May 16 2024 Section 1557 – Enabling Equity or Tool for Tyranny? Section 1557 of the Affordable Care Act prohibits health programs and activities receiving federal financial assistance (i.e., virtually every health plan, hospital, and provider) from discriminating on the basis of race, color, national origin, sex, age, and disability. 1 This discrimination prohibition is so straight-forward and plain, could it really be the source of controversy? Define “Sex” In the 14 years that have passed since Congress codified Section 1557, its seemingly plain text has unfolded in surprising ways. So much so that its terminology rings of “newspeak” from George Orwell’s dystopian 1984, in which “the Party” creates a truncated vocabulary called “newspeak” to eliminate even the possibility of objection. Can any sane person oppose anti-discrimination on the basis of sex? Well, it turns out that “discrimination on the basis of sex” means a lot more than one might initially expect. You Keep Using That Word. I Do Not Think It Means What You Think It Means. 14 years later, we are still unpacking exactly what “discrimination on the basis of sex” means. On May 6, 2024, the Biden Administration published new final rules interpreting Section 1557 and expanding the definition of “sex” to include “sex characteristics, including intersex traits; pregnancy or related conditions; sexual orientation; gender identity; and sex stereotypes”. 2 The new rules largely restore Obama-era provisions, and pare back previous exemptions available to persons (particularly institutions) on the basis of religion and conscience, which begs the question: Are religious institutions actually turning away individuals on the basis of sex? And if not, is Section 1557’s discrimination prohibition really just “newspeak” for requiring providers, payors, and employers to provide and facilitate procedures they find to be morally objectionable? Hint: the Catholic Church has long promoted basic healthcare as an essential service and fundamental human right.3 These demands concern above all . . . the provision of essential services to all, some of which are St. Joseph’s Regional Medical Center in New Jersey was sued in 2017 for refusing to perform a gender reassignment surgery. 4 The patient received the surgery from a nearby hospital a few months later but argued that St. Joseph’s violated Section 1557, causing emotional distress. The Court did not find that St. Joseph’s was exempt from Section 1557, and the parties settled in 2021. In 2023, the U.S. District Court of Maryland ruled that the state-operated St. Joseph’s hospital in Baltimore violated Section 1557 by canceling a patient’s gender reassignment surgery, notwithstanding the fact that Catholic hospital was required to follow the Ethical and Religious Directives for Catholic Health Services (“ERDs”). 5 Also in 2023, a U.S. District Court in Washington ruled that Catholic Health Initiatives’ self-funded plan administered by Blue Cross Blue Shield of Illinois had to pay for a member’s gender reassignment surgery. 6 This case sets a particularly alarming precedent for self-funded religious employers, who typically rely on non-religious health plans to administer health insurance benefits. In these cases and others, Section 1557’s discrimination prohibition serves as pretext for requiring coverage for and provision of services that are morally illicit per the religion of certain providers and plan sponsors. Religious Exemption The new rules, promulgated by the Office for Civil Rights (“OCR”), pay lip service to existing federal religious protections generally available, and offer entities the opportunity to seek an exemption by submitting a request to OCR. OCR is also the office tasked with ensuring its anti-discrimination rules are enforced, making OCR the legislature, arbiter, and police. The rules’ reliance on existing federal religious protections injects a significant amount of uncertainty into its applicability. While there is likely strong precedent for religious providers to object on religious grounds, the applicability is much more attenuated for religious employers objecting to pay for morally objectionable services. For example, whereas federal protections such as the Religious Freedom Restoration Act (“RFRA”) protect free exercise of religion, it is unclear how religious employers offering fully-funded plans, or religious employers who self-fund and rely on non-religious health plans to administer their plans, will be protected (as typified in the Washington case described above). Conclusion The enforcement trends and new rule highlight the need for faith-based insurers to take advantage of religious liberties and safeguard individuals and employers from being hamstrung by dependence on non-religious health plans administering their benefits. This year, Presidio became the first company in American history to apply to form a religious insurer, which would extend the full scope of religious freedoms to individuals and employers seeking a health insurance option that aligns with their faith and values. 