1 (888) 402-3465

Our Take: DOJ changes course: Entire ACA should be struck down

Apr 01, 2019

The Trump administration made a bold move Monday, with the Department of Justice (DOJ) issuing a letter stating that it agrees with a federal judge who struck down the entire Affordable Care Act (ACA) as unconstitutional.

In February 2018, Republican officials in 20 states initiated a lawsuit asserting that the entire law should be stricken because Congress repealed the fines associated with the individual mandate in a tax bill. In December, Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas ruled the ACA unconstitutional, specifically because of the individual mandate. The case now sits before the U.S. Court of Appeals for the Fifth Circuit.

A coalition of states and House Democrats intervened in the case and hired former U.S. Solicitor General Donald Verrilli Jr. to defend the law. Verilli successfully argued for the Obama administration in the 2012 Supreme Court case.

A day after the DOJ sent its letter to the appellate court, House Democrats introduced the Protecting Pre-existing Conditions & Making Health Care More Affordable Act. Among other changes, the legislation expands exchange subsidies for more middle-income Americans; reverses some administrative changes that undermine the law; prohibits the final rule on short-term plans; and provides funding for navigators, marketing and outreach, as well as state-based reinsurance programs.

More than 25 national advocacy organizationcame out in support of the legislation, while condemning the Texas suit and the DOJ’s position on refusing to defend the ACA.

In related news, a federal judge Thursday struck down a Department of Labor rule expanding access to association health plans (AHPs). The rule was developed to address an October 2017 executive order from President Trump that directed the federal government to expand access to AHPs and short-term, limited-duration health plans. U.S. District Judge John Bates said major provisions of the rule were “clearly an end-run around the ACA.”

Our Take: We, like the majority of pundits and pols on both sides of the aisle this week, are scratching our heads over the announcement by Trump and the DOJ. A full repeal of the ACA, without having something substantial to replace it, would be cataclysmic to the U.S. health care system.

Despite its flaws (and there are plenty to discuss in another forum), to understand what the ACA has accomplished is to imagine what would be taken away in its absence. Without Medicaid expansion13.6 million people would lose their health insurance. Without the ACA exchanges, 11.8 million would also find themselves without coverage for health care. As for pre-existing conditions, the Kaiser Family Foundation estimates that 52 million adults—27% of adult Americans under the age of 65—would be rejected for coverage under practices that existed in nearly all states before the ACA.

There would be no cap on out-of-pocket costs, and lifetime limits on coverage would again be permitted. Young adults under the age of 26 would no longer have coverage through their parents’ insurance plans. And insurance companies could return to charging people more for coverage based on their sex, age or profession.

Oh, and those Medicare ACOs, CMS bundles and other programs that followed the ACA through the CMS Innovation Center? It isn’t clear what would happen to such initiatives in the absence of the law, which gives CMS the authority to have such programs in place.

By the way, those and other incentive programs have been integrated into the workflow in health systems and physician groups across the country. Eliminating them would wreak havoc on their operations.

We presume that Trump’s move is designed to force lawmakers to come up with an Obamacare alternative. But with a divided Congress, that’s not going to happen. As Sen. Lamar Alexander, R-Tenn., put it, “We couldn’t repeal [Obamacare] and replace with a Republican House.”

We haven’t read the Democrats’ legislation, but we did have time to read the one-pager. Most of it makes good common sense and directly addresses much of what the Trump administration has done to undermine the ACA.

House Democrats have little chance of seeing their bill brought up for a vote by Sen. Mitch McConnell, unless he wants to stick it to President Trump. (Sen. McConnell, meanwhile, is staying as far away as possible from Trump’s declaration, telling Politico, “I look forward to seeing what the president is proposing and what he can work out with the speaker.”)

For that matter, why would Republicans sign on to legislation that would improve the ACA and erase the work they’ve done over the last two years to undermine it?

The last time the ACA was before the Supreme Court—which is where the Texas case will ultimately land—Chief Justice John Roberts was the swing vote. He upheld the individual mandate under Congress’ taxing power, some say through a bit of legal jujitsu to save the fate of the ACA. It is unclear how Chief Justice Roberts will address the challenge if and when the ACA is before him again.

Nine years in, Obamacare has become a foundational, integral part of our health care system. As Nicholas Bagely, professor of law at The University of Michigan Law School, wrote this week: “[The ACA] is now part of the basic plumbing of the American health care system.”

Rather than eliminate it, lawmakers should set their sights on fixing the parts that are broken.

What else you need to know
Centene Corp. announced that it will acquire WellCare Health Plans in a cash and stock deal valued at $17.3 billion. The combined entity will cover 22 million members across 50 states, including 12 million Medicaid members, 5 million Medicare beneficiaries and an estimated 5 million individuals served through the ACA exchanges or the military’s TRICARE program. The new entity will be led by Centene CEO Michael Neidorff. The deal is subject to shareholder and customary regulatory approval.

Dignity Health launched an in-house specialty pharmacy on Tuesday through a joint venture with Shields Health Solutions, a specialty pharmacy integrator. In a press release, Dignity said more than 20 disease states are eligible for Dignity Health’s enhanced clinical pharmacy program, including arthritis, cancer, cystic fibrosis, multiple sclerosis, transplants and other chronic conditions. The specialty pharmacy program will be located at Dignity’s flagship hospital, St. Joseph’s Hospital and Medical Center in Phoenix, and will serve as a hub for other Dignity hospital locations.

The state of Louisiana is working with a Gilead Sciences subsidiary for a “Netflix”-style, subscription-based contract to supply the state with a hepatitis drug. Under the model, the state will pay a fixed, monthly amount for unlimited access to medication. Asegua Therapeutics, Gilead’s new generics business, will provide the state with an authorized version of Epclusa (sofosbuvir/velpatasvir), Gilead’s best-selling hepatitis C treatment. Louisiana said it hopes to have the deal signed by June 1 and launched by July 1. The contract is expected to be for five years.

Eli Lilly released a report Monday on its insulin pricing in the wake of increased scrutiny from lawmakers concerning escalating insulin prices, The Wall Street Journal reported. The company said the price of its Humalog (insulin lispro), after rebates and discounts, was $135 per month in 2018, down from $147 in 2014—an 8% decrease. During the same period, the medication’s list price rose 51.9% to $534 per month. Critics say that although the analysis shows that most patients saw a slight decrease in price, higher list prices affect the uninsured disproportionately and causes them to ration their insulin doses.

What we’re reading

Contact Darwin Research Group and we will get right back to you.