A Reconfigured U.S. Supreme Court: Implications for Health Policy

U.S. Supreme Court decisions shape health policy in important ways. The nomination of Judge Amy Coney Barrett, if confirmed, is expected to establish a solid 6:3 conservative majority that could affect case outcomes in several areas. This issue brief considers the potential implications of a reconfigured Court for health policy issues, including those already on the Court’s docket for the coming term and those that the Court may choose to consider in this term or in the future:

• The future of the ACA: The Court will decide California v. Texas, a case that could determine whether the entire Affordable Care Act can continue, with significant implications for the U.S. health care system and virtually every American. Oral argument is scheduled for November 10, 2020.
• Cases requesting Supreme Court review:
  • Abortion: The Court may decide to consider one or more cases that could overturn the precedent of Roe v. Wade, alter the standard to evaluate whether abortion regulations are constitutional, or decide that abortion providers cannot sue to challenge abortion regulations.
  • Title X: The Court is likely to want to resolve conflicting appeals court decisions about whether the Trump Administration Title X Federal Family Planning regulations that prohibit federal funding to clinics that offer or refer for abortion are permissible under federal law.
  • Medicaid enrollees’ free choice of provider: The Court will decide whether to hear a case about whether Medicaid enrollees can sue to challenge a state’s refusal to allow Planned Parenthood to offer Medicaid services if that provider also separately offers abortion services (which are not covered by Medicaid). Federal appeals courts are split on this issue. The case has implications for enrollees’ ability to bring lawsuits challenging state violations of federal Medicaid law as well as enrollees’ free access to providers.
  • Medicaid work requirements: The Court will decide whether to hear cases about whether the HHS Secretary can approve Section 1115 waivers that condition Medicaid eligibility on meeting work and reporting requirements, which have led to over 18,000 people losing coverage in Arkansas.
• Cases that could reach the Supreme Court:
  • Payment of ACA cost-sharing reductions to insurers: The Court could be asked to hear cases brought by Marketplace insurers seeking unpaid cost-sharing reductions (CSRs) from the Trump Administration. Restoring CSR payments could lower Marketplace premiums and federal costs and improve affordability for individuals who do not qualify for Marketplace premium tax credits.
  • Nondiscrimination in health coverage and care: The Court could be asked to review cases challenging the Trump Administration’s rollback of regulations implementing ACA Section 1557, which bans discrimination in health programs and activities that receive federal funding. Issues include whether discrimination based on gender identity is prohibited and the extent to which individuals and entities are exempt from discrimination claims based on religious freedom.
  • Public charge rule: The Court could be asked to review cases challenging the Trump Administration’s regulations that prevent individuals from obtaining a green card or entering the U.S. if they are determined likely to use certain public programs, including Medicaid. The regulations are likely to lead to decreased participation in Medicaid by immigrant families and their primarily U.S. born children.
  • Hospital price transparency rule: The Court could be asked to hear a challenge to the Trump Administration’s regulations requiring hospitals to disclose their negotiated rates with insurers. The Administration argues that the regulations could lead to lower costs for consumers. However, if the Supreme Court accepts the argument, supported by the Trump Administration, that the entire ACA is invalid, Congress would need to pass new legislation before any price transparency regulations could be adopted.

Introduction

Along with legislation and administrative agency actions, U.S. Supreme Court decisions shape health policy issues in important ways. In the upcoming October 2020 term, the Court will hear a case involving the Affordable Care Act’s (ACA) survival. It also will decide whether to review cases involving abortion, Title X, Medicaid enrollees’ free choice of provider, and Medicaid work requirements. Other cases affecting health policy may reach the Court, such as payment of ACA cost-sharing reductions to Marketplace insurers, whether gender identity and sexual orientation are prohibited bases of discrimination in health care, issues affecting immigrants’ access to health coverage under the public charge rule, and regulations requiring hospital price transparency. With the exception of the abortion cases, all of these cases involve federal regulations and laws and could become moot if the administration and congressional majorities change. For example, if Congress raises the tax above zero dollars for failure to comply with the individual mandate, the question raised in the ACA case could become moot before the Supreme Court issues a decision.

