The Future of Healthcare Reform in the United States

The Future of Healthcare Reform in the United States

The Future of Healthcare Reform in the United States

The Future of Healthcare Reform in the United States

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Overview

In the years since the passage of the Patient Protection and Affordable Care Act (PPACA, or, colloquially, Obamacare), most of the discussion about it has been political. But as the politics fade and the law's many complex provisions take effect, a much more interesting question begins to emerge: How will the law affect the American health care regime in the coming years and decades?

This book brings together fourteen leading scholars from the fields of law, economics, medicine, and public health to answer that question. Taking discipline-specific views, they offer their analyses and predictions for the future of health care reform. By turns thought-provoking, counterintuitive, and even contradictory, the essays together cover the landscape of positions on the PPACA's prospects. Some see efficiency growth and moderating prices; others fear a strangling bureaucracy and spiraling costs. The result is a deeply informed, richly substantive discussion that will trouble settled positions and lay the groundwork for analysis and assessment as the law's effects begin to become clear.



Product Details

ISBN-13: 9780226255002
Publisher: University of Chicago Press
Publication date: 10/15/2015
Sold by: Barnes & Noble
Format: eBook
Pages: 352
File size: 1 MB

About the Author

Anup Malani is the Lee and Brena Freeman Professor at the University of Chicago Law School and professor at the Pritzker School of Medicine. Michael H. Schill is president of the University of Oregon.


Read an Excerpt

The Future of Healthcare Reform in the United States


By Anup Malani, Michael H. Schill

The University of Chicago Press

Copyright © 2015 The University of Chicago
All rights reserved.
ISBN: 978-0-226-25500-2



CHAPTER 1

Postmortem on NFIB v. Sebelius

Early Reflections on the Decision That Kept the ACA Alive.

Carter G. Phillips and Stephanie P. Hales


Introduction

But for one vote by one Justice of the Supreme Court, there would be no reason for any discussion of healthcare under the Affordable Care Act (ACA). Chief Justice Roberts's surprising opinion not only gives life to this symposium, but along with the other opinions by the various Justices serves as a useful context for beginning the process of looking to the future. This essay thus discusses the U.S. Supreme Court's decision in National Federation of Independent Business v. Sebelius and its implications going forward.

That the Supreme Court's decision upholding the ACA bears on "The Future of Health Care Reform in the United States" is beyond doubt. Less clear at this time, however, are the precise form and contours of this impact — both in the particular space of healthcare reform and in the broader realm of Supreme Court jurisprudence addressing the scope of congressional power. But being lawyers, a lack of clarity begins our discussion rather than ends it.

Indeed, this discussion was originally pitched to us as a "postmortem," which is a somewhat strange way to think about an opinion that as of the date of this conference (October 12, 2012) had been public for less than four months, and as such was decidedly not dead. Even as of this writing, the yet-recent decision is very much alive. And thanks to it, so is the ACA. Thus, this essay is more a general analysis of the decision than a postmortem in the literal sense.

We begin with an overview of the decision, featuring three main opinions with a host of unexpected and in many ways remarkable elements. We then discuss the three primary doctrinal areas of the Court's decision: (1) its analysis of ACA's "individual mandate" under the Commerce Clause, (2) its approval of the "individual mandate" under Congress's taxing authority, and (3) its ruling on ACA's Medicaid expansion provisions. Although a relatively short period of time has passed since the decision was announced, it paved the way for continued ACA implementation, which has proceeded along aggressive timelines (particularly following the reelection of President Obama in November). Thus, while appreciating that these implementation efforts are ongoing and in flux, and that additional challenges to the ACA continue to wind their way through the courts, we discuss not only what the Court held and our thoughts on why it did so, but also a few observations on how the Court's decision appears to be affecting (or not) ACA implementation to date.

The decision's impact beyond the realm of healthcare reform likewise remains to be seen. Throughout the decision, the Court draws a number of distinctions that we imagine only lawyers can love, many of which center on — but do not clearly define the boundaries of — the concept of "coercion": At what point does an act of Congress become too coercive, either with respect to individuals or to the states, to withstand constitutional scrutiny? In many ways, the Justices' opinions in NFIB v. Sebelius raise far more questions on this issue than they answer, planting seeds for continued constitutional litigation over where to draw lines.


