As you have read here, the Senate’s finest hours were not those spent in July 26, 2017 health care policy debate, which resumed July 27 at 10:00 am EDT.  The bipartisan demagoguery did not diminish, but some Senators on each side rose above that fray and, in the end, Democrats won the narrowest possible victory in a fashion reminiscent of Auburn’s “kick six” win over Alabama.

The presiding officer noted the scheduled 2:15 pm EDT vote on the “Medicare for all” amendment offered by Senator Daines (R-Montana).  Senator McConnell (D-Kentucky) portrayed the Daines amendment as offering Democrats an opportunity to vote for a single payer system.  It didn’t sound like a peace offer; it sounded like a double-dog dare.  Silence fell for a half hour.  As our mothers told us all, “if you don’t have anything nice to say to someone, don’t say anything at all.”

Senator Carper (D-Delaware) broke the ice with a polite presentation noting broad agreement on goals of better insurance coverage of more people for less money, so that this has been, since 1993, an argument about means and methods. He then repeated and expanded on his history lesson from the prior day’s debate, which was one of that day’s few edifying performances.  In 2008, when Japan spent 8% of GDP on healthcare, we spent 18%, he said.  Acknowledging that every American can get emergency health care regardless of insurance or income, he critiqued the associated public costs and noted the cost savings achieved by widely available preventive care.  This wound up being a plea to recommit H.R. 1628 to committee for “regular order” proceedings, despite the lack of a pending motion of that nature.

Senator Schumer (D-New York) took the floor moments before 11:00 am, daring Republicans to offer a bill for final passage, even if that should be the “skinny repeal” bill rumored in the press.  However, he said, should “skinny repeal” be offered, Democrats will offer so many amendments that the extended debate on H.R. 1628 will significantly delay consideration of the National Defense Authorization Act, H.R. 2810.  Senator Schumer signaled that Democrats would not support the “Medicare for all” Daines amendment, because they regarded it as campaign bait.  Again, silence fell for a quarter hour.

Senator McCain (R-Arizona) and Senator Schumer then debated the wisdom of holding the National Defense Authorization Act hostage to the health care debate.  Senator McCain warned of the precedent of blocking a non-partisan defense bill due to dispute over a partisan bill, asking for a two hour interruption of health care debate to pass the NDAA.  Senator Schumer was unyielding in demanding that H.R. 1628 be recommitted as the price of floor action on H.R. 2810 in the foreseeable future.  After Senator McConnell declined that offer, Senators resumed health care discussion.

Senator Lamar Alexander (R-Tennessee), H.E.L.P Committee chair, explained why “repeal” and “replace” should be done in one bill. He forecast a “skinny bill” vote late in the day, conceding that any such bill will just be a vehicle to get to a House-Senate conference committee, where something more complex will be prepared for an up-or-down vote in each chamber.

Beginning around 11:35 am, Senator Peters (D-Michigan) described how insurance made available by the ACA gave a named constituent access to life-saving health care, briefly making a case for health care as a government-guaranteed right.

Senator Sanders (D-Vermont) rose at 11:45, reviving the prior day’s apocalyptic, sarcastic tone of debate, shouting that Republican proposals would cause thousands to be “thrown out of their nursing homes.” He predicted that defunding Planned Parenthood would lead to deaths of “thousands and thousands of Americans every year.”  Only the “top 1%” getting tax cuts would benefit from “throwing disabled children off of health insurance” under “this absurd Republican proposal.”  And the beat went on.  At length, Senator Sanders facetiously congratulated Senator Daines for offering a Medicare-for-all proposal and dared him to vote in favor.  Senator Sanders committed only to vote for his own Medicare-for-all proposal and thanked President Trump for admitting that Australia’s single-payer health care system is superior to ours.  Nearing the end of his time, Senator Sanders advocated federal prescription drug price controls, shamed health insurers for “outlandish” profits and CEO compensation and blamed our “bureaucratic, complicated system” of insurance on the multiplicity of insurers and policy terms.  Senator Sanders asked rhetorically whether Wall Street or drug company executives are “greedier” and personally attacked the Koch brothers for their wealth, showing enlarged photos of a $90,000,000 yacht and a billionaire’s mansion.

At 12:30 pm, Senator Moran (R-Kansas) turned the discussion to the “VA Choice” program that he said will fail within days unless new funding is authorized.  This, according to Senator Moran, is in the stack of legislation waiting for floor action after the health care debate.

Senator Flake (R-Arizona) took the floor at 12:44 pm to ask for immediate passage of H.R. 3298, to facilitate the receipt of public contributions to fund the medical expenses of officers wounded in the recent attempted assassination of Congressional Republicans.  Without objection, it was approved.

Senator Murray (D-Washington) then came to the well to decry a purported Republican plan to pass a “secret bill,” “in the dark of night,” to reach their goal “to kick tens of millions of people off their coverage,” in order to “give a massive tax break to the wealthy.”  Strong letter to follow, we supposed.

Shortly before 1:00 pm, Senator Sasse (R-Nebraska) remarked the unfortunate tendency of every dispute to become a “blood feud” and predicted that demographic and cost trends soon will force a binary choice between government rationing of entitlement medicine and a “disruptive, innovative,” “portable, affordable,” market-driven system.  Senator Sasse lamented that his choice will not be on the floor this week.  This was the Republican version of Senator Carper’s assessment – polite and perceptive.

There followed a “regular order” appeal by Senator Udall (D-New Mexico), who yielded to Senator Heinrich (D-New Mexico), who accused Republicans of a “shockingly rushed and secretive effort” to produce a “secret Trumpcare bill,” in order “to give a massive tax break to the wealthiest among us.”  Mentally ill people will lose their stabilizing medications, grandmothers will be thrown out of closing nursing homes, etc., due to “this appalling legislation.”  In closing, he referred to “real bipartisan solutions,” but identified none.

Senator Bennet (D-Colorado) picked-up on and expounded a point made by Senator Sasse: most uninsured people are uninsured only during short times between jobs, so insurance portability is key to minimizing the number of uninsured, but that is not a subject currently under discussion.  Further, he complained, the health care squabble is preventing agreement on even more pressing problems like infrastructure.  His solution: recommit H.R. 1628 to committee for regular order proceedings.

