Tag Archives: Affordable Care Act

Affordable Care Act

Pay Cuts for Physicians

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The Affordable Care Act (ACA) was enacted to ensure that most people would have access to affordable health care insurance and to decrease the high cost of health care in our country. I have previously written about the Independent Payment Advisory Board (IPAB) and the role they will play in decreasing costs, but it looks like Health Care Insurers are already acting to cut payments without even waiting for guidance from the IPAB.

 

Highmark, a Blue Cross and Blue Shield provider that has programs in Pennsylvania, Delaware, and West Virginia has recently announced that they will be cutting payments to their participating physicians because of mounting losses from the plans they have provided through the ACA exchanges in those states. Highmark has found that they are paying out more in claims than they are collecting in premiums. This is not surprising as many healthy patients have chosen to opt out of health care insurance until they need it. Without participation from healthy patients who pay premiums but don’t use much health care, the losses were predictable.

 

Highmark claims they lost $221 million in 2014 and are projected to lose another $500 million in 2015 because of the mismatch in claims and premiums.     In the original ACA plan, recognizing that health insurers may be facing some significant losses until the system comes into balance, the Act originally had federal subsidies which were meant to offset losses for the first three years of the Act. However, the Congress, which is now under Republican control, has blocked the administrations access to these funds for the time being. As a result, companies like Highmark are only getting 13% of the subsidy money they were counting on; which was projected to be $220 million in 2014. Even though 13% of the money was made available, Highmark has not yet received any of their shares.

 

As a rational business, these losses will be handled by pay cuts to the physicians who are Highmark providers. Of course, Highmark could spread some of the losses to the participating hospitals but they have chosen not to do this. Apparently, cutting reimbursements to hospitals would require hospital specific negotiations whereas the doctor contracts are more flexible and “adjustments” are already built in to the present contract structure.

 

Highmark could have taken the losses and remained viable by dipping into their reserve funds and they have done this in the past, but they have now decided that subsidizing money-losing exchange plans is no longer a reasonable option.

 

Highmark is not the only insurer that is losing money under the ACA. I have previously written about Kynect, the Kentucky exchange which is talking about abandoning their state exchange altogether. The United Health Group has recently reported a $720 million loss for 2015. If they don’t see a financial turnaround soon, it is predictable that they will pull out of the exchanges. Other insurers such as Aetna and Anthem are also losing money on the exchanges.

The insurers are facing increasing losses because the patients opting into insurance purchases are a riskier pool than the insurers had originally anticipated. Highmark has shown that the congestive heart failure rates for those among the ACA purchasers was 43% higher than for members of their regular commercial plans. Chemotherapy claims per ACA users has been found to be 49% higher than the regular commercial users. These patients have high cost for care and the premiums paid by these patients (due to community ratings) does not cover the costs.[1]

 

To remain in business, the insurers will need to increase their premiums and decrease their payments on claims. Decreased payments can be done by increasing deductibles on the plans as well as paying less for each claim made. It is hoped that more healthy people will opt into buying health insurance since the penalty (tax?) for not having health insurance is scheduled to rise. However, if the penalty is still significantly less than the premiums, it is unlikely that a rational healthy person will participate in the exchanges. This is even more likely due to “guaranteed issue” which allows a person to buy insurance at any time; this means he can wait until he is sick to buy the needed insurance.

 

Another strategy being used by the insurers is to deny payment for those drugs or procedures that do not meet the insurance company guidelines. This denial usually results in the health care provider appealing the decision which can be labor intensive and time consuming. Providers are justifiably aggravated as it seems like gatekeepers for the insurance companies are making clinical decisions on patients they have never seen. Also, guidelines have never been deemed to be the “standard of care” as each patient has their own unique characteristics which the provider needs to understand in order to make a reasonable medical judgment.

 

If the payments to physicians are decreased, there will come a time that they will no longer participate as their overhead costs will exceed their remuneration. They will either refuse to see patients with certain insurance or they will retire. Either of these two options can put the Affordable Care Act in jeopardy as physicians are a critical resource in the health care model.

 

Can the government force the physicians to participate in the ACA? Can the government prevent the physicians from retiring? These questions will need to be litigated and will probably have to go to the Supreme Court for a definitive decision. This process will take time.