Did Anyone Predict This?

Many people expected that the ACA would survive the Court's review (although we suspect that just as many felt certain it would not after the oral argument). But did anyone predict the constellation of elements in the decision that culminated in that result? Probably not.

First, the Justices split into three main opinions, including an opinion written by Chief Justice Roberts only for himself.

Second, the Chief Justice's opinion was joined in certain places by the four liberals, in the opinion authored by Justice Ginsburg,2 and not at all by the four dissenting conservatives;3 although they clearly agreed with some portions of the Chief Justice's analysis, remarkably, the four conservatives never even mentioned his opinion in their dissent.

Third, the dissent coauthored by the four conservatives has no individually named author. This is an extraordinary step that is exceedingly rare. Perhaps even more provocatively, and as noted, this dissent with no individually named author never mentions, let alone addresses, the analysis in the Chief Justice's opinion. Even Justice Ginsburg, at various times — both when she joined with it and when she did not — at least acknowledged and did business with aspects of the Chief Justice's opinion, as is customary in separate opinions written by individual members of the Court on their own behalf or for one or more other Justices. She also dealt with the four conservatives' dissenting analysis (and notably, they dealt in some places with hers).

Fourth, the Chief Justice was a "swing vote," and further, was the lone swing vote; Justice Kennedy, the usual swing-vote suspect, obviously chose not to join the Chief on any point.

Fifth, the individual mandate was upheld — but not on Commerce Clause grounds.

Sixth, the Chief Justice included an in-depth opinion analyzing the individual mandate under the Commerce Clause, even though that issue was upheld under Congress's taxing power, which made it completely unnecessary to address the Commerce Clause issue.

Seventh, the Court held both that the individual mandate "penalty" is not a tax (jurisdictionally speaking) and is a tax (constitutionally speaking). This, of course, is a distinction only a lawyer can love.

Eighth, the Medicaid expansion ruling was in many ways a "sleeper" issue that few people paid much attention to prior to the Court's ruling; yet it produced an unprecedented result, in that the Court found (7 to 2, no less) unconstitutional "coercion" by Congress in connection with financial incentives provided to states under Spending Clause legislation designed to encourage the states to adopt certain programs. Although precious few people predicted this result, and perhaps no one predicted the nuanced outcome of rendering the Medicaid expansion "optional" for states while not striking down those provisions altogether — and, further, preserving every other aspect of the ACA — this ruling could have significant implications for cooperative federalism moving forward, both within and outside of the healthcare industry. Then again, perhaps it will not, as discussed further below. Time alone will tell.

The balance of this essay addresses, briefly, the elements of the decision, how it came out, and the impact it may have moving forward for healthcare policy and in other contexts. Particularly for conversations about structural healthcare reform going forward, it is important to understand the metes and bounds of the Court's decision, and in some ways to try to figure out how it will play out in practice and how long it will survive. To be sure, challenges to the ACA remain ongoing,4 but as its implementation plunges forward in the meantime, with NFIB v. Sebelius in place as the law of the land, the decision is a crucial one for policymakers and constitutional advocates to assess and understand.


The Commerce Clause: Constitutional Avoidance of "the Broccoli Horrible"

A. Context for the Individual Mandate

A central feature of the ACA, and certainly the headlining issue in NFIB v. Sebelius, is the individual mandate (or as the statute calls it, the "individual responsibility" requirement "to maintain minimum essential coverage"). This provision requires that everyone — with certain exceptions, but virtually everyone — must buy healthcare insurance, or else pay what is called a "penalty," although the assessment is codified in the Internal Revenue Code. The question is: can Congress impose that requirement in the context of an economy that is about one-fifth driven by healthcare costs and under circumstances in which we think everybody would concede that the system, if not broken, is certainly not functioning as efficiently as we might hope that it could?