About 30 minutes before the scheduled vote on the Daines amendment, Senator Sullivan (R-Alaska) addressed the importance of “repealing, replacing and repairing” (emphasis ours) the current healthcare system, predicting that “we will probably be debating all night.”  He then denounced the National Defense Authorization Act hostage situation, noting that the NDAA won unanimous committee approval.

Well before 2:00 pm, the Senate entered a periodic hush, with few Senators on the floor, provoking a quorum call.  In four hours of debate, only Senator Sanders and Senator Sasse seemed to have taken seriously the single payer topic of the Daines amendment.  Finally, Senator Daines took the floor to explain his purpose – i.e., to focus attention on where the current system is heading without basic revision.  To do this, he copied and pasted Rep. Conyers’ (D-Michigan) entire House bill, H.R. 676, to create his H.R. 1628 amendment.  The Conyers bill, Daines said, has 115 House Democrat co-sponsors, and forbids private insurers to sell insurance policies in competition with its “Medicare for all” insurance.  Senator Daines invited Democrats to vote for his amendment or to acknowledge that they do not want to go where the current system is heading.

Another quorum call commenced at 2:18 pm, but was suspended when Senator Sanders rose again to congratulate Senator Daines again, offering to vote for the amendment if “five or six” Republicans also would vote in favor.  Otherwise, said Senator Sanders, Democrats would vote “present.”  As chuckles spread around the chamber, the Clerk began to call the roll.  No Senator voted for the Daines amendment.  All 52 Republicans plus Senators Heitkamp (D-North Dakota), King (I-Maine), Manchin (D-West Virginia), Nelson (D-Florida) and Tester (D-Montana) cast the 57  “no” votes.  The other 43 voted “present.”

At about 3:00 pm, the chair called-up the Strange (R-Alabama) amendment to block tax-funded abortion under the ACA.  However, most Senators had left the floor, none rose to speak, and so mics were muted again.  After about ten minutes, Senator Cornyn (R-Texas) resumed the debate.  Medicaid spending would rise by $71 billion over ten years under H.R. 1628, but that growth rate would be sustainable, unlike the current growth rate, he claimed.  After reciting Republican ACA talking points, Senator Cornyn yielded the floor to Senator Kennedy (R-Louisiana), who began by crediting Democrats with only good intentions when they passed the ACA.  However, he noted, doctors once bled their patients, with solely good intentions. When they learned it didn’t help, they stopped doing it.  ACA supporters are in the same situation, Senator Kennedy claimed.  He called the basic policy, “a bus ticket without a bus” and predicted days of remaining debate before a majority solution could be found.

Senator Wyden (D-Oregon) took the floor to claim that the majority’s unseen, rumored “skinny repeal” amendment was written during a just-concluded Republican lunch.  Nevertheless, he predicted severe Medicaid cuts based on a CBO score of a Democrat guess of what might be in a “skinny repeal” bill.  And, he announced a just-released Senate Parliamentarian decision that reconciliation may not be used to pass a “Trumpcare” provision permitting the states to redefine ACA “essential health benefits” and “affordability.”  Senator Wyden invited such states to seek ACA § 1332 waivers from HHS and offered Republicans “bipartisan cooperation” if reconciliation proceedings are abandoned.  Unlike prior speakers, Senator Wyden proposed a specific object of such cooperation: increasing payments to insurers to stabilize individual insurance markets.

Starting at 4:00 pm EDT, Senator Toomey (R-Pennsylvania) gave the Republican response to Senator Wyden, focusing on Medicaid’s need for reform, as part of the fiscal imperative of entitlement reform.  Medicare, Medicaid and Social Security comprise almost all of entitlement spending.  Only Medicaid has no associated, dedicated revenue stream and Medicaid is the fastest growing expenditure, growing much faster than the economy.  Senator Toomey recalled President Clinton’s proposal to cap Medicaid spending and read from Senator Murray’s 1995 letter pledging the support of all Senate Democrats.  The main difference between the 1995 proposal and today’s Republican proposal, said Senator Toomey, is that Republicans propose to impose the caps more gradually than did Senate Democrats in 1995.  Using a series of charts, Senator Toomey then critiqued the CBO scores of the BCRA and of H.R. 1628.

Senator Wyden offered, in rebuttal, to explore Medicaid cost restraint cooperation if the pending bill should be recommitted to the Finance Committee.

Up next, Senator Grassley (R-Iowa) complained of Democrat “hyperbole and fear-mongering,” designed to produce insurance market failure and adoption of single payer healthcare, he said.  Senator Grassley quoted at length from what Senator Daniel Patrick Moynihan said about the need for welfare reform in the mid-1990s, and read the dire, incorrect, predictions of those who opposed reform.  Unusually for Republican speakers thus far, Senator Grassley was as vociferous as any Democrat.

At 4:40 pm EDT, Senator Enzi (R-Wyoming) requested and received approval to hold the Strange amendment vote at 5:00 pm, with a brief interlude then to vote on unrelated H.R. 3364, before resuming debate on H.R. 1628.  Speaking to the ACA generally, Senator Enzi likened it to a 1970’s novelty gift, the Pet Rock, which had great marketing and packaging that did nothing to improve the quality of the rock but greatly increased its cost.

Beginning just minutes before the vote, Senator Strange quickly explained his proposal to extend the Hyde Amendment to ACA Exchange insurance purchase subsidies, so that, starting in 2019, 90% of such subsidies would be covered by the Hyde Amendment.  Senator Schatz (D-Hawaii) then made the expected process objection, Senator Strange requested the needed waiver, and Senators repeated the sort of supermajority vote taken on the Cruz and Heller amendments, with the same result – no waiver.

A round 6:30 pm EDT, Senator Enzi called-up Senator Heller’s amendment to repeal the excise tax on so-called “Cadillac” health insurance plans.  As usual, speakers seemed to ignore the change of tune and kept dancing their preferred dances.  Senator Blount (R-Missouri) explained his view that the individual and employer mandates are unconstitutional.  Senator Lankford (R-Oklahoma) read from constituent letters about the pain inflicted by the individual mandate and rising health care premiums and deductibles, calling the individual mandate a “poverty tax.”  He predicted no bipartisan solution because Democrats will not change or eliminate either mandate.  The “skinny repeal” idea, he said, is necessary because the CBO takes weeks to score each new proposal and can’t keep up with a wider floor amendment process.  He reminded Senators that the skinny plan does not alter pre-existing conditions protections or rules about annual limits, lifetime limits or kids on parents’ plans to age 26.