[1] Robert Lowes, Medscape Medical News, March 3, 2016.

 

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by Darryl S. Weiman, M.D., J.D.

Professor, Cardiothoracic Surgery, University of Tennessee Health Science Center and Chief of Surgery, VAMC Memphis, TN

MORE ABOUT THE AUTHOR: Darryl Weiman is a featured expert in www.healthcaredive.com on February 17, 2016. 

Affordable Care Act

Closure of a State Exchange

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One of the linchpins of the Affordable Care Act (ACA)[1] was to have health care insurance available for everyone. States were to form health care exchanges whereby people could shop for a suitable health care policy that fit their needs and still meet the requirements of the Act. If a state were to opt out of making an exchange, the Federal government would have a fall back exchange which could be used instead. The Federal government could not force the states to set up exchanges because that would violate rules of Federalism and the separation of powers.

In an effort to have the state’s set up the exchanges, the Act, in its original form, would only allow premium subsidies for those people who bought their health insurance on a state exchange. Surprisingly, only 17 states set up an exchange and 7 states developed a partnership exchange with the federal government; the other states opted to use the Federal exchange. The Federal government preferred the states to set up their own exchanges because the requirements of health insurance were under the powers relegated to the states. Each state would be in the best position to decide which policies would meet that particular state’s requirements.

Obamacare became a heated political issue and it was finally passed by Congress in 2010 with no votes from the republican side.  President Obama signed it into law.

Kentucky was one of the states that set up its own exchange. After the passage of Obamacare, Matt Bevin, the republican candidate for governor of Kentucky was able to win relying on a platform to do away with the ACA.

It is no surprise that Governor Bevin decided to close the Kentucky state run health care exchange “Kynect.” This exchange had originally been formed under the leadership of Steve Beshear, a democratic governor.

Governor Bevin felt that Kynect was wasteful spending since the Federal exchange could be used with relatively low costs to the state. With the recent Supreme Court decision of King v. Burwell, there would really be no penalty to Kentuckians who would still be eligible for premium support from the federal government. After all, Burwell held that state and federal health insurance exchanges were the same as far as health insurance premium support was concerned.

With the closure of this exchange, about 100,000 Kentuckians with private health insurance will now need to reapply for insurance through the Federal insurance exchange. This application can be long and difficult. There are more plans to choose from and the premiums vary considerably. Some people may opt out of getting health insurance altogether. They may have to pay a penalty (a tax) by being without insurance, but this tax will likely be less than the premium costs, anyway. Also, insurance can be bought at any time (guaranteed issue) and there is no penalty for waiting until you get sick (community rating).

It is likely that many of the 100,000 will hold off on redoing their health insurance until they need it. If relatively healthy people opt out of buying health insurance, this will put pressure on the insurance companies who rely on healthy patients to pay premiums and then don’t use the policy since they are in good shape. If insurance companies start to lose money, they may opt out of participating in the health insurance business of that state.

Here is some historical perspective. Kentucky was one of the first states to implement guaranteed issue and community rating in the 1990’s. Premiums kept rising as the insurance companies tried to stay solvent. Between 1994 and 1997, forty-five insurance companies left Kentucky because of rising losses.[2]

Several health insurers have been struggling under the Affordable Care Act. The nation’s largest health insurer, UnitedHealth Group warned that they may have to pull out of the exchanges by the end of 2016.  Tenet Healthcare, HCA Holding, Aetna, and Anthem are also struggling.[3]

There are several issues that will need to be addressed if Kentucky does close the state exchange. The state will first need to meet the obligations of the exchange through the end of 2016. Insurance companies who have participated thru the state exchange will then need to transition to the Federal exchange. Will these companies be willing to meet the requirements of the Federal exchange if they are significantly different from the requirements of the state? If the insurers are losing money, they are unlikely to stay in the business.

Is this closure of the state exchange just political posturing on the part of the republican governor who is trying to fulfill political promises? After all, there will be significant costs to the state and potentially to the citizens caught up in the transition.

The state will have to pay a 3% fee on insurance costs for the residents who use the Federal exchange. The state will also be at risk of losing $58 million of the federal grants it received for setting up the original state exchange.