Members of the Court, including Chief Justice John Roberts, reject the assertion that judicial decisions may be motived by particular political party’s ideology. Still, analysis of the justices’ voting patterns reveals a spectrum with those appointed by Democratic Presidents typically supporting positions characterized as liberal and those appointed by Republican Presidents typically supporting positions characterized as conservative. As with any generalization, there can be exceptions, as the issues before the Court and its composition evolve over time. Even so, the recent death of Justice Ruth Bader Ginsburg and the nomination of Judge Amy Coney Barrett, if confirmed, to fill the empty seat is expected to establish a solid 6:3 conservative majority that could affect case outcomes in a number of areas.¹ This issue brief considers the potential implications of a reconfigured Court for key health policy issues, including the ACA case, scheduled to be heard November 10, 2020, and cases the Court may choose to consider this term or in the future.

The Supreme Court Will Decide the Future of the ACA

The Court will once again consider the survival of the Affordable Care Act (ACA) in California v. Texas, a case with far-reaching consequences, affecting nearly every American in some way.² Currently scheduled for oral argument on November 10, 2020, the case challenges the constitutionality of the ACA’s individual mandate and asks the Court to decide whether the entire law can continue. A group of Republican-led states and two individuals who have purchased Marketplace coverage argue that, because Congress reduced the payment for failure to comply with the individual mandate to zero dollars, the mandate is no longer a constitutional tax. They further argue that the rest of the law is not severable from the mandate, so the entire ACA must be invalidated as a result. Notably, the Trump Administration is not defending the ACA. Instead, the Administration is arguing that the entire ACA is invalid, though it is asking the Court to prohibit it from enforcing only the provisions that ultimately are found to harm the individual plaintiffs.

A decision by the Court invalidating all or even some of the ACA would have significant implications for the U.S. health care system and virtually every American. At stake are the ACA’s changes to the individual insurance market, including protections for people with pre-existing conditions, restrictions on premium surcharges based on health or gender, coverage of essential benefits, insurance marketplaces, and premium subsidies for people with low and modest incomes. Overturning the ACA could also roll back other changes throughout the health care system including expanding Medicaid eligibility for low-income adults; requiring private insurance, Medicare, and Medicaid expansion to cover preventive services with no patient cost sharing; phasing out the Medicare prescription drug doughnut hole coverage gap; reducing the growth of Medicare payments to health care providers and insurers; establishing new national initiatives to promote public health, care quality, and delivery system reforms; and authorizing a variety of tax increases to finance these changes.

Cases Requesting Supreme Court Review

There currently are cases in three key health policy cases requesting certiorari, for the Supreme Court to accept the case to review this term. Four justices must vote to accept a case.

Abortion

If the Court accepts a case involving abortion, the precedent of Roe v. Wade could be overturned or states could be granted more authority to restrict abortion access or doctors could lose the ability to sue to challenge abortion regulations.  Among the most contentious issues in the country right now is abortion. There are two abortion cases the Supreme Court is currently considering whether to hear.

The first case is Thomas E. Dobbs, State Health Officer of the Mississippi Department of Health  v. Jackson Women’s Health Organization. This case involves a Mississippi law, House Bill 1510, Gestational Age Act, banning all abortions over 15 weeks’ gestational age except in medical emergencies and in the case of severe fetal abnormality. The Court’s ruling could allow states to restrict abortions by directly overturning Roe v. Wade, establishing a new standard to evaluate state restrictions with more deference to state legislatures, or overturning the long held precedent that abortion doctors and clinics have the right to bring lawsuits to challenge abortion regulations on behalf of their patients (third-party standing). If the Court overturns Roe v. Wade, 15 states have laws in place that would immediately ban abortion. If the Court allows more deference to states on restricting abortions, patients may not be able to access abortion in many states. If the Court decides that doctors and clinics no longer have the right to challenge abortion regulations on behalf of their patients (third-party standing), abortion would remain a constitutional right, but many unconstitutional abortion regulations may go unchallenged. Women seeking abortions often must overcome numerous obstacles, including financial limitations, and concerns for privacy and personal safety, that would make it difficult for them to assert their constitutional rights and challenge an abortion restriction. This could have far-reaching implications for other cases where third-party standing has been recognized including physicians’ ability to challenge laws on behalf of their patients’ rights to privacy for contraception, and to obtain mental health services.