The big news of the 8:00 hour was the defeat (57-43) of Senator Schumer’s motion to recommit H.R. 1628 to the Senate H.E.L.P Committee with instructions to do something about the Cadillac plan tax.  Senator Heller (D-Nevada) then explained his amendment to kill that tax permanently, with the support of many groups normally aligned with Democrats and the ACA.  The roll call vote on his amendment consumed most of the 9:00 hour, and resulted in passage (52-48).

At 9:52 pm EDT, Senator McConnell offered a strike-all amendment dubbed the “Healthcare Freedom Act of 2017,” which had been released to the public about an hour earlier.  This was the long-awaited “skinny repeal plan.” It zeroed the individual and employer mandate taxes accrued after 2015, repealed the Medical Device Tax for three years, shifted one year of Planned Parenthood funding to community health centers, raised HSA limits and offered states $2B of funding for ACA § 1332 waiver requests and programs.  As soon as Senator McConnell finished speaking, Senator Murray (D-Washington) moved to recommit the “skinny repeal” plan to the H.E.L.P. committee, calling it “Trumpcare.”  Following that lead, Senator Murphy (D-Connecticut) called skinny repeal, “nuclear bonkers” and “health care arson,” designed to protect, “the freedom to go bankrupt” and the “freedom to die early.”

Senator Tester (D-Montana) took a more measured tone, expressing his worry about the consequences of skinny repeal for small rural hospitals.  Senator Brown (D-Ohio) then picked up where Senator Murphy had left off, accusing Senator McConnell of letting drug company and insurance company lobbyists write the amendment in his office.

Senator Manchin (D-West Virginia) renewed his plea that Senate leaders turn this policy debate over to members who had been state governors.

Senator Whitehouse (D-Rhode Island) then accused Republicans of being “beholden to a small handful of creepy billionaires,” and Senator Sanders again reviled the “absurd” process.

Senator Durbin (D-Illinois), using a copy of the amendment as a prop, cited a comment by Senator Graham (R-South Carolina) to the effect that skinny repeal is a fraud.  About 20 minutes later, Senator Kaine (D-Virginia) spoke to the same effect, with the Graham comment printed on a foam core enlargement.

Senator Booker (D-New Jersey) said that the debate had made him physically ill and warned that, “When health insurance rates go down, mortality rates go up.”

Senator Hirono (D-Hawaii) asked Republicans to show for ACA beneficiaries the same compassion that they had shown for her after her cancer diagnosis.  That exhausted the Democrats’ share of the debate time.

Senator Enzi took the floor at 11:09 pm EDT and ran out the clock on the Republicans’ allotted time, rebuffing eight attempts by Democrats to interject comments and questions.  Mostly, Senator Enzi read from and commented on the book, “Demystifying ObamaCare: How to Achieve Healthcare Reform,” by David G. Brown.  At one point of particular frustration with the interruptions, Senator Enzi reflected on former Senator Phil Graham’s warning that Democrats on healthcare “don’t care who drives the train, as long as it wrecks.”

By 12:07 am EDT, July 28, leaders had made a deal to give Democrats ten more minutes and Republicans five more minutes of rebuttal.  Senator Wyden (D-Oregon) predicted that “skinny repeal would be the gateway to full Trumpcare” and Senator Schumer promised that Democrats had “learned our lesson” and wanted to start over.  Senator Cornyn then reminisced about the partisan, secretive process Democrats used to pass the ACA and noted that the only specific cooperation offered by Democrats was to markedly raise payments to health insurers to subsidize their unsustainable losses.

The vote on Senator Murray’s motion to recommit began at 12:20 am and failed, 52-48, but there was obvious tension rising between Senator McConnell and Senator McCain.  The roll call on adoption of the “skinny repeal” amendment to H.R. 1628 began at 1:24 am EDT, with Senator McCain off the floor.  During the vote, Senator McCain re-entered and, standing near (but not facing) Senator McConnell, Senator McCain signaled his “no” vote, to a standing ovation from Democrats.  Senators Collins (R-Maine) and Murkowski (R-Alaska) also voted against the amendment, so that it failed, 51-49.

At 1:39 am EDT, Senator McConnell pulled H.R. 1628 from the floor and spoke words that communicated surrender, in a tone suggesting anything but.

In short, the ACA remains federal law to the same extent as before the November 2016 elections, except that we’re now months closer to IRS enforcement actions.



Senate floor activity has made this the ACA’s biggest news week not involving Justice Roberts, but whatever news you have read, rest assured that it wasn’t really that simple.  Let us preach on it.

Shortly after noon EDT on July 25, Senator McConnell announced a vote on a motion to proceed to debate the National Defense Authorization Act (H.R. 2810), which actually proved to be a vote on a motion to proceed to debate the House-passed American Health Care Act, H.R. 1628.  With the Vice President providing the tie-breaking vote, that motion passed and debate commenced.

Shortly thereafter, Senator Cruz (R-Texas) offered what’s been called a “skinny plan” amendment that would allow sellers of ACA-compliant plans to sell cheaper alternatives lacking some of the coverages mandated by the ACA.  However, since that amendment, standing alone, would not be filibuster-proof, Senator Cruz needed a waiver of the related budget reconciliation rules.  The motion to waive those rules needed 67 votes, but got just 43.  The roll call showed nine Republicans voting with all Democrats to deny the waiver.

Senator Donnelly (D-Indiana) then moved to send H.R. 1628 back to the Senate Finance Committee (not the Budget Committee) with Medicaid-protective instructions.  The Senate recessed until 9:30 am EDT July 26, then to resume debate, with a vote on the Donnelly motion set for 11:30 am July 26.

This would be the most edgy health care vote taken since March 2010.  Should Senator Donnelly succeed, Democrats would keep the bill alive, at the risk that committee Republicans might get their act together and come up with something that could attract 60 votes later.  Don’t laugh.  It could happen.  Old dogs can and do learn new tricks.  By defeating the motion, Republicans would tee-up a reconciliation rules vote on something yet unseen that might fall short of even 50 votes, thus wasting a one-shot, filibuster-proof process that could have been used to pass tax reform or infrastructure spending, or both.  Indeed, that specter might have motivated some of the nine votes against the Cruz amendment rules waiver.

