Judicial opinions on the constitutionality of the new health care law are pouring out of the federal courts. With the general expectation that the Supreme Court will have to resolve what is now a clear conflict between two [ http://www.ca6.uscourts.gov/opinions.pdf/11a0168p-06.pdf ] federal courts of appeals [ http://www.uscourts.gov/uscourts/courts/ca11/201111021.pdf ], the individual lower-court decisions have pretty much ceased to make news. By the time the Supreme Court rules, if and when it does, a decision [ http://pacer.ca4.uscourts.gov/opinion.pdf/111057.P.pdf ] earlier this month by the federal appeals court in Richmond, Va., throwing out Virginia’s challenge to the statute without reaching the ultimate constitutional question, will be all but forgotten.
That would be unfortunate, because in its relatively brief 33 pages, this opinion from a unanimous three-judge panel of the United States Court of Appeals for the Fourth Circuit, sitting in the heart of the old Confederacy, offers a powerful reminder of a fact that a dismaying number of folks appear lately to have forgotten: the Civil War is over.
On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act and Virginia’s attorney general, Kenneth T. Cuccinelli II, filed suit in federal court to have the law declared unconstitutional. The next day, Gov. Bob McDonnell signed into law the Virginia Health Care Freedom Act. These last two events were inextricably linked.
The Virginia law provides that “no resident of this Commonwealth… shall be required to obtain or maintain a policy of individual insurance coverage. . . ”
In other words, a few weeks shy of the 150th anniversary of Virginia’s “ordinance of secession [ http://www.civil-war.net/pages/ordinances_secession.asp ],” the Commonwealth of Virginia seceded from the reach of the federal health care law’s individual mandate.
True, the Virginia Health Care Freedom Act contains no enforcement mechanism. Nor is there any prospect that the federal government, once the requirement to buy health insurance takes effect in 2014, would pay the state law the slightest attention. But that was never the point. The purpose of the Virginia law – in addition to permitting the state’s public officials to strike a high-minded tone while pandering for votes – was to give Virginia something that it and the two dozen other Republican-run states challenging the federal law manifestly lack: standing to sue, the right to be in court in the first place.
Although the courts that have struck down the law have glossed over the point – oddly enough, given that conservative judges are usually obsessively attentive to the doctrines of standing, ripeness, and other barriers to entry to federal court – the state plaintiffs can’t meet the basic requirement of standing: a concrete, immediate “injury in fact,” caused by the action that is being complained about. The individual mandate, as such, imposes no obligation on the states. Neither vague mumbling about sovereign interests nor resentment about being told what to do by Washington is sufficient to get the states through the door – or didn’t use to be sufficient. So Virginia, whose governor was one of the first graduates of the evangelist Pat Robertson’s Regent University Law School, attempted by its declaration of health care freedom to inoculate itself against being thrown out of court. “The collision between the state and federal schemes,” the state’s legal complaint asserted, “creates an immediate, actual controversy involving antagonistic assertions of right.”
A federal district judge, Henry E. Hudson, agreed with the state in August of last year, refusing to dismiss the case and allowing the lawsuit to proceed (his eventual opinion, issued last December, surprised no one by declaring the individual mandate unconstitutional.) Explaining why the Virginia Health Care Freedom Act gave the state standing to sue, Judge Hudson said: “The mere existence of the lawfully-enacted statute is sufficient to trigger the duty of the Attorney General of Virginia to defend the law and the associated sovereign power to enact it.”
Not so fast, said Judge Diana Gribbon Motz for the Fourth Circuit panel, which also included Judges James A. Wynn Jr. and Andre M. Davis. “A state possesses no legitimate interest in protecting its citizens from the government of the United States,” Judge Motz wrote. (Should a federal judge really have to say such a thing in 2011?) “Contrary to Virginia’s arguments, the mere existence of a state law like the VHCFA does not license a state to mount a judicial challenge to any federal statute with which the state law assertedly conflicts.” The Virginia law was not an exercise of “sovereign power,” she continued, “for Virginia lacks the sovereign authority to nullify federal law.”
Judge Motz noted that under Virginia’s theory, “a state could acquire standing to challenge any federal law merely by enacting a statute – even an utterly unenforceable one – purporting to prohibit the application of the federal law.” Under its theory, Virginia could get into court to defend a law providing that “no Virginia resident shall be required to pay Social Security taxes,” Judge Motz observed, adding: “Thus, if we were to adopt Virginia’s standing theory, each state could become a roving constitutional watchdog of sorts; no issue, no matter how generalized or quintessentially political, would fall beyond a state’s power to litigate in federal court.”
Of course, even throwing out all the state plaintiffs wouldn’t make the health care litigation go away. A number of the lawsuits have private individuals or organizations as plaintiffs, with their own imaginative claims to standing. A Pennsylvania couple, Barbara Goudy-Bachman and Gregory Bachman, succeeded last week in persuading a federal district judge, Christopher C. Conner of Harrisburg, to strike down [ http://www.pamd.uscourts.gov/opinions/conner/10v763a.pdf ] the individual mandate; their legal complaint described the federal law as an example of “tyranny in the modern era” that threatened to turn Americans into “mere economic slaves of congressional will.” Their claim to standing was that they don’t now have health insurance for themselves or their children and don’t want to have to get any. The judge found that the individual mandate was unconstitutional, beyond Congress’s authority under the Commerce Clause.