42 U.S.C. § 18116 [↩]89 Fed. Reg. 37,522 (May 6, 2024) (to be codified at 42 C.F.R. § 92.101). [↩]See, United States Catholic Conference of Bishops, Health and Healthcare, Pastoral Letter, November 19, 1981 (“health care is so important for full human dignity and so necessary for the proper development of life that it is a fundamental right of every human being”); and Pontifical Council of Justice and Peace, Compendium of the Social Doctrine of the Church, para. 166 (“The demands of the common good are . . . strictly connected to respect for and the integral promotion of the person and his fundamental rights. [↩]Conforti v. St. Joseph’s Healthcare System, Inc. et al., U.S. District Court for the District of New Jersey, No. 2:17-cv-00050-CCC-CLW. [↩]Hammons v. University of Maryland Medical System Corporation, et al., U.S. District Court for the District of Maryland, No. DKC 20-2088. In a quirky fact patter, St. Joseph was acquired by the University of Maryland Medical System Corporation – a public entity – in 2012, and the asset purchase agreement contained covenants requiring the hospital to be operated consistent with Catholic values and principles, including the ERDs. [↩]Pritchard v. Blue Cross Blue Shield of Illinois, U.S. District Court for the District of Washington, No. 3:20-cv-06145. The ruling in this case is far-reaching for two reasons: first, it applies Section 1557 to Blue Cross’ third-party administrator services by virtue of Blue Cross’ receipt of federal funding for insurance operations, and second, it extends Blue Cross’ Section 1557 obligations to its Catholic employer client without consideration of the Catholic employer’s religious protections. At the time of this article’s publication, the Court’s order granting plaintiffs’ motion for classwide relief and nominal damages is being appealed to the Ninth Circuit. [↩]
Sep 11 2023 What is Pro-Life Health Insurance? In the wake of the Affordable Care Act, many Americans are stuck with health insurance coverage that pays for services that violate their consciences. Presidio HealthCare is launching the first faith-based, pro-life health insurance company, with a vision of breathing new life into the health insurance markets as a catalyst for building a culture of life and promoting human flourishing. Why a pro-life option is needed The Affordable Care Act (“ACA”) continues to shape the health insurance landscape, and requires virtually all health insurance policies to provide certain preventive services for women – including contraceptive services and abortifacients – free of cost.1 That means virtually every comprehensive, fully-insured health insurance policy pays for contraceptive services and abortifacients.2 Some states even require private insurance plans to pay for abortions,3 and many large private insurers electively cover abortions with or without state mandates. 44% of American adults identify as “pro-life”,4 and large religious communities – such as the Catholic Church – morally object to the use of contraception. Yet the vast majority of individuals and employers are stuck with health insurance plans that pay for services that violate their consciences. What does “pro-life” mean? We started Presidio because we think Americans deserve a better option – one that does not violate the consciences of those who object to services like abortion and contraception. But “pro-life” means a lot more than just anti-abortion. Our vision for Presidio is to provide insurance products that promote human flourishing. That vision is guided by a Christian anthropology, which includes the following beliefs: Human beings are a body-soul composite – care for the body and soul needs to be considered holistically; Human beings are created “in the image and likeness” of God5 – this inherent dignity emphasizes the need for patient autonomy as opposed to paternalism in medicine; Human beings are endowed with everlasting souls, and our bodies will be resurrected – the lens of eternity shapes our understanding of life and death; Fertility is a gift and invitation to participate in the divine act of pro-creation – care surrounding fertility and pro-creation should align with God’s creative order; Jesus Christ assumed our mortal flesh, and redeemed us by his suffering and death – this dignifies our suffering, even giving it redemptive power; God is the sovereign author of life – healthcare technologies should be developed and leveraged to promote health and wellness, while appropriately revering the mystery