Health Insurance Exchanges

In early January, Idaho Governor Butch Otter signed an executive order (EO) directing the state’s Department of Insurance (DOI) to “seek creative options” to expand “access” to health insurance coverage for Idahoans. The EO essentially deemed to allow health carriers in the state to offer plans on the health insurance exchanges created by the Affordable Care Act (ACA) “even if not all [ACA] requirements are met.”[1]  For many spectators, the most significant aspect about the order was not that it instructed a state agency to ignore federal law, but that it left open the question whether the Centers for Medicare & Medicaid Services (“CMS”), under the direction of Trump Administration appointee Seema Verma, would step in to enforce the ACA.  CMS’s response in early March was that it would enforce the ACA’s penalties against carriers that attempted to sell non-compliant plans, which was a rare instance of the Administration defending a law that it has otherwise attempted to eliminate. Continue Reading What Lessons Can We Take From The Administration’s Refusal to Allow Idaho to Dismantle the ACA Marketplaces?

ML Strategies has published the first installment of a new weekly preview, designed to give you quick overview of health happenings in the coming week. The preview highlights upcoming activity in the House and Senate and other hot topics on the Hill.

Spoiler alert: the confirmation processes for Dr. Scott Gottlieb (FDA) and Judge Neil Gorsuch (Supreme Court) will get a lot of attention this week.

See HERE for this week’s preview and be sure to stay tuned in the coming weeks.

Written by: Stephen M. Weiner, Alden J. Bianchi, and Roy M. Albert

On July 22, 2014, two federal appellate courts issued conflicting decisions, within hours of each other, regarding the IRS final rule published on May 23, 2012 (the “IRS Rule”), intended to implement the exchange-related tax credit provisions of the Affordable Care Act (“ACA” or the “Act”).  The decisions will likely lead to another Supreme Court decision addressing fundamental provisions of the ACA.  How these issues are reconciled and resolved will affect the further implementation of Obamacare, and even whether its core policies will survive.


ACA Section 1401 provides for tax credits for eligible taxpayers purchasing insurance “through an Exchange established by the State under [ACA Section 1311]” (emphasis added). ACA Section 1311 directs the states to establish health insurance exchanges. It does not refer to federally-facilitated exchanges. Under ACA Section 1321, if a state does not elect to create an exchange that meets federal requirements, the federal government will “establish and operate” one in that state.  Currently 16 states and the District of Columbia have established their own exchanges.  Thirty-four states rely on federally-facilitated exchanges.  The IRS Rule authorized tax credits for insurance purchased on both the state and the federally-facilitated exchanges.

The Decisions

Both decisions addressed whether tax credits are available for residents in the 34 states that have federally-facilitated exchanges.  The District of Columbia Court of Appeals (the “D.C. Circuit”), in Halbig v. Burwell, said “no”; the Fourth Circuit Court of Appeals (the “Fourth Circuit”), in King v. Burwell, said “yes.”  The decisions turned on readings of the relevant statutory language and application of the principles set out in the 1984 Supreme Court case, Chevron U.S.A. v. NRDC.

The Chevron test is used to assess whether agency action, in this case the IRS, is within the scope of the agency’s authorization, in this case the authority granted by the ACA.  The Chevron test has two prongs:

  • First, has Congress “directly spoken to the precise question at issue?  If the intent of Congress is clear, that is the end of the analysis; for the court as well as the agency must give effect to the unambiguously expressed intent of Congress.”
  • Second, “if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.”

The D.C. Circuit relied principally on the first prong, concluding that the governing language, the specific language of Section 1401, was unambiguous: the IRS cannot provide for tax credits in conjunction with federally-facilitated exchanges.

The Fourth Circuit, weighing the conflicting arguments put forth by both parties and looking at Section 1401 in a broader context, concluded there was ambiguity in a very complex statute, and so it moved on to the second prong of the Chevron test: whether the IRS Rule was based on “a permissible construction of the statute.”  This review standard, the Fourth Circuit noted, is highly deferential, with a presumption in favor of finding the agency action valid.  Under this prong, in concluding that the IRS Rule should be upheld, the Fourth Circuit was “primarily persuaded by the IRS Rule’s advancement of the broad policy goals” of the ACA: a major overhaul of the entire health insurance market in the US, for which the individual mandate and the tax subsidies are integral.  Further, the court noted that the IRS Rule took on even greater importance in light of the number of states that chose not to establish their own exchanges.

Continue Reading Charting the Future of Premium Subsidies under the Affordable Care Act: Halbig v. Burwell and King v. Burwell

Written by: Roy Albert

Last week, HHS’s Office of the Assistant Secretary for Planning and Evaluation published a Report offering health plan enrollment data for the state-based insurance marketplaces authorized by the Affordable Care Act (“Marketplaces”).  Some states have elected to implement their own Marketplaces, whereas other state Marketplaces are supported by or are fully run by HHS.  The Report provides data for the over 8 million people that enrolled in either the state-based Marketplaces or federally-facilitated Marketplaces during the initial enrollment period ranging from October 1, 2013 through March 31, 2014.

The beginning of the initial enrollment period was quite rocky, as the widely-chronicled problems with caused some to question whether the website would derail the successful implementation of the Affordable Care Act.

Many of the most widespread problems with the website have been resolved, and enrollment at the end of the initial enrollment period surged, which HHS notes is consistent with expectations based on the experience of private employers, the Federal Employees Health Benefits Program, and Medicare Part D.  HHS specifically notes that the rate of young adults (18 to 34 years of age) entering the Marketplaces increased toward the end of the initial enrollment period.  During the last month of the initial enrollment period, the number of young adults who selected Marketplace plans doubled from approximately 1.1 million to over 2.2 million.  HHS’s focus on young adults is predicated upon the belief that participation of younger people in health insurance risk pools is essential to the success of the Marketplaces, as younger often more healthy people must offset older individuals who may require greater health expenditures.

Continue Reading HHS Report Highlights “Surge” In Enrollment in Health Insurance Marketplaces

The Mintz Levin Center for Health Law & Policy hosted a panel discussion entitled, “Understanding Health Insurance Exchanges: The Experts Weigh-In.”  The event, which covered the key issues regarding exchanges, including state flexibility, the essential benefits package, and qualified health plan (QHP) and employer requirements, was held on August 4th at the firm’s Washington, D.C. office.

The U.S. Department of Health and Human Services (HHS) recently proposed the first in a series of rulemaking on Health Care Exchanges—mechanisms for organizing the health insurance marketplace to help consumers and small businesses access coverage in a way that permits the easy comparison of available options based on price, benefits and services, and quality.

View Seminar Recording


  • Alden Bianchi, Member, Employment, Labor & Benefits Section; Practice Group Leader, Employee Benefits & Executive Compensation Practice
  • Liz Fowler, Special Assistant to the President for Healthcare and Economic Policy, National Economic Council, Executive Office of the President
  • Brian Webb, Manager of Health Policy & Legislation, National Association of Insurance Commissioners (NAIC)