Faced with those circumstances, Congress took what many view as the extraordinary action to impose the individual mandate as part of a complex and intricate legislative package designed to fix — or at least begin to address — an extremely inefficient and, many would argue, dysfunctional healthcare system. To be sure, the individual mandate is just one component of the ACA, a statute that consists of two public laws consuming more than 950 pages in addition to subsequent amendments that have enacted further technical and substantive changes to its provisions. Congress, in other words, was attempting in the ACA to deal with countless parts of the healthcare system, and the result is a complicated, intertwined web of provisions addressing more issues than most can imagine. To name only a small sample, the ACA includes provisions increasing reimbursement for primary care providers in Medicaid; addressing fraud and abuse in government healthcare programs; creating and funding preventative healthcare services and programs; closing the Medicare Part D "donut hole" to increase seniors' access to affordable prescription drugs; providing grants for minority health workers; amending the Fair Labor Standards Act to require a reasonable break time for nursing mothers; establishing new annual fees and excise taxes for health insurers, pharmaceutical manufacturers, and medical device manufacturers; and authorizing dozens of demonstration projects and other initiatives pertaining to healthcare payment and delivery reforms.

Within this context of trying to fix countless different moving parts, Congress also addressed (again through many provisions, including but certainly not limited to the individual mandate) the current functioning of the health insurance market, which renders coverage unattainable for a substantial proportion of the population due to financial constraints, preexisting conditions, or both. Congress did not seek a "single payer" solution, as some countries have implemented; instead, it sought to preserve the private market to the extent possible, including its feature that most Americans rely on employer-sponsored health insurance, particularly those under age sixty-five (i.e., those who do not qualify for Medicare, the country's very popular single-payer healthcare system for the elderly and individuals with certain disabilities). In doing so, Congress considered the context and essentially said, "Look, we need to have people in the health insurance market in order to make the system work; health insurance is meaningless if those who are sick are shut out of the market; further, the market cannot be sustained if those who are not sick choose to 'opt out' of the market until the point at which they do get sick." This was not a new idea, and indeed its origins came ideologically from the right, not the left.

Congress clearly understood that its mandate decision would draw scrutiny, as it included comprehensive findings within the legislation as to this issue's effect on the national economy and interstate commerce. In these findings, Congress stated that "[t]he individual responsibility requirement provided for in [the ACA] is commercial and economic in nature, and substantially affects interstate commerce, as a result of the effects described in paragraph (2)"; paragraph (2) then sets forth, in eight subparagraphs, Congress's explanation for why the individual mandate substantially affects interstate commerce. As a further point, the legislation adds that "[i]n United States v. South-Eastern Underwriters Association (322 U.S. 533 (1944)), the Supreme Court of the United States ruled that insurance is interstate commerce subject to Federal regulation."

These provisions plainly are designed to justify the individual mandate as a valid exercise of the Commerce Clause under existing Supreme Court precedent. And, Congress added, the mandate would be enforced through what the legislation calls a penalty. In describing the consequence of noncompliance as a penalty and not a tax, Congress apparently was not anticipating the argument upon which the Court ultimately would uphold the individual mandate — Congress's taxing authority. We address the tax issue further below. To stay with the Commerce Clause for the moment, however, the key question is: can Congress impose the individual mandate as a valid regulation of commercial and economic activity under Article I, Section 8, Clause 3 of the Constitution?


B. A Brief Overview of Commerce Clause History

As two students of constitutional law (or so we thought), we both learned from the Chief Justice's decision that what we thought we knew about constitutional law perhaps is not as obvious as we had come to believe. In particular, we would have thought that under the Court's decision in Wickard v. Filburn, decided more than sixty-five years before NFIB v. Sebelius and still on the books, there was no question that Congress had the authority to impose the individual mandate as codified — because, frankly, there are effectively no limits on what Congress can do so long as it is regulating economic activity.

In Wickard, a farmer, Roscoe Filburn, was growing wheat on his farm for his own family's consumption. The U.S. government had established limits on wheat production as part of a scheme for controlling wheat supply and therefore prices during the Great Depression. Filburn was growing more wheat than the laws permitted and was ordered to destroy his crops and pay a fine, even though he was growing the excess wheat for his own consumption and had no intention of selling it. In other words, Filburn argued, his activity was neither "interstate" nor "commerce." (He was "inactive" in the commercial wheat market.) The Court did not agree, finding instead that Filburn's wheat-growing activities affected the amount of wheat he otherwise would buy on the open market, and thus were affecting interstate commerce. The issue, the Court held, was not whether the activity was "local" but rather whether the activity "exerts a substantial economic effect on interstate commerce."