We watched every minute of hours of persistent, partisan hyperbole that commenced as scheduled on Wednesday morning.  For clarity, consistency and calm reason, the remarks of Senator Rand Paul (R-Kentucky) stood out, except that he was lauding the bill as he would amend it, stripping all the “replace” and leaving only the “repeal.”  At 12:13 pm, Senator Mike Enzi (R-Wyoming) successfully sought to waive a quorum call and to delay the scheduled 11:30 vote until 3:30 EDT, then debate resumed.  The future of healthcare was earnestly guaranteed to be Utopian or Hellish, depending on how fellow Senators voted. Would that Mark Twain, H.L. Mencken, and P.J. O’Rourke had live-tweeted it.

At 12:50 pm, Senator Thune (R-South Dakota) hopefully forecast that keeping the bill on the floor for amendment would lead to final passage … days later.  In a lucid interval from 1:07 until 1:20 pm, Senator Donnelly tried to redirect the debate to the motion actually before the chamber but he, too, succumbed to the tragedian temptation and the next speaker (Senator Chris Van Hollen, D-Maryland) reviled the “nasty DNA” of all Republican “wealth care” proposals, urging Senators to “kill the bill, don’t kill us.”  Nothing is more common than regression to the mean.

Beginning about 2:00 pm, Senator Cornyn (R-Texas) first turned the discussion to the specifics of H.R. 1628 but then returned to the ACA’s evils, Democrat “single payer” desires and associated, asserted motives for obstruction.  Senator Shaheen (D-New Hampshire) responded with an offer of bipartisanship, in the future, with regard to some unspecified but “common sense” solution, if Republicans would first surrender their “harsh, unsustainable” ideas.  Senator Durbin (D-Illinois) made an eloquent appeal for a return to “regular order,” reading from the recent floor speech given by Sen. McCain (R-Arizona).  But, starting at the bottom of the hour, Senator Wyden (D-Oregon) raced back to the bottom, targeting President Trump and “Trumpcare.”  Not to be outdone, Senator Blumenthal (D-Connecticut) then called H.R. 1628 a “shameful, deceitful mockery of democracy,” before closing with a call for mutual respect and civility.  That took us to 2:42 pm, when your humble correspondent mumbled, semi-consciously, “Sharknado, take me now.”

Senator Johnson (R-Wisconsin) rose to offer amendments, one of which would require members of Congress to obtain ACA-compliant health insurance through ACA exchanges.  Each amendment related to the text of H.R. 1628, not to the motion being debated.  Senator Enzi took the floor again at 3:05.  He reviewed how the same partisan reconciliation process was used to pass the ACA in 2010, how many material changes were made by the prior Administration’s “executive actions,” and how premiums soon will “surge” if Congress fails to make other needed changes now. Again, nothing about Senator  Donnelly’s pending motion.  After a quarter hour of muted-mic floor silence, Senator Strange (R-Alabama) made a short plea for consensus opposition to tax-funded abortions.

Fortunately, all things must come to an end, as this seemed to do, starting with a quorum call at 3:32, followed by a roll call vote … on Senator Paul’s amendment, which was defeated, 55 – 45.  Starting at 4:14 pm, the Clerk finally called the roll for the vote on Senator Donnelly’s motion to recommit H.R. 1628 to the Finance Committee.  On that one, Republicans stuck together and prevailed, 52 – 48.  Game on.

You thought we were done for the day?  Rookie.  Seconds after the Donnelly motion’s defeat, Senator Casey (D-Pennsylvania) moved to send H.R. 1628 back to the Finance Committee with instructions to protect in the bill all those protected by the Americans with Disabilities Act, using in his speech an enlarged photo of a disabled constituent and accusing “obscene,” “repeal and decimate” Republicans of seeking to institutionalize people with disabilities.  Because, apparently, when “they” take the low road, “we” tunnel.

Senator Cassidy (R-Louisiana), like Rand Paul a physician,  ignored that bait and added a new Republican talking point: 37% of all ACA Medicaid expansion funds have been spent in just three states – California, Massachusetts and New York.  He then announced a forthcoming “Graham – Cassidy Amendment” to spread that wealth around.  In the best WWF tradition, Senator Cassidy then tagged Senator Graham (R-South Carolina), who used foam-core charts and an easel to explain that “we’re leaving the taxes on wealthier Americans in place,” in order to have the funds to convert Medicaid to state block grants boosting underfunded states without excessive cuts to overfunded states.  West Virginia, he said, would get a 43% Medicaid raise.  Montana Medicaid funding would double.   There was no ad hominem argument, no name calling – just observations and proposed solutions.  Apparently filling time, Senator Inhofe (R-Oklahoma) took the floor for a few minutes to praise President Trump and “my hero Jeff Sessions.”  Senator Enzi then announced that the next votes would be on the Heller Amendment (not yet described) and the Casey motion.

Senator Carper (D-Delaware) spoke at length on the recent history of federally-funded health care, noting that the Heritage Foundation originally conceived several solutions adopted by the ACA, including health insurance exchanges, as an alternative to the single-payer system proposed by Hillary Clinton in 1992-93.  “Romneycare” was prominently mentioned. If Republicans winced, they weren’t on camera.

After two more Democrats denounced “Trumpcare” and the vote-a-rama process, Senator Heller (R-Nevada) was recognized to tout the Heller Amendment.  However, he discussed only the desirability of Medicaid expansion protection, offering no details of his proposal.

Senator Duckworth (D-Illinois) then related a sympathetic story about a quadriplegic constituent and accused Republicans and President Trump of “threatening her life.”

Senator Casey rose again to try again to explain why ACA Medicaid expansion is needed to protect the rights created by the ADA, calling the Heller Amendment mere “sentimentality,” without any binding effect.

At 6:10 pm EDT, the Clerk began to call the roll on Senator Casey’s motion to recommit H.R. 1628 to the Finance Committee.  Republicans prevailed, 51-48, whereupon Senator Heller summarized his amendment, expressing the sense of the Senate that the bill is not intended to reduce Medicaid eligibility, benefits or coverage.  Senator Sanders (D-Vermont) interposed a procedural objection and Senator Heller sought a waiver, just as Senator Cruz had done, but won only 10 votes.

At 7:10 pm, Senator McConnell called-up an amendment proposed by Senator Daines (R-Montana).  Senator Schumer (D-New York) then announced that Democrats would offer no further amendment unless and until Republicans put on the floor a final bill offered for passage.