Kentucky will still have to manage Medicaid and the Children’s Health Insurance Program (CHIP). These programs had originally been tied in to the state private insurance exchange; this uncoupling will likely result in some administrative costs to the state. Will the Feds cut back on the support of Medicaid and CHIP that they presently send to the state as a means to penalize the state for abandoning the state exchange?

Bevin’s approach to Medicaid will be different with the new system. Bevin says the state will still cover those whose income is up to 138% of the poverty level but there will likely be a decrease in benefits for those at or below the poverty line who do not pay Medicaid premiums. Bevin wants to model the Kentucky program after the Indiana program where people who do pay Medicaid premiums will get a better benefits package. It is uncertain as to how this will play out with the electorate.

There are some unknown unknowns that Bevin may have to deal with. Since King v. Burwell[4] showed that the Internal Revenue Service (IRS) controls the premium support available to the citizens, can the IRS financially punish the citizens of Kentucky to such a degree that Mr. Bevin will be forced to abandon his plans? I would not be surprised if pressure is brought to bear and Mr. Bevin may be forced to back off.  I don’t think any significant changes to Obamacare will occur until there is a new President and I don’t think the present executive will sit idly by while there is an attempt to close the Kentucky exchange.

[1] Commonly referred to as “Obamacare:.

[2] Conrad F. Meier, “Destroying Insurance Markets: How Guaranteed Issue and Community Rating Destroyed the Individual Health Insurance Market in Eight States,” The Council for Affordable Health Insurance and the Heartland Institute, 2005; http://www.cahi.org/cahi_contents/resources/pdf/

[3] Nathan Bomey and Jayne O’Donnell, USA Today, November 20, 2015.

[4] King v. Burwell, 576 U.S._(2015).

 

ABOUT THE AUTHOR: Darryl Weiman is a featured expert in www.healthcaredive.com on February 17, 2016. 

Affordable Care Act

Physicians at Teaching Hospitals

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In the United States, Medicare pays the salary and fringe benefits of interns and residents in teaching hospitals. This amounts to about $100 thousand per resident every year. Of this amount, the resident is paid about $40-$50 thousand per year in salary.

Some of the dollars from Medicare are paid to physicians in charge of training the residents. In addition, several billion dollars is paid to teaching hospitals every year to offset the added costs of training residents. These costs include malpractice coverage for the residents and the added costs generated by inexperienced physicians who have a tendency, it is believed, to order more tests and consults on their patients than are really necessary. These tests and consults are for “learning purposes.”

In the late 80’s, the Inspector General and the General Accounting Office decided to do an audit as to how this money was spent. This audit found that some of the money was spent on alcoholic beverages, trips to European countries, and fine works of art. Believing that this spending was not related to resident education or training, Congressional hearings were convened.

At the initial hearings, the teaching hospitals argued that Medicare policy on how the money could be spent was unclear. Although Congress agreed that the policies were vague, they also believed that spending on art, alcohol, and trips were clearly not related to the intent of the spending. As a result of these hearings, the initial Physicians at Teaching Hospitals (PATH) audits were done. These audits were intended to “make sure that the Federal Government is getting its money’s worth and that there is honesty in what is being done.”[1]

Historically, the charting on a patient was done by the residents. The attending physician would make rounds where the residents and medical students would present the patient, go over the latest clinical course, including lab values, EKG’s, and radiographs and results of other tests. A discussion would follow and a plan would be made. The history, physical exam, and daily notes were the responsibility of the resident.

For operations and other procedures, the resident who did the procedure or even small parts of a procedure, was expected to do the pre-operative note and the post-operative note and the dictated operative report which was a detailed description of what was done during the procedure including the operation performed, the operative findings, blood loss, specimens obtained, drains placed, and complications.

The documentation done by an attending was variable. Some attendings would do their own notes, some would just cosign the resident notes and some would do nothing. The television show House, starring Hugh Laurie, is a good depiction of attending involvement. House would go over the patient with the residents and he would do procedures on the patients, but he never made a note in the chart.

When I was a Surgical Resident in the late 70’s and early 80’s, night work was in the realm of the residents; including any operations that needed to be done. However, before anything was done to the patient (except for dire emergencies), the attending would be notified. He would then usually give the “go ahead”. At least the attending would be aware of what was going on. Sometimes (rarely) the attending would come in to the hospital but this usually meant that he did not trust the particular resident who had the on-call responsibilities at that time.