As an interesting sidelight to this, a scholar on Justice Robert H. Jackson — who wrote the opinion in Wickard for a unanimous Court — found a letter exchange between Justice Jackson and a Seventh Circuit judge. The judge had criticized Justice Jackson for his opinion in Wickard, stating that the decision provided no meaningful guidance to the lower courts or to litigants about how to proceed under the Commerce Clause. Justice Jackson reportedly wrote back and essentially said, "Well, that is because I can't conceive of any way to articulate any limits, and so I leave it basically to the good judgment of Congress to decide ultimately." And that is effectively what the Wickard opinion reflects — which at least through about the 1990s was the way that nearly everybody thought about Congress's authority. You could (as many do) question the wisdom of what Congress had done, but so long as the action related to regulating economic activity in some way, it was not for the courts to decide whether it was constitutional or not, at least under the Commerce Clause.

Now, there were exceptions to that general rule, most notably articulated in United States v. Lopez (1995) and United States v. Morrison (2000). In Lopez, Congress was told that there are limits to what it can do — and, for the first time since the New Deal, a provision was struck down as exceeding those limits. In the context of that case, the Court held that Congress could not, under the Commerce Clause, prohibit a person from possessing a gun within a certain distance of a school. The theory was that no form of economic activity was involved, and that the relationship between the conduct and interstate commerce was so attenuated as to be insufficient; to reach the necessary link would require "pil[ing] inference upon inference in a manner that would ... convert congressional authority under the Commerce Clause to a general police power of the sort retained by the States." Therefore, the Court held (in a 5 to 4 decision authored by then–Chief Justice Rehnquist) that this was too far to go and struck down the relevant statute. Even in doing so, however, the Court upheld the general framework of Wickard — namely, that there are three broad categories of activity that Congress may regulate under the Commerce Clause: (1) the channels of interstate commerce; (2) the instrumentalities of interstate commerce, or persons or things in interstate commerce; and (3) activities that substantially affect or substantially relate to interstate commerce.


(Continues...)

Excerpted from The Future of Healthcare Reform in the United States by Anup Malani, Michael H. Schill. Copyright © 2015 The University of Chicago. Excerpted by permission of The University of Chicago Press.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Table of Contents

Introduction
Michael H. Schill and Anup Malani

PART 1. ACA and the Law
Chapter 1. Postmortem on NFIB v. Sebelius: Early Refl ections on the Decision That Kept the ACA Alive
Carter G. Phillips and Stephanie P. Hales
Chapter 2. Federalism, Liberty, and Risk in NFIB v. Sebelius
Aziz Z. Huq
Chapter 3. The Future of Healthcare Reform Remains in Federal Court
Jonathan H. Adler
Chapter 4. Essential Health Benefi ts and the Affordable Care Act: Law and Process
Nicholas Bagley and Helen Levy

PART 2. ACA and the Federal Budget
Chapter 5. The Fiscal Consequences of the Affordable Care Act
Charles Blahous
Chapter 6. Estimating the Impact of the Demand for Consumer-Driven Health Plans Following the 2012 Supreme Court Decision of the Constitutionality of the Patient Protection and Affordable Care Act
Stephen T. Parente

PART 3. ACA and Healthcare Delivery
Chapter 7. After the ACA: Freeing the Market for Healthcare
John H. Cochrane
Chapter 8. Obamacare and the Theory of the Firm
Einer Elhauge
Chapter 9. Can Federal Provider Payment Reform Produce Better, More Affordable Healthcare?
Meredith B. Rosenthal

PART 4. Healthcare Costs, Innovation, and ACA
Chapter 10. The Role of Technology in Expenditure Growth in Healthcare
Amitabh Chandra and Jonathan Holmes
Chapter 11. Economic Issues Associated with Incorporating Cost-Effectiveness Analysis into Public Coverage Decisions in the United States
Anupam B. Jena and Tomas J. Philipson
Chapter 12. The Complex Relationship between Healthcare Reform and Innovation
Darius Lakdawalla, Anup Malani, and Julian Reif

PART 5. ACA and Health Insurance Markets
Chapter 13. The Affordable Care Act and Commercial Health Insurance Markets: Fixing What’s Broken?
James B. Rebitzer
Chapter 14. A Cautionary Warning on Healthcare Exchanges: A Plea for Deregulation
Richard A. Epstein
List of Contributors
Index
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