On the heels of that ultimatum, Senator Reed (D-Rhode Island) renewed the bipartisan cooperation offer made earlier by Senator Shaheen, then yielded the floor to Senator Franken (D-Minnesota), who decried the Republicans’ “reckless, irresponsible” plan to “gut Medicaid,” so as to deprive a named, autistic child of the “therapy he needs to thrive.”  Other examples followed.  Republican health care philosophy, he said, is “survival of the fittest.”  In closing, he urged his colleagues to “stand up to the lies.”

Following Senator Franken, we were treated to a speech by Senator Whitehouse (D-Rhode Island) on the merits of a carbon tax.

Finally, just before 8:00 pm, Senator Enzi announced that debate on H.R. 1628 would resume at 10:00 am EDT July 27, with a vote on the Daines amendment set for 2:15 pm.  Who knew health care could be so complicated?

Nearly three years ago, having spent hundreds of hours immersed in ACA minutiae, we anticipated that clients would not react well to fees for services that consisted principally of telling them that they had asked the wrong question. So we decided, against tradition and much conventional wisdom, to sink lots of unpaid partner time into this education project. A casual reader of this blog should learn basic ACA terms and concepts, so that he or she can converse effectively with advisors. A regular reader should be able to identify, during such a conversation, a purported ACA expert who’s a poseur. Sadly, they abound. A colleague should find this a thought-provoking reference to ACA rules and guidance documents. Those are our goals.

Substitute nothing you read here for legal or other professional advice about any specific situation. ACA rules and sub-regulatory guidance change frequently and whimsically. Occasionally, the three main enforcement agencies (DOL, HHS, IRS) disagree. Sometimes, they publish a new rule unaware of a related, existing rule. Part of our service to you is to alert you to what we see coming. We usually have guessed right, but we often are guessing. And of course, apparently insignificant factual details can turn out to be determinative. If you regard this blog as cheap – i.e., free – legal advice, you’re rolling the dice at your own risk and the risk might be far bigger than you realize.

Finally, we invite constructive comments, including reasoned criticism, but not rants. We delete hissy-fits and block commenters who seem to be unable to comment otherwise. That goes triple for political hyperbole. Sometimes, we must explain political realities in order to explain a regulatory reality, but we try to be objective. You should, too.

Today, the ACA enforcement agencies (DOL, HHS, IRS) jointly published final rules, effective January 1, 2017, on grandfathered plan status, pre-existing condition exclusions, lifetime and annual limits, rescissions, dependent coverage, appeals and patient protections. Interim rules and sub-regulatory guidance issued since June 2010 are merged and finalized. On first reading (104 pages), we see no boat-rocking changes, but here are bits we think deserve review.

Grandfathered Plan Status

Grandfathered status is lost immediately, irrevocably, when a prohibited change is made, even in mid-year. However, since this applies separately to each benefit package within a plan – e.g., a PPO option, and HMO option and a POS arrangement – grandfathered status of the entire plan is not lost when the plan makes changes that forfeit the grandfathered status of one benefit package.

More good news for unions: multiemployer plans get substantial exemption from anti-abuse rules, permitting new employers to join expressly to take advantage of the plans’ grandfathered status.

Dropping coverage of anything needed to diagnose or treat a particular condition will be treated as eliminating substantially all benefits for that condition, forfeiting grandfathered status. For example, if a mental condition requires both drugs and counseling and the plan deletes counseling, grandfathered status is lost.

If employees pay a fixed dollar amount (including $0) that does not increase, a plan remains grandfathered even if the employer contribution rate declines by more than 5%.

A grandfathered plan offering self-only coverage may add family coverage and peg the employee contribution for the new family tier at more than 5% above the self-only rate.

When a generic alternative becomes available, a grandfathered plan may move the brand name drug to a higher cost-sharing tier without forfeiting its status due to increased costs imposed on those who continue to buy the brand name drug.

HRAs and Premium Reimbursement Plans

A stand-alone HRA remains illegal, as does a health FSA not offered through a § 125 plan. But very small employers (under 20), exempt from the duty to offer group health coverage to Medicare-eligible employees, now may integrate premium reimbursement plans with Medicare Part B or D as long as they offer group health coverage to employees not Medicare eligible.

Dependent Coverage

Some HMO plans require covered individuals to live within a stated geographic area. When a child under age 26 is away at college, she loses eligibility. This now will be deemed to violate the adult child coverage mandate. For dependents other than children (e.g., grandchildren), a plan may impose residence, financial dependence or similar coverage requirements.

External Appeals

Plans no longer may condition external review on payment of a filing fee, with one exception. In states with laws expressly permitting nominal filing fees, consistent with the 2004 NAIC model, a plan may charge a fee up to $25 per appeal (limited to $75 annually per claimant) if the plan refunds fees paid for successful appeals and waives fees that would impose a financial hardship.

Emergency Services

The agencies believe that plans have been abusing out-of-network providers, resulting in excess balance billing of patients. Henceforth, plans must pay for out-of network emergency services at least the greatest of – (1) the median amount paid to network providers; (2) the product of the formula that the plan uses generally for out-of-network services (UCR, for example); (3) the Medicare payment amount.

ACA § 1557(a) (42 U.S.C. § 18116(a)) says:

Except as otherwise provided for in this title (or an amendment made by this title), an individual shall not, on the ground prohibited under title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.), title IX of the Education Amendments of 1972 (20 U.S.C. 1681 et seq.), the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.), or section 794 of title 29, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any health program or activity, any part of which is receiving Federal financial assistance, including credits, subsidies, or contracts of insurance, or under any program or activity that is administered by an Executive Agency or any entity established under this title (or amendments). The enforcement mechanisms provided for and available under such title VI, title IX, section 794, or such Age Discrimination Act shall apply for purposes of violations of this subsection.

Sub-section (b) emphasizes that subsection (a) does not limit the previous application of the statutes referenced in subsection (a). Subsection (c) authorizes the HHS Secretary to “promulgate regulations to implement this section.” All of this has been in effect since March 2010. So, why did HHS need over five years to propose the set of rules published September 8? Here are a few highlights. For brevity’s sake, we omit foreign language service requirements, disability accommodation, compliance certification, grievance procedure and notice posting rules, among others.