The second case at the Supreme Court is Food and Drug Administration v. American College of Obstetricians and Gynecologists. In this case, the FDA is requesting that the Court lift the national injunction issued by the United States District Court of Maryland preventing the FDA from enforcing the Risk Evaluation and Mitigation Strategies (REMS) requirements for mifepristone, the abortion medication, during the COVID-19 pandemic. The REMS only permit medical providers who have received special certification from the manufacturer to prescribe and dispense the drug which limits access to abortion during the emergency. On October 8, 2020, the Supreme Court directed the FDA to request that the district court to lift or modify the preliminary injunction before the Supreme Court rules on the issue. It is possible that this unusual order to not rule on the stay until the FDA requests the district court to reconsider the scope of the injunction may reflect a compromise when there are only eight justices. When the case comes back to the Supreme Court, there will likely be nine justices. While this case could be limited to the availability of mifepristone during the pandemic, the case could have broader implications because the Solicitor General is requesting that the Court accept this case in order to clarify the legal standard that should be applied to determine if abortion regulations are constitutional.

Title X Family Planning Regulations

To resolve a split between the 9th Circuit Court of Appeals and the 4^th Circuit Court of Appeals, the Court will likely consider a case challenging the Trump Administration’s Title X regulations. These regulations effectively block the availability of Title X grants to family planning clinics that offer abortion services with other non-federal funds, curtail counseling, ban Title X projects from making referrals to abortion services, and require all pregnant patients served by Title X clinics to be referred for prenatal services, regardless of their pregnancy intention.

The Court’s decision could uphold the regulations, which have resulted in 29% of the Title X family planning sites to leave the Title X Program and six states to completely withdraw from the program. This would likely affect the availability of affordable family planning services to low-income people in many parts of the country. Eight lawsuits challenging the regulations were filed in federal court. There is a split in decisions between the 4th Circuit Court of Appeals, which held that the regulations are arbitrary and capricious and contrary to law, and the 9th Circuit Court of Appeals, which allowed the regulations to go into effect. The regulations are currently blocked in Maryland, but in effect in the rest of the county. The American Medical Association, Oregon Medical Association, Planned Parenthood Federation of America, National Family Planning and Reproductive Health Association, and Essential Access Health, Inc. have petitioned the Court to review the case from the 9^th Circuit to resolve the circuit split. The Oregon Attorney General with 21 other Attorneys General separately petitioned the Court to review the case from the 9^th Circuit. HHS has also petitioned the Court to review the case from the 4^th Circuit. Many provisions in the Trump Administration’s regulation mirror those issued in 1988 by the Reagan Administration. In 1991, the Supreme Court upheld the Reagan regulations in the case, Rust v. Sullivan.

The petitioners asking for review from the 9^th Circuit argue that the applicable law has changed, and that Rust v. Sullivan is not controlling. The Court’s ruling about the future of the ACA may ultimately impact the decision for the Title X case. One of the key arguments for those challenging the regulations is based on the violation of Section 1554 of the ACA, which states that HHS shall not promulgate any regulations that create any unreasonable barriers to the ability of individuals to obtain appropriate medical care or restricts communications between a doctor and a patient. They contend that these Title X regulations create barriers to and restrict patient-doctor communication. However, HHS contends that Rust v. Sullivan is controlling and that the agency has the statutory authority to promulgate these regulations.