The only Medicare requirement for payment was to have some documentation of attending involvement. This documentation was usually met with some co-signatures in various parts of the chart. These co-signatures did not have to be dated and timed although they could be. Often, these co-signatures were placed at the time the patient was being discharged.

The PATH audits turned everything on its head. The Office of the Inspector General found that the University of Pennsylvania had significant errors in their billings. A percentage of billing errors was determined based on a sampling of medical records reviewed. This led to a referral to the Department of Justice (DOJ). The DOJ process used to estimate billing error used the OIG percentage of error results and used that percentage to estimate the potential False Claims for all Medicare part B services for multiple years. By using this methodology, the DOJ was able to claim a fine in the $100’s of millions range. Each violation (false claim) could have led to a fine of over $10 thousand. Since there were thousands of bills and using the percentage of error found in the OIG audit, the DOJ could put the University of Pennsylvania at grave financial risk if the Court were to rule with the government.

Because of the huge financial risk of litigating the claim, the University of Pennsylvania decided to settle with the Department of Justice for $30 million.

A similar audit at the University of Washington resulted in a $35 million settlement. I think the penalty may have been a little higher since one of the neurosurgery attendings tried to suborn perjury by having his residents say he was present in the operating room when he actually was not.

An audit of Dartmouth was initiated even though the OIG had no prior indication that the University was not properly billing. Dartmouth mounted a vigorous defense. The audit lasted for ten months and, according to Dartmouth, cost the institution $1.7 million in direct and indirect costs. When the audit was completed, the identified billing errors totaled $778. Dartmouth was vindicated but it still cost them a significant amount of money in the defense.

The OIG was making a lot of money and every University and Hospital with a training program was on the radar. A lobbying effort led to Congress shutting down the OIG but the chance of the audits starting up again remained.

The Affordable Care Act was passed by Congress and signed by President Obama in 2010. Many parts of the Act have been postponed by a stroke of the President’s pen; other parts have yet to be clarified by the Administrative bodies that have been empowered to enforce various sections of the Act.

One thing is clear. A major focus of the Act is to decrease the cost of Health Care in our country. A major mechanism of decreasing the costs is to eliminate waste, fraud, and abuse. It is likely that physicians will be closely watched to see that they are providing the services that they are billing for. Physicians at Teaching Hospitals will, once again, be scrutinized to be sure that they abide by the supervision requirements laid out by CMS and other third party payers.

At this point in time, the physician educator must document with specificity that he has seen and examined the patient. The documentation must include a pertinent history and physical exam and a plan of action to address the medical problem(s).

For physicians who are billing for a surgical or other type of procedure, there must be documentation that the attending physician was present for the critical portions of the procedure. In the past, a statement verifying that you were there for the critical portions of the procedure would have been sufficient for billing purposes. The physician could use his own judgment as to what a critical portion of the procedure was. I predict that the requirements will be tightened in the future. “Critical portions” are likely to be defined as the beginning of the operation (skin incision) and those other parts necessary to accomplish the operation successfully; this may now even include the closure of the incision.

I do not think that the teaching physicians will be required to do the critical portions of the operation themselves, but they will be required to be present in the room. This can be problematic from a resident training standpoint. If the residents in training are not allowed to do the critical steps of the operation themselves, then how will we know that they can do these steps when they, themselves, become an attending? It is a strong public interest to train physicians for the future. Will there be any wiggle room as to how much “presence” is necessary to allow for billing?

For now, a surgeon needs to be either (1) scrubbed and doing the procedure himself, or (2) scrubbed and first assisting the resident, or (3) not scrubbed, but in the room supervising the resident, or (4) not scrubbed, but available for immediate consultation. This last requirement usually required the attending to be, at least, in the hospital.

The time frame of the presence requirements has never been defined but I would not be surprised if the enforcers try to make it from beginning of the procedure until the end of the procedure. If they do this, it will mean that attending surgeons will need to be spending more time doing procedures and less time in the wards, seeing consults in the clinic, and meeting administrative responsibilities. Of course their research and teaching time will also be affected. This will mean that physicians will need to work more hours per day and/or that more physicians or physician extenders will need to be hired.