Marketplace Insurers Are Covered Comprehensively

Receipt of non-procurement federal financial assistance, including ACA Marketplace subsidies, directly or indirectly, subjects a health insurer to § 1557 coverage, for all its health plans, not just those sold through the Marketplace. See preamble footnote 73 and accompanying text and see 45 C.F.R. § 92.4. Entities legally separate from those insurers might be able to serve as third party plan administrators for otherwise uncovered, self-funded group health plans, subject to “case-by-case inquiry” into § 1557 coverage.  No guidance is given about how that call will be made.

But wait, there’s more! “A health program or activity also includes all the operations of a State Medicaid program,” we learn in preamble footnote 16.

Insurer and Medicaid program exposure matter to the extent that HHS reads § 1557 to forbid otherwise lawful plan designs or practices or to mandate practices or coverages that had been optional. Surprise! According the proposed rules, § 1557 does both.

Gender Transition (Absolutely) and Sexual Orientation (Probably) Are Protected

The proposed rules say –

The term “on the basis of sex is defined to include, but is not limited to, discrimination on the basis of pregnancy, termination of pregnancy, recovery therefrom, childbirth or related medical conditions, sex stereotyping, or gender identity.

Consequently, “discrimination on the basis of sex includes discrimination in the basis of gender identity.” So, “failure to treat individuals in accordance with their gender identity may constitute prohibited discrimination.” Thus, a covered plan may not exclude services related to gender transition. HHS also announces its support for “banning discrimination in health programs and activities . . . also on the basis of sexual orientation,” while requesting comments about the legal authority to do so.

This new protection is augmented by HHS’ decision to forbid a covered entity to discriminate against an individual because he or she, though not in a protected group, is “associated with” someone in a protected group. See 45 C.F.R. § 92.209.

Permitted Discrimination: Age Rating? Dependent Pregnancy Exclusion?

In fifty pages of preamble and rules, HHS references § 1557’s limiting, introductory clause – i.e., “[e]xcept as otherwise provided for in this title” – just four times, saying only once, in preamble footnote 38, what it might mean. See 80 Fed. Reg. 54,181 (Sept. 8, 2015). We learn there that HHS considers the age rating permitted by 45 C.F.R. § 147.102(1)(1)(iii) to be beyond § 1557’s reach. Those rules implemented ACA § 1201(4), which enacted new PHS Act § 2701 (42 U.S.C. 300gg), limiting the age rating spread for individual and non-grandfathered small group plans to a 3:1 ratio. That limit was not imposed on grandfathered or large group plans. Should we infer from footnote 38 that § 1557 bans all age-rating except the 3:1 spread permitted for individual and non-grandfathered small group plans, effectively extending that limit to large group and grandfathered, plans? Or should we infer that age rating, up to 3:1 by individual and small group plans, and all age rating by large group and grandfathered plans is unregulated by § 1557?

Consider also dependent pregnancy coverage. Pregnancy coverage for all is among the “Essential Health Benefits” required of individual and non-grandfathered, small group plans, but EHB are not mandated for grandfathered or for large group health plans. See ACA § 1302(b)(1)(d) (42 U.S.C. 18022) and ACA-added PHS Act § 2707 (42 U.S.C. § 300gg-6). Consequently, grandfathered and large group plans (like state Medicaid plans) typically exclude dependent pregnancy coverage. Does ACA Tile I “otherwise provide for” that exclusion? If not, does the exclusion violate § 1557’s prohibition of discrimination on the basis of sex?

The most obvious place for the rules to explain what “otherwise provided for” means is at 45 C.F.R. § 92.2(b)(2), titled “Limitations.” Here’s the complete text of that subsection: “[Reserved.]” Is HHS reserving its option to tell us later that § 1557 compels what was allowed elsewhere in Title I? That seems contrary to the limiting function of the opening clause. But if so, what specific discrimination, otherwise outlawed by § 1557, does Title I “provide for”? Is 3:1 age rating the sole example? Then why didn’t § 1557 reference only that section, as was done in § 1251, which distinguished the PHS Act amendments that would and would not apply to grandfathered plans?

A Broad Employee Health Plan Exemption

But for § 92.208 of the proposed rules, employer recipients of federal financial assistance might be exposed to significant new health plan mandates. However, that section seems to take back much, maybe all, of what may have been given to employees elsewhere. Here’s the entire section.

 §92.208 Employer liability for discrimination in employee health benefit programs.

A covered entity that provides an employee health benefit program to its employees and/or their dependents shall be liable for violations of this part in that employee health benefit program only when:

(a) The entity is principally engaged in providing or administering health services or health insurance coverage;

(b) The entity receives Federal financial assistance a primary objective of which is to fund the entity’s employee health benefit program; or

(c) The entity is not principally engaged in providing or administering health services or health insurance coverage but operates a health program or activity, which is not an employee health benefit program, that receives Federal financial assistance; except that the entity is liable under this part with regard to the provision or administration of employee health benefits only to the employees in that health program or activity.

The preamble summarizes that section helpfully, twice.

[W]here an entity that receives Federal financial assistance provides an employee health benefit program to its employees, it will be liable for discrimination in that employee health benefit program under this part only in the following circumstances [thereafter stating subs-sections (a) through (c) above].

[U]nless the primary purpose of the Federal financial assistance is to fund employee health benefits, we propose to not apply Section 1557 to an employer’s provision of employee health benefits where the provision of those benefits is the only health program or activity operated by the employer.

This seems to us to undercut any contention that § 1557 mandates dependent pregnancy coverage for employee health plans sponsored by recipients of federal financial assistance. Perhaps HHS did this to avoid having to specify the discrimination that is permitted by § 1557 because it is “otherwise provided for” in ACA Title I.

Note, however, that § 92.208 speaks only to employer liability. HHS sees the employer’s insurer as independently subject to § 1557 if it is a Marketplace participant. Therefore, in order to exclude coverages deemed mandated by § 1557, the employer’s plan might need to be self-funded and administered by a TPA that is not a Marketplace participant.

Comment Period

Comments on the proposed nondiscrimination rules must be received by November 9, 2015.

With group health plan premium increases limited by market and regulatory forces, insurers and self-insurers have raised deductibles, co-insurance, co-pays and other cost-shifting provisions, subject to the ACA’s 2015 maximum out-of-pocket (“MOOP”) limits – $6,600 per individual, $13,200 per family.  But “reference-based pricing” complicates MOOP enforcement.  In Frequently Asked Questions (“FAQ”) guidance issued October 10, 2014, DOL, HHS and IRS revealed their current views on the subject.