Medicaid Enrollees’ Free Choice of Provider

The Court will decide whether to hear Baker v. Edwards, a case about whether Medicaid enrollees can sue to challenge a state’s refusal to allow a provider to participate in Medicaid if that provider also separately offers abortion services (not covered by Medicaid). Federal law requires states to allow Medicaid enrollees to obtain covered services from any qualified willing provider. South Carolina’s Medicaid agency terminated Planned Parenthood as a Medicaid provider after the governor issued an executive order declaring that providers are “unqualified” to participate in Medicaid  if they also offer abortion. Planned Parenthood and one of its Medicaid patients sued to challenge this state action, and the lower court issued a preliminary injunction allowing Planned Parenthood to continue as a South Carolina Medicaid provider while the case is pending. The Fourth Circuit Court of Appeals found that a Medicaid enrollee has the right to sue in federal court to enforce Medicaid’s free choice of provider requirement. The Medicaid Act itself does not explicitly authorize third parties, like Medicaid enrollees, to sue to enforce its provisions. However, the Fourth Circuit Court of Appeals found that the enrollee can sue under federal civil rights law, Section 1983, which allows individuals to bring federal lawsuits to challenge state actions that deprive them of rights provided under federal law. The Fourth Circuit joins the Fifth, Sixth, Seventh, Ninth, and Tenth Circuit Courts of Appeals in upholding a Medicaid enrollee’s right to sue to enforce the free choice of  provider provision, while the Eighth Circuit Court of Appeals has ruled that Medicaid enrollees cannot bring these lawsuits.

If the Court rules that the enrollees cannot sue to enforce the free choice of provider provision, state rules restricting provider participation in Medicaid may go unchallenged. Medicaid enrollees have often sued as third parties to enforce the free choice of provider provision. Removing the ability of enrollees to sue also eliminates the availability of an injunction to allow providers to continue to participate in Medicaid while the merits of a case are decided. In an earlier case, former CMS administrators explained that the agency does not have the resources to investigate all potential violations of federal Medicaid law and relies on third parties like Medicaid enrollees to bring lawsuits to challenge state actions. If unchallenged, state actions restricting enrollees’ free choice of provider can limit enrollees’ access to covered services. Planned Parenthood in South Carolina provides Medicaid enrollees services including physical exams, cancer screening, contraception, pregnancy testing, and screening for chronic conditions such as diabetes, depression, anemia, cholesterol, thyroid disorder, and high blood pressure.

Medicaid Work Requirements

The Court will decide whether to hear Azar v. Gresham and Azar v. Philbrick, cases about whether the Health and Human Services Secretary can approve Section 1115 demonstration waivers authorizing Medicaid work requirements and other restrictive provisions.³ The Trump Administration is seeking review of a unanimous DC Circuit Court of Appeals decision which found that the Secretary’s waiver approval in Arkansas was unlawful because he failed to consider the impact on coverage as required by the statute.⁴ The Administration also is seeking review of a second appeals court decision in which the court concluded that the reasoning of its Arkansas decision required a similar outcome in a case challenging a New Hampshire waiver approval.

Court decisions about the bounds of the Secretary’s Section 1115 authority not only determine the legality of Medicaid work requirements in Arkansas and New Hampshire, but also could have implications for similar waivers in other states and the Secretary’s discretion in approving waivers more broadly. To date, Arkansas is the only state to have implemented a waiver that conditioned Medicaid eligibility on meeting a work and reporting requirement, with significant effects on enrollees. Before Arkansas’ waiver was set aside by a lower court, over 18,000 Medicaid enrollees lost coverage in that state. The Trump Administration has continued to expand the bounds of the Secretary’s Section 1115 authority, issuing guidance inviting states to apply for new waivers that would impose work requirements and other eligibility and benefit restrictions in exchange for a federal financing cap, and currently is considering a “modified block grant” proposal from Tennessee.

Cases That Could Reach the Court

Payment of ACA Cost-sharing Reductions to Insurers

The Court could be asked to hear appeals in the lawsuits brought by Marketplace insurers seeking unpaid cost-sharing reductions (CSRs), Community Health Choice v. U.S. The ACA requires CSR payments to compensate insurers for reducing out-of-pocket costs such as deductibles and copayments to Marketplace enrollees with income from 100-250% of the federal poverty level. In October 2017, the Trump Administration stopped making CSR payments, on the basis that Congress had not appropriated funds. The ACA still required insurers to offer plans with CSRs to enrollees, so insurers sued the federal government to recover their CSR costs. In August 2020, a three-judge panel of the Federal Circuit Court of Appeals ruled that the federal government must reimburse insurers for CSR costs. However, the appeals court limited the amount that insurers can recover, finding that payments must be reduced by the amount insurers received in higher premium tax credits due to “silver loading.” For example, many insurers increased premiums on silver level plans – which are the benchmarks for ACA premium subsidies — to account for unpaid CSRs. Consequently, the amount of CSR costs that any insurer may recover could vary based on the degree of premium loading each has adopted. Both insurers have asked the entire appeals court to rehear the case, and the federal government may join in this request.