A more significant consequence of this more onerous presence requirement will be that future physicians will never have the opportunity to operate independently until they become an attending. Since all of the Surgical boards require a statement from the teachers that a particular resident can function “safely” and “independently,” it is obvious that a conflict is looming as to how best to train future physicians who do procedures, e.g., surgeons. If the law says that attendings must be present from the beginning to the end of a procedure, then there will be no opportunity for the resident to ever work without the attending looking over his shoulder.

While it is true that simulators are being developed to help surgical residents develop the skill sets needed to operate safely, they are not yet to the level of actually operating on a real live human.

It is clear to me that an unforeseen consequence of the Affordable Care Act is the reduction of the skill sets and confidence that the surgeons (and other physicians) in training need in order to operate in a safe and independent fashion. Future generations of patients will suffer as the best training methods in the world are being impaired by regulations mandated by non-clinician beaurocrats. As the older surgeons retire and/or die out, the replacements will just not be as good! What a shame.

Care will be cheaper, but it won’t be as good. I never thought that the American public would put up with this nonsense but I may be wrong.

[1] Senator Arlen Spector, October 21, 1991.

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ABOUT THE AUTHOR: Darryl Weiman is a featured expert in www.healthcaredive.com on February 17, 2016. 

Affordable Care Act

Retirement Looks Good About Now

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With all of the new requirements for practicing medicine under the Affordable Care Act (Obamacare), retirement for those who can do it looks like a pretty reasonable option. Unfortunately, there is a clause under the Act that may take this option off of the table. Section 5210  Establishing a Ready Reserve Corps, amends Section 203 of the Public Health Service Act (42 U.S.C. 204) such that there will now be a Ready Reserve Corps for service in time of national emergency.

Physicians have always been subject to a draft during times of war. This new law now makes them subject to a draft during any national emergency. It is not clear under the law as to what would constitute a “national emergency,” but Section 203(c)(2)(D) states that the Ready Reserve Corps “be available for service assignment in isolated, hardship, and medically underserved communities …to improve access to health services.”

Physicians are the “ready reserve corps”. Not much has been written in the news media about this small section of the Affordable Care Act, but as a physician looking forward to retirement, it is of concern. In fact, the law specifically states that this reserve force must be able to respond on short notice and may even have to serve “involuntarily.” [1] Does this mean that they can keep me from retiring and put me in a medically underserved community which may need a cardiothoracic surgeon? The way I read the law, the answer is “yes.”

The uses of this Ready Reserve Corps would be to “ (A) participate in routine training to meet the general and specific needs of the Commissioned Corps; (B) be available and ready for involuntary (emphasis added) calls to active duty during national emergencies and public health crises, similar to the uniformed service reserve personnel; (C) be available for backfilling critical positions left vacant during deployment of active duty Commissioned Corps members, as well as for deployment to respond to public health emergencies, both foreign and domestic; and (D) be available for service assignment in isolated, hardship, and medically underserved (emphasis added) communities …to improve access to health services.”

On July 2, 2008, President Obama stated that “We cannot continue to rely on our military in order to achieve the national security objectives that we’ve set,” he said. “We’ve got to have a civilian national security force that’s just as powerful, just as strong, just as well-funded.” Could the Affordable Care Act be the first legislation used in setting up this new national security force and will the physicians so drafted be the spear-head of this force? Why should a civilian national security force need to be just as powerful as our military? Why does it need to be as well-funded? Will this force be armed with military style weapons? This seems to be overkill to me but there is not much on the internet or in the main stream media to help discern the role of this force.

Would this new force be constitutional? The ACA funds it and the Commissioned officers of the ready reserve are to be appointed by the President. This would be different than the commissioned officers of the regular corps which are appointed by the President with the advice and consent of the Senate emphasis added. Why no requirement for the advice and consent of the Senate for the officers of the ready reserve corps? I don’t know but I am worried. Who will the president appoint? What kind of power will these officers have? Will it be the same type of power as the regular corps or will there be differences? Where will the checks and balances be if the Senate has no role in deciding who these officers will be; this is very different from the requirements of the other uniformed services. Why the difference? Will this force only be answerable to the President?

Nancy Pelosi infamously stated that we would have to pass the Affordable Care Act in order to find out what was in it. What she has stated has now come to pass.