A typical group health plan pays substantially more for services rendered by a network provider than for the same services rendered by an out-of-network provider.  Reference-based pricing can be viewed as an alternative to provider network designation.  The insurer sets a price that it will pay for a certain service in a certain market.  All who provide the service for the reference price are, in effect, network providers. Providers who charge more can collect only the reference price from the insurer, leaving their patients exposed to balance billing.

Suppose that the normal covered cost of a procedure in your market is $26,600, and that a non-grandfathered, large group plan subject to the ACA’s 2015 individual MOOP limit therefore would pay at least $20,000.  What if, instead, the plan sets a reference price of $16,600? Is that equivalent to an unlawful, $10,000 individual MOOP provision?  And what if the reference price is so low that it’s accepted only by a single, over-booked surgeon 150 miles away?  Should that be treated the same as a traditional plan’s network adequacy problem?  Summarized briefly, here are major points emphasized in this FAQ guidance.

  • Reference-based pricing should apply only to services that can be delayed long enough to permit patients to shop around.  If reference-based pricing is applied to emergency services, balances paid must count toward the MOOP limit.
  • If the number or quality of providers of the service for the reference price would not meet applicable, functionally equivalent state network adequacy standards, PHS Act § 2707(b) won’t be satisfied, either.
  • Insurers should pay more than the reference price if the service is not reasonably available for the reference price from a high quality provider in the relevant area.

Finally, if the plan uses reference-based pricing, PHS Act § 2707(b) requires these disclosures (quoted verbatim):

Disclosure. Plans should provide the following disclosures regarding reference-based pricing (or similar network design) to plan participants free of charge.

a.  Automatically.  Plans should provide information regarding the pricing structure, including a list of services to which the pricing structure applies and the exceptions process. (This should be provided automatically, without the need for the participant to request such information, for example through the plan’s Summary Plan Description or similar document.)

b.  Upon Request.  Plans should provide:

  i.  A list of providers that will accept the reference price for each service;

  ii.  A list of providers that will accept a negotiated price above the reference price for each service; and

  iii.  Information on the process and underlying data used to ensure that an adequate number of providers accepting the reference price meet reasonable quality standards.

A dangerous notion is afoot – that an employer too small for “employer mandate” taxation under 26 U.S.C. § 4980H is therefore “exempt from Obamacare,” as we have heard it said too often.   That’s wrong for many reasons.  Every employer sponsoring a group health plan is obligated to comply with applicable coverage, cost sharing and anti-discrimination mandates, whether or not the employer is required to offer coverage at all.  Here’s one example that’s currently getting too little attention.

By adding new § 2716 to the Public Health Service Act, the ACA directed DOL, HHS and IRS to adopt for fully-insured plans non-discrimination rules like those already applicable to self-funded plans.  Violations would subject the plan to ERISA suits and to Code § 4980D taxes or PHS Act civil money penalties of $100 per day per non-highly compensated individual.  About six months later, the IRS renewed the warning in Notice 2010-63, inviting, “comments on what additional guidance relating to the application of section 105(h) (2) would be helpful with respect to insured group health plans.”

In Notice 2011-1 (December 2010), the IRS warned again that, “if a self-insured plan fails to comply with § 105(h), highly compensated individuals lose a tax benefit; if an insured group health plan fails to comply with § 2716, the plan or plan sponsor may be subject to an excise tax, civil money penalty, or a civil action to compel it to provide nondiscriminatory benefits,” adding that grandfathered, fully-insured plans will be exempt from the new rules.  Notice 2011-1 also told us that –

compliance with § 2716 should not be required (and thus, any sanctions for failure to comply do not apply) until after regulations or other administrative guidance of general applicability has been issued under § 2716. In order to provide insured group health plan sponsors time to implement any changes required as a result of the regulations or other guidance, the Departments anticipate that the guidance will not apply until plan years beginning a specified period after issuance.  Before the beginning of those plan years, an insured group health plan sponsor will not be required to file IRS Form 8928 with respect to excise taxes resulting from the incorporation of PHS Act § 2716 into § 9815 of the Code.

Comments were invited on these thirteen topics (summarized briefly here):

  1. What “benefits” should be tested?  “For example, is the rate of employer contributions toward the cost of coverage (or the required percentage or amount of employee contributions) or the duration of an eligibility waiting period treated as a “benefit” that must be provided on a nondiscriminatory basis?”
  2. Should there be an alternative that tests only coverage availability?
  3. How this relates to employer and individual mandate taxation.
  4. Which employee groups might be tested separately.
  5. Which separate employer locations might be tested separately.
  6. Safe harbor options.
  7. Aggregation of “substantially similar” coverages.
  8. Application to expatriate employees.
  9. Application to multi-employer plans.
  10. Testing, or not, of after-tax coverages provided to the highly compensated.
  11. Treatment of voluntary waivers of employer coverage.
  12. Treatment of corporate mergers, acquisitions and similar transactions.
  13. Penalty application.

The anticipated rules next were referenced next in a set of proposed rules on “wraparound” plans, published on Christmas Eve, 2013.  See 78 Fed. Reg. 77,740, to be codified at 26 CFR § 54.9831-1(c)(3)(vi).  Neither the rule text nor the preamble gave any further hint about the content of the coming rules.  See 79 Fed. Reg. 77,636.

Then, news broke in January 2014 that the IRS would delay issuance of related ACA rules until after the November 2014 elections, perhaps well into 2015.   That caused many employers to tune out.

We suspect that existing rules for self-funded plans are being reconsidered and perhaps rewritten to match the new rules for fully-insured plans.  If so, the new rules could make a big splash with small employers who have adopted self-funded plans to escape the ACA’s impact on their insurance markets.  A lot is happening that deserves the attention of employers large and small. Don’t get caught napping.

Recently, we have received requests to re-post prior articles on the 90-day waiting period, the employer mandate final rules (supplemented here, here, here and here), and our pop quiz for ACA consultants.  As we approach our 100th article, some readers apparently find the scroll-down browsing process tedious.  So do we.  Here are two other ways to find the articles that most interest you.

You may search by “Tags” or by search terms.  We have attached all our present “Tags” to this article, appearing just under the author’s name, so that you may see your options.  Click any Tag and the server will show you a list of all articles similarly tagged.  Or, enter your search term(s) in the “Search” box, in the green bar above and to the right of the article, just above “ABOUT THIS BLOG.”  The server then will show you a list of articles that contain your search term(s).