and divinity of the source of life. As we build insurance products, we envision these policies as more than just standard health insurance policies with mere carve-outs for things like abortion, contraceptive services, “gender-affirming” care, etc. Rather, we want Presidio policies to build the culture of life by covering things like: Fertility awareness and holistic procreative technologies – while fertility awareness can be leveraged to avoid or achieve pregnancy, it can also help identify underlying health issues, and can be combined with new technologies and procedures that are clinically proven to be as effective as artificial reproductive technologies for treating infertility;((NaProTECHNOLOGY and Conscientious OB/GYN Medicine (AMA Journal of Ethics))) Mental health benefits – this specialty is particularly vulnerable to ideological influence, so connecting members with values-aligned mental health professionals is a top priority; Marriage and family therapy – we believe families are the fabric of society, and we are exploring policies that encourage family flourishing; Holistic, patient-centered care – services like homebirths can be cost-effective alternatives to hospital births, but are often not covered because they require care teams to revolve around the mother and baby rather than the other way around. Is Presidio religious? Presidio is religious, but does not require its members to subscribe to a religion or set of moral beliefs. Think of Presidio like a faithful Catholic hospital – it is grounded in religious principles and provides services to individuals of all faith backgrounds precisely because of its religious principles. Presidio coverage determinations will be consistent with the Ethical and Religious Directives for Catholic Health Care Services (“ERDs”).6 The ERDs are the most succinct and baseline articulation of Christian healthcare ethics, and are consistent with Presidio’s Catholic identity. That does not mean Presidio members need to subscribe to the ERDs – it just means services inconsistent with the ERDs will not be covered under Presidio insurance policies. Conclusion At Presidio, we view religion as more than a set of rules to follow, but principles to promote human flourishing. This is precisely why Christian communities, and the Catholic Church in particular, have pioneered healthcare services((See, e.g., Catholic Hospitals in American Healthcare (Grand Valley State University))) in response to Christ’s command to heal the sick and proclaim the kingdom of God.((Luke 10:9)) Religious communities have historically focused on delivering healthcare services to those in need. The ACA has ushered in an era that calls for new focus on building faith-based health insurance options that exclude services that violate many Americans’ consciences, and that promote human flourishing. The time is ripe for faith-based communities to meet the demand for pro-life health insurance options, and Presidio seeks to offer products that align with Christian values to promote a culture of life. 42 U.S.C. § 300gg-13(a)(4); A Statement by U.S. Department of Health and Human Services Secretary Kathleen Sebelius, January 20, 2012 [↩]We discussed the scope of the religious exemption in more detail in our article, “The Un-Utilized Religious Insurer Exemption” [↩]California, Illinois, Maine, Maryland, Massachusetts, New York, Oregon and Washington require insurance plans to cover abortion. See Regulating Insurance Coverage of Abortion (Guttmacher Institute) [↩] ‘Pro-Choice’ or ‘Pro-Life’ Demographic Table (Gallup) [↩]See Gen 1:26 [↩]Ethical and Religious Directives for Catholic Health Care Services (United States Conference of Catholic Bishops) [↩]
Jul 13 2023 BREAKING: Proposed Rules Would Dramatically Reshape Non-ACA Marketplace On July 12, 2023, the Biden Administration published a Notice of Proposed Rule Making (“NPRM”) that would redefine and significantly curtail short-term limited duration insurance products. If adopted, approximately 3M Americans’ insurance coverage would be jeopardized. Timing of this NPRM dramatically emphasizes the need for individual health insurance options, and positions Presidio to serve as a release valve for these individuals, many of whom will be actively looking for coverage during 2024 open enrollment. Background: What is Short-Term Limited Duration Insurance? Short-Term Limited Duration Insurance (“STLDI”) preexisted the Patient Protection and Affordable Care Act (“ACA”) as a stop-gap measure for individuals in between coverage, but its importance was thrown into relief because of the ACA. The ACA subjected individual health insurance coverage to restrictions including guaranteed issue, prohibition of preexisting condition exclusions, and minimum essential coverage that includes access to free contraception, among others.