Sections of the ACA that I thought were clearly unconstitutional have passed Supreme Court scrutiny. First, mandating the purchase of health care insurance was deemed to be a proper exercise of the taxing power of the United States.[2] Originally, President Obama stated that this power was allowed under the Commerce Clause and it was not (emphasis added) a tax.  Justice Roberts stated the opposite in his opinion. The mandate was not allowed under the Commerce Clause but it is allowed as a tax. Oh, well.

The other Supreme Court decision that I was way off on was the case of King v. Burwell.[3] Originally, the ACA would only allow tax credits for those who used exchanges that had been set up by the States. When States did not set up an exchange, then the Federal government would set one up but the people in those states would not be given any tax credits which were intended to help pay the premiums for the health insurance. The intent of the Congress was to get the States to buy into Obamacare but many of the states chose not to do this.

Despite the clear language of the statute, the Internal Revenue Service, under the direction of the White House, started giving tax credits to everyone, even to those in States that had not set up an exchange. The Executive Branch is supposed to enforce the law, not change it. When this issue made it to the Supreme Court, the Court decided to repair the law. Since the Judicial branch is supposed to state what the law is, it seems like the Court was overstepping its authority when they essentially changed the law such that State exchanges really meant State and Federal exchanges.

By its decision, the Court essentially gave the Internal Revenue Service the authority to spend billions of dollars on tax credits for those using the federal Exchanges. The power of the purse, I thought, was to be invested to the legislature, not the Court. Boy, was I wrong.

It is said that the Supreme Court is not last because it is right, it is right because it is last. There must be finality in the law or we will have a society in disarray. Asking me to make a prediction as to a law’s constitutionality would not be a good idea; I am often wrong, especially as it relates to Obamacare.
[1] Section 203(c)(2)(B) of the Affordable Care Act.

[2] National Federation of Independent Business, et al., v. Kathleen Sebelius, Secretary of Health and Human Services, 648 F.3d 1235.

[3] King v. Burwell, 135 S. Ct. 475 (2014).

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ABOUT THE AUTHOR: Darryl Weiman is a featured expert in www.healthcaredive.com on February 17, 2016. 

Affordable Care Act

A Commentary on King v. Burwell

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One of the linchpins of the Affordable Care Act (Obamacare) is to have everyone in the United States get Health Care Insurance. The way that the law instructed that this be done was to have the States set up Exchanges; access to the exchanges would allow each person to shop, preferably on-line, for an insurance policy that would best meet their needs. Accessing the exchange website would allow the people to compare the types of coverage, the premiums they would be responsible for, and the deductibles available. It would be one stop shopping for health insurance. This is a great idea on its face.

Since the requirements of health insurance were powers relegated to the states, each state would be in the best position to decide which policies would meet that particular state’s requirements.

Under the law, if the state decided that the cost for setting up the exchange was too high or for whatever other reason, they could choose to have the Federal government come in and set up an exchange for them. The Federal government preferred to have the States set up the exchanges but they could not force the states to do so as that would violate rules of Federalism and the separation of powers. The Administration had to come up with a way to get the states to “buy in” and they decided to do this by making tax credits available to the people of the States that set up their own, non-federal, exchange.

These tax credits were critical for the law to succeed because without them, the costs of meeting the requirements of coverage would exceed eight percent of the income of many people which would allow those people to claim exemption from coverage. Since many of these people were healthy and would not generate much health care costs, insurance carriers really needed them to participate in order for business to be viable.

The reason that the premiums had to be high was the ACA’s requirements for “guaranteed issue” and “community rating.” The “guaranteed issue requirement” meant that insurers could not deny any person coverage due to a pre-existing medical condition. The “community rating” requirement prevented the insurance carriers from charging higher premiums for those with a pre-existing medical condition. It was probably the “guaranteed issue” and “community rating” issues that led to the failure of “Romney care” in Massachusetts and the commercial insurance market in New York, but that’s another story.

Without the tax credits along with the requirements of “guaranteed issue” and “community rating” it was foreseeable that many healthy individuals would face premiums that would exceed eight percent of their income whereby they would be exempt from buying health insurance or if they did not meet the eight percent level, they would opt out of the Affordable Care Act insurance requirements and pay the tax penalty (much less than the offered premiums) instead. These healthy people could buy the insurance after they became sick and they would suffer no penalties for waiting. This is another example of people acting rationally.