We genuinely seek to help employers, providers, insurers and brokers understand ACA compliance issues, but please remember that the articles posted on this site are not legal advice and should not be substituted for legal advice.  They are offered as educational introductions to the subjects addressed.  ACA legal advice should be obtained confidentially from a lawyer who knows the ACA and who knows all your relevant facts.

On April Fools’ Day, HR 4302 officially became Public Law 113-93.  It was the latest in a long line of so-called “Doc fix” bills, delaying scheduled Medicare reductions of payments to physicians.   Few onlookers noticed this, inserted between provisions on ICD-10 Code set delay and a GAO child health care report mandate:


(a) IN GENERAL.—Section 1302(c) of the Patient Protection and Affordable Care Act (Public Law 111–148; 42 U.S.C. 18022(c)) is amended—

(1) by striking paragraph (2); and

(2) in paragraph (4)(A), by striking ‘‘paragraphs (1)(B)(i) and (2)(B)(i)’’ and inserting ‘‘paragraph (1)(B)(i)’’.

(b) CONFORMING AMENDMENT.—Section 2707(b) of the Public Health Service Act (42 U.S.C. 300gg–6(b)) is amended by striking ‘‘paragraphs (1) and (2)’’ and inserting ‘‘paragraph (1)’’.

(c) EFFECTIVE DATE.—The amendments made by this Act shall be effective as if included in the enactment of the Patient Protection and Affordable Care Act (Public Law 111–148).

Shorn of legalese, it says that the ACA’s annual cap on small group health plan deductibles  – $2,000 individual, $4,000 family in 2014 – is repealed, retroactive to the date of the ACA’s passage, as if it had never been in the Act.  Was it just six months ago that our government shut down over failed attempts to repeal various ACA bits and pieces?  Yes.  So why this, why now?  Any why no uproar?

In ACA §  1302(c), Congress capped non-grandfathered, small group health plan deductibles, but not individual or large group plan deductibles.  That’s why so many of the plans being sold through feature deductibles near the out of pocket maximum limit.  It was either a Congressional drafting error or a poison pill that only Congress could fix.  Part XII of the enforcement agencies’ Frequently Asked Question publications and the proposed rules on the subject (45 CFR § 156.130) effectively said, “It is what it is.”

But imposing similar limits on individual and large group plans probably would have been rejected even by ACA supporters, because sticker shock would be much worse without high deductibles.  And the premium inflation consequences for small group plans contributed to the ACA’s unpopularity in an election year.  So, ACA opponents got a scalp.  ACA defenders hope it was not theirs.

We have been concerned for many months that some of our clients and friends are getting unreliable ACA compliance advice.  This is not a knock on insurance agents, or brokers, or TPA’s or any other class of advisors.  We work with some who are as helpful to our mutual clients as we are to them.  But too many (lawyers included) plainly do not know the subject. 

We have wondered how, unless they have mastered the ACA, executives can distinguish good advice from bad, trustworthy advisors from . . . not so much.  So, we created a pop quiz (below) that any reliable ACA advisor should ace, but that many others will bomb.  Whether you use it, and how, is up to you.  But now you have a tool that you did not have yesterday. 

If you like, we will grade your advisor’s paper, e-mailed to us – – without charge, assuming that we have no ethical conflict with that evaluation, and limited to the first 100 requests that we receive. We won’t contact your advisor without your advance, written permission and we won’t shame him or her, on this site or elsewhere; our aim is to help you, not to hurt others.

ACA Employer/Plan Compliance Pop Quiz

Read all questions, then answer each question completely and legibly, in writing.

  1. Do you personally study the ACA and the implementing regulations and guidance documents, or do you rely on someone else to do that and keep you current?  To the extent that you rely on someone else, provide his or her name and contact information.
  2. Provide the URL of a web site where we may read your published writings on ACA compliance.
  3. List the principal ACA federal enforcement agencies and the primary enforcement sub-agencies of each.
  4. What risks does an employer run if it funds an HRA for each employee to use to purchase an individual health insurance policy, through a private exchange or otherwise?
  5. Identify the Fair Labor Standards Act section, added by the ACA, for which no implementing rule has yet been proposed.
  6. State the effective date of the new ACA rules forbidding non-grandfathered, fully insured group health plans to discriminate in favor of the highly compensated.
  7. In a leased employee arrangement, what determines whether the leasing firm or its customer bears the Employer Shared Responsibility Cost obligation to offer coverage to full time employees and their dependents?
  8. Explain how a group health plan may recover its grandfathered status if it has been lost due to a minor error such as a clerical mistake.
  9. What is an employer’s potential exposure for permitting a health care provider to pay group health plan premiums for an employee?
  10. Is each following statement True (T) or False (F)? (Circle one).
A grandfathered group health plan need not comply with the coverage and cost-sharing mandates that the ACA added to the Public Health Service Act.



A group health plan is grandfathered if it has made no coverage or cost-sharing changes adverse to employees since March 23, 2010.



The ACA’s Employer Shared Responsibility Cost rules do not apply to state or local government employers.



An Applicable Large Employer that offers minimum essential coverage to at least 70% of its full time employees and their dependents in 2015 will be exempt from assessments under Code § 4980H for 2015 coverage months.



To determine whether an employer is an Applicable Large Employer subject to the Employer Shared Responsibility Cost rules beginning in January 2015, the employer should count its number of full time employees in each month of 2015 and determine whether it employed, on average, at least 50 full time employees per month.



For purposes of the preceding statement, a full time employee is one who works at least 130 hours per month (equivalent to 30 per week).



Self-funded group health plans are not required to pay annual PCORI fees unless they are required to file an annual Form 5500.



Self-funded group health plans are not required to remit annual reinsurance fees to HHS.



An employer that receives an erroneous employee subsidy certification notice from the Federally Facilitated Exchange will have 60 days to appeal the error.



The penalty for a fully-insured group health plan’s discrimination in favor of the highly compensated is taxability of plan benefits to the highly compensated employee.



Group health plan changes that an employer makes in order to comply with the ACA are not mandatory subjects of bargaining with the affected employees’ union representatives.



Because employees who have lost their jobs are eligible for immediate Exchange enrollment, employers no longer need to provide COBRA notices.



Employees who believe that they have suffered employer retaliation for their exercise of an ACA right may file an EEOC Charge to obtain relief.