((Title XXVII of the Public Health Service Act (“PHS Act”) )) While many of these restrictions are laudable in ideal scenarios (excepting the contraception mandate), they also had the effect of constraining insurance providers,1 limiting competition,((Average insurers per state dropped from 5.0 in 2014 to 3.5 in 2018, with many states and metropolitan service areas having a single insurer for extended periods (Insurer Participation on the ACA Marketplaces, 2014-2021 (KFF)) )) and increasing premiums.((Premiums rose 121% for the first five years of the ACA (Rate Review Data (cms.gov)) )) As a result, pre-subsidy insurance premiums skyrocketed with the implementation of the ACA, leaving many families in want of alternative insurance options.((Id. )) Importantly, STLDI is generally exempt from many of the ACA’s requirements because it is not considered “individual health insurance coverage” for ACA purposes.((42 U.S.C. 300gg-91(b)(5))) As a result, a market emerged through which creative insurance providers leveraged STLDI products, offering families affordable insurance alternatives. These products are often more affordable than their ACA corollaries because – unlike ACA products – STLDI can be underwritten, meaning the premiums are used to fund healthcare expenses of a healthier risk pool.((See Estimated Financial Effects of the Short-Term, Limited-Duration Policy Proposed Rule (cms.gov) (CMS chief Actuary estimated -49% change compared to average gross premium in the ACA marketplace as a result of 2018 STLDI expansion). The NPRM similarly acknowledged that STLDI premiums may be 54% lower than unsubsidized ACA coverage (88 FR 44596 (July 12, 2023), citingWhy do Short-Term Health Insurance Plans Have Lower Premiums than Plans that Comply with the ACA? (KFF)). )) What exactly is meant by the terms “short-term” and “limited duration” has become something of a political volleyball. Critics are wary that STLDI has been hijacked to hoodwink consumers and end-run the ACA,((Shortchanged: How the Trump Administration’s Expansion of Junk Short-Term Health Insurance Plans is Putting Americans at Risk (U.S. House of Representatives Committee on Energy and Commerce Democratic Staff Report))) whereas proponents of STLDI appreciate the optionality these plans provide to families underserved by the ACA.((The Value of Short-Term Health Plans: Rebutting the Energy and Commerce Democratic Staff Report (Health Affairs))) NPRM Changes A 2018 rule currently in effect permits STLDI polies to cover a maximum period of less than 12 months, renewable up to 36 months in total.((83 FR 38212 (August 3, 2018))) STLDI policies must contain clear disclaimers alerting the policyholder of the policy’s nature and limitations.2 The NPRM proposes to limit STLDI maximum coverage periods to less than 3 months, or no more than 4 months together with all extensions and renewals.((88 FR 44596 (July 12, 2023))) It also prevents what it calls “stacking” policies from a single insurer within 12 months of the initial policy’s effective date.2 It is unclear how the definition would permit an individual losing coverage early in the year to maintain coverage until open enrollment (typically beginning November 1), an observation unscrupulously referenced in the NPRM itself.((Id.)) The NPRM also proposes limits to fixed-indemnity insurance policies, similarly aimed at eliminating alternatives to ACA plans in the name of consumer protectionism, that would further limit options available to price-conscious shoppers.((Id.)) Table 1 compares current versus proposed STLDI rules. Table 1 NPRM Effects If implemented, the NPRM would effectively eviscerate the vast majority of alternative health insurance products currently available, leaving families with three primary options: Enroll in ACA products; Join a health sharing plan; or Go uninsured. The NPRM gives short shrift to the reality that most of the 3M Americans insured through STLDI policies are unlikely to enroll in ACA products when their policies expire, noting only that there would be an unquantified “potential increase in the number of uninsured individuals” as a result of the proposed rule.(( Id.))In fact, approximately 3M Americans are insured through STLDI policies,3 and the NPRM estimates only 120K will convert to ACA plans between 2024 and 2028.