Surprising to the Obama Administration, many of the States decided to opt out of setting up their own exchanges. There was a very real concern that many people in those states, not being eligible for the tax credits, would not buy health insurance and they would not be penalized since the premiums they would have to pay amounted to more than eight percent of their income. If these predominately health people would not participate, the insurance carriers would likely go bankrupt and have to withdraw from participating in the ACA. This could have led to a death spiral for the whole Affordable Care Act.

Under direction from the White House, the Internal Revenue Service (IRS) decided to make tax credits available to all who used the exchanges, even the exchanges set up by the Federal government.

The Petitioners in this Supreme Court case were citizens of Virginia, a state with a Federal Exchange. The Petitioners did not want to purchase health insurance and if they were not eligible for tax credits their premiums would have fallen above the eight percent threshold of their income and, thus, would have been exempt from the law’s coverage requirement. However, with the IRS rule, they would have been eligible for the tax credits and would have to buy insurance or be subject to the IRS tax penalty.

The District Court which heard the case held that the Act made tax credits available to those enrolled in a Federal Exchange. The Court of Appeals for the Fourth Circuit affirmed. The Fourth Circuit wrote that the Act was “ambiguous and subject to at least two different interpretations.” They chose to defer to the IRS’s interpretation.

At the same time that the Fourth Circuit was issuing its holding, the Court of Appeals for the District of Columbia Circuit ruled against the IRS Rule, holding that the ACA “unambiguously restricts” the tax credits to State Exchanges. This Circuit did not believe that the Federal Exchange was a State Exchange.

When two different circuits come down with two different holdings of the law, it is not unusual for the Supreme Court to grant certiorari and they did.

The legal issue of the case was whether the Act’s tax credits would be allowed in States that have a Federal Exchange. The Supreme Court held that they would be allowed. The Court, in dicta, wrote “an Exchange established by the State…is properly viewed as ambiguous. The phrase may be limited in its reach to State Exchanges. But it is also possible that the phrase refers to all Exchanges—both State and Federal—at least for the purposes of tax credits.”

The Court went on to say that “[t]hose credits are necessary for the Federal Exchanges to function like their State Exchange counterparts and to avoid the type of calamitous result that Congress plainly meant to avoid.” It seems like the Court was saving the Affordable Care Act from itself.

In a blistering dissent, Justice Scalia, made it clear that a Federal Exchange was not the same as a State Exchange and the tax credits were purposely kept out of the States which opted for a Federal Exchange. The Secretary of Health and Human Services, the person responsible for setting up the Federal Exchanges was not a “State” and thus, citizens of those states should not have been eligible for the tax credits.

Historically, the Court does not like to salvage poorly written laws. They will interpret what is before them and then expect Congress to do its job by making the necessary repairs. The Supreme Court decided to make the credits available to everyone to make the insurance affordable to all. They seemed to be doing what Congress should have been responsible for.

In the United States, under our Constitution, any changes in the law should have come through the Congress. However, in light of the fact that the Congress was now controlled by the Republicans, it is unlikely that the necessary changes needed to save the law would not have been passed; the ACA was in dire straits and the Obama administration recognized this.

King v. Burwell brought to light a significant problem with the Affordable Care Act. In an effort to save an unartfully crafted law, the Obama administration changed the law to allow the Internal Revenue Service to spend billions of dollars on tax credits for those using Federal Exchanges. Changing the law is not a power vested in the Executive branch under the Constitution of the United States. All spending rules must emanate from the United States Congress.

In what looks like an effort to avoid a Constitutional crisis, and the disintegration of the Affordable Care Act, the Supreme Court ruled that any Exchange, including one set up by the Federal government, was really a State exchange. This power to re-write the law is, again, not a power vested in the Supreme Court. However, once the Supreme Court makes a decision, that decision is final.

It is said that the Supreme Court is not last because it is right, it is right because it is last. There must be finality in the law or we will have a society in disarray. The issue on tax-credits and the origination of the Exchanges under the ACA is over! At least for now.

[1] King v. Burwell, 576 U.S._(2015).

ABOUT THE AUTHOR: Darryl Weiman is a featured expert in www.healthcaredive.com on February 17, 2016.