limiting the mandate even further. Kennedy acknowledged two sides of the argument: that the extent of the mandate was troubling, but also that the uninsured "are in the market in the sense that they are creating a risk that the market must account for" (3/27 oral arguments, p. 70) and  "the young person who is uninsured is uniquely proximately very close to affecting the rates of insurance and the costs of providing medical care in a way that is not true in other industries" (p. 104).

Kennedy could divide the baby and limit the mandate to catastrophic coverage, effectively ordering Congress to make catastrophic coverage available to all. I raised this possibility in my 4/2 post, though I wondered whether it was legally plausible -- could the Court order Congress to change the law in a particular way? Marty Lederman, however, has suggested that it could:
Moreover, even if Randy and Mike Carvin were correct, and the preventive care coverage could not be justified under my proposed, or any other, limited holding, that would only mean that the Court should declare invalid those subsections of section 18022(b) that go beyond coverage for catastrophic care and other services that are government-guaranteed. Such an excision would likely have, at most, only a marginal impact on the cost of insurance premiums, since it is of course catastrophic and longterm care--the services the state and federal governments guarantee--that account for the lion's share of uncompensated health care costs, and of the cost of health insurance (my emphasis).
Perhaps, too, this could be done by order of the HHS. A Dec. 16 HHS bulletin seems to provide considerable wiggle room:

Allowing Plans Flexibility to Innovate and Consumers Greater Choice

To meet the EHB coverage standard, HHS intends to require that a health plan offer benefits that are “substantially equal” to the benchmark plan selected by the state and modified as necessary to reflect the 10 coverage categories. Health plans also would have flexibility to adjust benefits, including both the specific services covered and any quantitative limits, provided they continue to offer coverage for all 10 statutory EHB categories and the coverage has the same value.  Permitting flexibility will provide greater choice to consumers, promoting plan innovation through coverage and design options, while ensuring that plans providing EHBs offer a certain level of benefits.

Updating the Approach

The department intends to propose that benchmarks will be updated in the future, and that state mandates outside the definition of essential health benefits may not be included in future years. The Bulletin also notes that updating the benchmark will allow benefits to reflect the most up-to-date medical and market practices.
And so the megaphoning to Justice Kennedy continues: note the extensive limitations already placed on the individual mandate; limit it further if you must, but don't kill it -- and so kill the country's last best hope of extending coverage to all, and containing healthcare costs..

More on the mandate and catastrophic coverage
Michael Carvin misrepresented the mandate in oral argument
The ACA offers catastrophic coverage: the AP notices
The bounded, minimalist way to uphold the ACA (Marty Lederman at Balkinization)
Go tell the justices: the ACA has a catastrophic coverage option

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