((88 FR 44596 (July 12, 2023))) That leaves a whopping 2.88M Americans unaccounted for. Conclusion Individuals and families at risk of losing health insurance as a direct result of the rules proposed in the NPRM are in need of creative solutions to provide financially-secure insurance options that 1) are affordable, 2) maintain access to broad PPO networks, and 3) do not force families to pay for services that violate their consciences. If the rules proposed in the NPRM are finalized, approximately 3M individuals who previously did not find value in ACA products will be actively shopping for new insurance. This casts new light on the need for creative insurance solutions providing valuable options and ensuring families retain access to affordable and secure health insurance. Companies like Presidio are needed now more than ever to provide these options to individuals who will be actively shopping for health insurance that meets their unique needs, and to serve as a backstop to ACA markets to reduce the number of uninsured individuals.((Evidence indicates that increasing ACA alternatives – including through deregulation of STLDI – reduces uninsured rates (Renewable Term Health Insurance: Better Coverage Than Obamacare, Manhattan Institute (manhattan-institute.org))) For example, due in part to medical loss ratio requirements of the ACA, 15 states currently have no PPO individual ACA market products (opting instead for narrow-network HMO products) (Rate Review Data (cms.gov)) [↩]Id. [↩] [↩]Shortchanged: How the Trump Administration’s Expansion of Junk Short-Term Health Insurance Plans is Putting Americans at Risk (U.S. House of Representatives Committee on Energy and Commerce Democratic Staff Report) [↩]
Jun 29 2023 Winners and Losers of the ACA The Affordable Care Act (“ACA”) had laudable goals, but also left vulnerable a significant demographic who were subjected to inflated premiums, narrow networks, and top-down mandates that required individuals to purchase products that violate their moral consciences. Private market solutions co-existing alongside ACA markets can alleviate pressures without destabilizing ACA risk-pools, and state and federal legislatures should expand these markets by relaxing stifling regulations. How Has the ACA Hurt Families? The ACA created winners and losers. The winners get access to Medicaid expansion or receive federal subsidies (for families making less than 400% of the federal poverty level “FPL”) to help purchase ACA coverage. The losers do not receive federal assistance but must pay the full cost of premiums, which rose 121% (17% year-over-year) for the first five years of the ACA.1 Many American families were hurt by the rising costs of health insurance due to the ACA and are not properly served by the options developed by the private market and allowed by policymakers. The following lists the main gaps in value for the segment of the population that do not receive employer-based coverage or adequate federal subsidies to purchase ACA coverage: Unaffordable Premiums – The ACA market is “guaranteed issue”, which means individuals with pre-existing conditions are guaranteed coverage, and their health cannot be considered in determining their premiums. While this is an important feature for those with pre-existing conditions, the existing framework shifts costs, resulting in higher premiums for healthy, unsubsidized families. Limited Networks – The ACA markets have resulted in a “race to the bottom” with many carriers offering only narrow networks and no preferred provider organization (“PPO”) products. Exhibit 1 shows the number of states with varying PPO product availability between the individual and small group markets. Looking at individual ACA markets, a whopping 15 states (including Texas) have zero available PPOs. Contrast that to only 3 states in the small group ACA markets that are without a PPO plan. This means that families with individual market ACA plans often have limited options to see their desired physicians and hospitals. This is the direct result of regulations that perversely incentivize carriers to develop the cheapest products possible, forcing carriers to cut costs, often resulting in limited patient choice.2Exhibit 11 Lack of a Pro-life and Financially Secure Insurance Option – Christian families in this population must compromise between 1) ACA products that offer benefits contrary to the Christian faith, and 2) Health Sharing Ministry products that are not legally insurance and are not required to pay medical bills. A decade of ACA implementation data and trends demonstrate that subsidies – not punitive mandates or limiting alternatives – are the primary drivers of increased enrollment. Implementing alternative risk pool options within the existing ecosystem (i.e., alongside guaranteed issue and subsidized options) will alleviate the burden with minimal impact to ACA risk pools. Here, we note that the penalty for violating the individual mandate was reduced to $0 in 2018 with no correlating increase to average premium prices, as seen in Exhibit 2. Exhibit 2 shows the changes in Bronze ACA premiums for subsidized ACA coverage, unsubsidized ACA coverage and average costs for alternative non-ACA coverage. ((The 2018 drop in net