The outcome of this case also has implications for the federal deficit and for individuals who do not qualify for premium tax credits and therefore pay full Marketplace plan premiums. Because the second-lowest cost silver level plan is used to determine the premium tax credit amount, higher silver level premiums result in higher premium tax credit costs for the federal government. In 2017, when the Trump Administration ended CSR payments to insurers, the Congressional Budget Office estimated that premium loading would increase the overall federal cost of Marketplace premium tax credits by about $10 billion per year. If CSR payments to insurers resume and premium loading stops, the overall cost of Marketplace premium tax credits could be reduced. Premium loading also can result in higher premiums for Marketplace enrollees with incomes above 400% of poverty who are ineligible for premium tax credits and must bear the entire premium cost. Resuming CSR payments to insurers could result in a downward adjustment of silver level Marketplace plan premiums, lowering costs for these enrollees.

Nondiscrimination in Health Coverage and Care

One or more of the pending lawsuits challenging the Trump Administration’s rollback of regulations implementing ACA Section 1557’s prohibition of discrimination in health programs and activities receiving federal financial assistance could reach the Court. The Trump Administration’s June 2020 final regulations eliminate the prior regulations’ nondiscrimination protections based on gender identity and specific health insurance coverage protections for transgender individuals issued by the Obama Administration; adopts blanket abortion and religious freedom exemptions for health care providers; reduces protections for those with limited English proficiency; and limits the activities and entities covered, among other provisions. It also eliminates prohibitions on discrimination based on gender identity and sexual orientation in ten other federal regulations outside Section 1557.

The Court could be asked to confirm that its recent decision finding that sex discrimination includes sexual orientation and gender identity in the employment context also applies to the health care context and to determine the parameters of religious freedom objections. Just after the Trump Administration published its final Section 1557 regulations, the Supreme Court decided Bostock v Clayton County, Georgia, finding that sex discrimination includes sexual orientation and gender identity in the employment context. In Bostock, the Court said that questions about the intersection of religious freedom and nondiscrimination protections “are questions for future cases.” Based on the Bostock decision, two federal courts issued nationwide preliminary injunctions blocking parts of the final Section 1557rule: NY and DC courts blocked provisions excluding sex stereotyping from the definition of sex discrimination, and the DC court also blocked the religious freedom exemption. The NY court is now considering whether to block other provisions of the rule, and other lawsuits are pending.

Public Charge Rule

The Court could be asked to review one or more of the pending lawsuits challenging the Trump Administration’s final rule changing public charge policy to prevent individuals from obtaining a green card or entry into the U.S. if they are determined likely to use certain public programs, including Medicaid. Longstanding policy allows the federal government to deny an individual entry into the U.S. or adjustment to legal permanent resident (LPR) status (i.e., a green card) if he or she is determined likely to become a public charge. Under the Trump Administration rule, officials will newly consider use of certain previously excluded programs, including non-emergency Medicaid for non-pregnant adults, the Supplemental Nutrition Assistance Program (SNAP), and several housing programs, in public charge determinations. As of September 11, 2020, a nationwide preliminary injunction blocking the rule was lifted, allowing the Administration to implement the rule while litigation continues.

The public charge changes will create new barriers to getting a green card or immigrating to the U.S. and likely lead to decreases in participation in Medicaid and other programs among immigrant families and their primarily U.S.-born children beyond those directly affected by the new policy. Nationwide, over 13.5 million Medicaid and Children’s Health Insurance Program (CHIP) enrollees, including 7.6 million children, live in a household with at least one noncitizen or are noncitizens themselves and may be at risk for decreased enrollment a result of fear and uncertainty surrounding the rule. Decreased participation in these programs would contribute to more uninsured individuals and negatively affect the health and financial stability of families and the growth and healthy development of their children. Growing fear and uncertainty among individuals in immigrant families may also lead to some individuals avoiding accessing services including health care and/or enrolling in public programs, including health coverage through Medicaid and CHIP, even if they are eligible for them.

