As the country focuses on the upcoming King v. Burwell decision, the Supreme Court recently ruled on a barely noticed, yet critical, healthcare case: Armstrong v. Exceptional Child Center. The Court’s decision in Armstrong will likely have significant, negative consequences for the continued pursuit of universal healthcare.
In Armstrong, an Idaho healthcare provider sued the Idaho Department of Health and Welfare arguing that the state department was reimbursing for Medicaid procedures at insufficient levels. The department claimed they were unable to raise reimbursement rates because the Idaho legislature had not allocated the funds. Medicaid, a government program that provides health insurance for low-income Americans, requires state governments to pay healthcare providers an amount “sufficient to enlist enough providers so that care” is available (this is known as the Equal Access Provision). Prior to Armstrong, Medicaid providers could bring a lawsuit against their state if they believed the state was “paying them too little” under the Medicaid Act.
The Supreme Court ruled against this practice last week with its ruling that neither the Constitution’s Supremacy Clause nor the Medicaid Act allow private actors to bring a cause of action against states when they provide insufficient reimbursement rates. This decision reversed lower court rulings. The Court did not believe that federal courts were properly situated to set Medicaid rates. Rather, they ruled that the Department of Health and Human Services should be the only entity that can challenge insufficient reimbursements by states. This decision will likely have damaging practical effects.
First, DHHS’ only option against a state that does not provide sufficient reimbursement rates is to withhold all Medicaid funding from that state. This is a severe option. To cut off all Medicaid funds because some reimbursement rates are insufficient would only hurt Medicaid recipients even further. And because it is a severe option that DHHS will likely shy away from, states view DHHS action as a paper tiger. With private rights of action, federal courts, unlike DHHS, could enjoin states to set the proper rates. This was a more efficient and effective process.
Second, DHHS being the sole overseer will stifle accountability. As past DHHS leadership told the Court, the Department lacks the resources to challenge all insufficient state reimbursement rates. In the past, DHHS has relied on private providers to bring cases. Without private actors bringing suits, it is likely many insufficient reimbursement rates will go unchallenged, and states will not be accountable to the Equal Access Provision.
Third, if insufficient rates go unchallenged, Medicaid recipients will not have healthcare providers. Insufficient reimbursement rates deter healthcare providers from providing care to Medicaid recipients. Providers simply cannot take insurance that does not reimburse them sufficiently. Because of Armstrong, these providers cannot challenge the low payments, and as a result, more providers may refrain from taking Medicaid beneficiaries. When this occurs, Medicaid recipients will face even worse access to healthcare. As the American Medical Association told the Court, “state reimbursement rates may represent the difference between life and death.”
Despite less media focus on Armstrong compared to King, make no mistake: the ruling in Armstrong will have significant effects. Medicaid Expansion will be irrelevant if providers do not accept Medicaid due to insufficient reimbursement rates. Medicaid beneficiaries will possess an empty promise: health insurance without healthcare. Because of this ruling, Medicaid providers cannot bring their challenges to the courts, but must instead rely on a government agency. I fear that Anderson was not an exercise in purely procedural or administrative matters: it was an exercise in limiting healthcare access.
This is a great piece. Very informative. I do wonder, however, why the threat of removing funding is insufficient. Is that not a tool the federal government frequently uses for various other policy objectives?
Also, could the legislature fix this by passing a law similar to those civil rights statutes which allow for a private cause of action? It would be interesting to see a policy proposal of that sort initiated here at HLS.
Anyways, great piece. Looking forward to more.
Andrew, thanks for reading and for the great questions. I am unsure how often the threat of funding is used for various policy objectives, but it does seem like the threat to remove funding is one of the federal government’s strongest tools with federalism. As you may remember, the threat to pull all Medicaid funding if states did not expand Medicaid under the ACA was struck down by the Supreme Court in the first ACA case (with Chief Justice Robert’s “gun to the head” analogy). But my main claim is that to remove all Medicaid funding would actually hurt health access even further. For instance, if a state fails to reimburse properly for one procedure, it seems dangerous to revoke funding for all Medicaid procedures throughout the state. Medicaid recipients would be punished further. And because it is so counter-productive, I believe DHHS will refrain from using the threat, thus states will not be held accountable.
To your second point, Congress could indeed pass a law allowing for a private cause of action. In fact, much of this case was a case of statutory interpretation (which my post did not address because it was more focused on the effects of the ruling rather than the jurisprudence). Many who opposed the decision hope that the decision was a narrow ruling and will not apply to other statutes that lack an express private right of action. Let’s hope that is indeed true.