premiums for subsidized enrollment was due to both high premium increases correcting for underpricing in 2014-2016 and the impact of “Silver-loading”. The second drop in 2022 reflects the enhanced subsidies introduced by the American Rescue Plan. While the detailed explanation of subsidy dynamics is beyond the scope of this blog post, it’s important to understand that per capita subsidy levels have significantly increased beyond the original design of the ACA subsidy structure. )) Increased access to non-ACA alternative risk pools (blue line) would be attractive to those having to pay the full premium (grey line), creating up to 25% savings for those individuals. At the same time, subsidies preserve the relative value for those receiving assistance (orange line). Exhibit 2 The subsidized proportion of on-exchange enrollment has grown to over 90% (See Exhibit 3) while premiums have remained flat since 2018, indicating a stable risk pool that has not worsened with declining unsubsidized enrollment. Exhibit 3 Christian families are increasingly enrolling in health sharing ministry products, with approximately 1.5 million individuals enrolled in 2021 (an estimated ninefold increase from 2014).3 Federal control of benefits in ACA markets, limited networks and unaffordable premiums in ACA markets are driving this increase. Meanwhile, some health shares have run into liquidity issues due to having no regulatory oversight, leaving many families at risk for medical debt.4 How Can We Improve This? Policymakers at the federal and state levels should work to make available more affordable options outside of the ACA. This can be accomplished by allowing alternative marketplaces to exist with less restrictions. These marketplaces should: allow for healthier risk pools (pre-existing condition exclusions and policy underwriting) outside of the ACA; allow for benefit flexibility so that options aligned with Christian values can be readily available, along with higher deductibles and out-of-pocket maximums to reduce costs; and efficiently spend federal ACA dollars to maintain stability in the ACA markets.((Note that a few states, including Texas, are successfully navigating efficient spending of ACA dollars to increase enrollment.5 Lawmakers significantly increased subsidies compared to original ACA subsidy designs, only to enroll less than half of the expected number of enrollees.6 ACA enrollment is driven by subsidies. The fear of alternative risk pools hurting the ACA is unsubstantiated and has resulted in an unnecessary limitation of options for healthy families making over 400% of the FPL. Private companies can innovate in current and future regulatory environments. Companies like USHealth Group have pioneered cost-effective options through innovation. Faith-based organizations like Presidio will do the same to meet the needs of unsubsidized Americans, and in a way that honors God’s creative order. Conclusion The American health insurance industry is large and complex. We have suffered from an increasingly “one size fits all” approach that leaves major gaps in access to health care that families can trust. The principle of subsidiarity should compel Christians to creatively implement a health care system that solves problems at the state level with private companies facilitating innovation. The majority of Americans are subsidized either by federal programs or through their employers (who receive tax incentives to cover their employees). Currently, families hit the hardest by the regulatory system are those who do not receive employer-based coverage or federal assistance. Federal rules have also squeezed out health insurance options that are compatible with the Christian faith. While private companies can innovate within the current regulatory environment, further expanded access to faith-based, financially-secure insurance options can be facilitated through federal and state policy changes that would be minimally disruptive to ACA markets. Rate Review Data (cms.gov) [↩] [↩]ACA Metal-Tier Mispricing: Improving Affordability By Solving An Actuarial Mystery (healthaffairs.org) [↩]Health Care Sharing Ministries: What are these cost-sharing products in the individual health care market? (theactuarymagazine.org) [↩]See, e.g., Health Care Sharing Ministry Sharity Leaves 10K Families with Millions in Unpaid Bills (christianitytoday.com); and A Christian Health Nonprofit Saddled Thousands With Debt as It Built a Family Empire Including a Pot Farm, a Bank and an Airline (propublica.org); and Solidarity Health fails federal disclosure requirements, despite promising change (pillarcatholic.com) [↩]See, e.g., How the Texas Legislature Learned to Stop Worrying and Love the ACA Marketplace (prospect.org) [↩]The Disappointing Affordable Care Act (forbes.com) [↩]