Hospital Price Transparency

The Court could be asked to review a case challenging the Trump Administration’s regulations implementing the ACA’s hospital price transparency requirement, American Hospital Association v. Azar. The ACA requires each hospital to publicly disclose an annual “list of the hospital’s standard charges for items and services provided by the hospital.” Following President Trump’s Executive Order on improving price and quality transparency, in November 2019, HHS issued final regulations effective January 2021, requiring hospitals to disclose their negotiated rates with insurers and authorizing financial penalties for failure to comply. The new regulations would replace those issued by the Obama Administration, which interpreted the ACA as requiring disclosure only of hospitals’ list prices (or gross charges), absent any discounts. In December 2019, the American Hospital Association with other hospital and health system groups challenged the Trump Administration’s regulations, contending that the statute only allows the Administration to require disclosure of standard list prices, not “custom” negotiated prices. In June 2020, the DC federal district court ruled in favor of the Administration, finding that the new regulations are a reasonable interpretation of “standard charges,” and the ACA authorizes the imposition of penalties. The district court also found that the regulations do not violate the hospitals’ First Amendment right to free speech because the requirements are reasonably related to the government’s interests in “providing consumers with factual price information to facilitate more informed health care decisions” and “lowering healthcare [sic] costs.”  The plaintiffs appealed the case the D.C. Circuit Court of Appeals, which will hear oral argument on October 15, 2020.

If the Supreme Court accepts the argument in California v. Texas, supported by the Trump Administration, that the entire ACA is invalid, then Congress would need to pass new legislation before any hospital price transparency regulations could be adopted. The Trump Administration argues that these regulations are necessary to implement the ACA provision that requires hospitals to publicly disclose their standard charges; without the ACA, the Administration would have no legal authority to issue any price transparency regulations. The Trump Administration and organizations supporting the regulations contend that disclosure of negotiated prices is necessary to tackle rising hospital costs by enabling consumers to meaningfully compare prices and improving competition. The hospitals and organizations opposing the regulations maintain that disclosure will not lead to lower costs because the regulations are burdensome to implement and could create “confusion” among consumers between insurers’ reimbursement rates and consumers’ out-of-pocket costs.

Looking Ahead

The outcome of the election could impact the underlying laws and regulations related to some of the health policy cases before the Supreme Court, while the Court will remain the final arbiter in others. If former Vice President Biden wins the Presidential election, and the Democrats gain control of the Senate and maintain control of the House, the tax penalty associated with the ACA individual mandate and CSR payments could potentially be reinstated, essentially making these cases moot. Similarly, the regulations changing Title X, Section 1557, public charge policy, and hospital price transparency could be revised or withdrawn. However, the Supreme Court will maintain the final say about the constitutionality of abortions, the rights of states to restrict abortion access, and whether Medicaid enrollees can sue to enforce the free choice of provider provision regardless of the outcome of the 2020 election.

While it is impossible to predict a justice’s decision in a particular case with absolute certainty, the confirmation of Judge Barrett is expected to replace Justice Ginsburg’s vote as the leader of the Court’s liberal wing with votes reflecting a conservative judicial ideology. Judge Barrett is a member of the conservative Federalist Society and has said that she follows the same judicial philosophy as Justice Scalia, who is well-known for his conservative legal views and for whom Judge Barrett clerked. While not determinative of the current ACA challenge before the Court, Judge Barrett has criticized the Court’s NFIB v. Sebelius decision, writing that Chief Justice Roberts’ opinion upholding the mandate as a constitutional exercise of Congress’ taxing power “pushed the Affordable Care Act beyond its plausible meaning to save the statute.” While a professor at the University of Notre Dame, Judge Barrett signed a statement in a 2006 advertisement opposing “abortion on demand” published in the South Bend Tribune. On the 7^th Circuit, she dissented in two court decisions declining en banc hearings after the initial 3 judge panel struck down abortion regulations. She also dissented from a 7^th Circuit Court of Appeals decision in a case challenging the public charge rule, writing that she found the Trump Administration’s interpretation to be reasonable. Though her prior opinions cannot definitively predict how she would rule in future individual cases before the Court, it is expected that her confirmation would shift the Court’s ideological balance to a solid 6:3 conservative majority, with potential implications for case outcomes affecting a number of health policy issues for years to come.