I have a confession to make. I can describe the legal arguments and the judicial conclusions, but on a fundamental level, I just don’t get the attack on the federal law. I don’t understand people who voluntarily, without claiming poverty, let their children go uninsured. I don’t understand the moral compass of the owner of the fancy car I saw the other day that sported the bumper sticker: “Repeal Obamacare.” I suppose that the self-satisfied and oh-so-secure car owner never met anyone like the healthy 27-year-old man profiled the other day in USA Today [ http://www.usatoday.com/money/industries/health/story/2011-09-09/health-insurance-denial-rates-kaiser-health-news/50362322/1 (below)] who was denied insurance in the private market because his doctor four years ago had ordered a particular heart-monitoring test – which found nothing wrong with his heart. I do know such people. So do you. They are all around you, but maybe such an intimate subject as their inability to get health insurance has never come up in conversation. So as this debate for the soul of the country continues to unfold, I take comfort – perhaps unduly, no doubt prematurely — from the reminder from the appeals court in Richmond that the Civil War is over and that p.s., the Union won.
Health insurance denial rates routinely 20%, data show
By Phil Galewitz, Kaiser Health News Posted 9/11/2011 5:40 PM Updated 9/12/2011 12:09 AM
Amanda Hite says she felt "really healthy" when she applied recently for health insurance. But Anthem Blue Cross and Blue Shield denied her, because she had seen a chiropractor a few months earlier for a sore back and later had visited an emergency room because of back pain.
"I was surprised and let down," said Hite, 34, of Lexington, Ky., who didn't think her periodic back pain would be enough to keep her from buying health insurance.
Hite's case isn't unusual. Many of the plans offered by Anthem Blue Cross in Kentucky reject about one in five applicants, according to data provided by insurers to the federal Department of Health and Human Services. Rival insurers in the state have even higher denial rates: Humana rejects 26% to 39% of applications in Kentucky, while UnitedHealthcare denies 38% to 43%.
Citing its own 2009 study, America's Health Insurance Plans, an industry trade group, says 87% of people who apply nationally for individual coverage are offered a policy. That figure, however, includes people who are turned down for one policy but offered another that may cost more or have fewer benefits.
The federal website contains denial rates in all 50 states, the District of Columbia and U.S. Territories, and is updated periodically. The most current information is for the first three months of 2011. The data show that denial rates routinely exceed 20% and often are much higher, according to a Kaiser Health News review of 20 of the most populous states and the District of Columbia. The data reflect applications that are turned down for any reason.
The information provides fresh evidence of the challenges facing people buying individual health insurance. It also shows the likelihood of whether consumers are approved for a policy depends on which state they live in and the insurer they choose.
Denial rates can vary widely within individual states. In Georgia, for example, Aetna's denial rate is 15% compared with 47% for Kaiser Permanente and 67% for John Alden Life Insurance.
Also, the same insurer can have vastly different denial rates in different states. For example, Kaiser Permanente denied 32% of applications in Maryland but 17% in Colorado. (Kaiser Health News is not affiliated with Kaiser Permanente.)
James Larreta-Moylan, director of individual and family plans for Oakland-based Kaiser Permanente, said the denial rates vary because of the different types of plans sold, and the age and health conditions of applicants in different markets. He said denial rates can be higher in some markets where sicker patients apply for plans with richer benefits. Medical underwriting, or reviewing an applicant's health status, "is an unfortunate reality of today's market," he said.
Mike Cantone, 27, of Orlando, was denied a health insurance policy last year by UnitedHealthcare, which considered him a risk because a doctor used a monitor to test his heart for a few days in 2007. No problems were detected, he said. "I was shocked and frustrated," said Cantone, a political director for a community organization. He is still uninsured.
Denial rates of 70% and 53%
Two companies consistently had the highest denial rates — John Alden Life Insurance and Time Insurance, both owned by Milwaukee-based Assurant Health. In nearly every market surveyed, their denial rates were at least twice the rate of competing insurers. For example, in Tennessee, John Alden turned down 70% of applicants and Time, one of the biggest individual insurers in the country, rejected 53%.
Assurant spokeswoman Heather McAvoy said her company offers alternative plans when applicants are rejected due to health status. These can include policies that require consumers to pay extra to cover a pre-existing medical condition. "Unfortunately, when consumers accept the alternative coverage — and are, in fact, insured with Assurant Health — they are classified as a 'denial' under the HHS criteria," she said.
AHIP, the trade group, says the federal data on coverage denials are misleading because they do not include people rejected for one plan but offered another. The data also include denials involving applicants who don't live in the plan's coverage area.
The Deartment of Health and Human Services acknowledged AHIP's arguments but said it was important for the data to reflect when people can't get the specific policies they apply for. The department said most of the denials are the result of medical underwriting.
Health care overhaul offers help
The difficulty of buying individual coverage was a big reason behind the 2010 federal health overhaul, which will ban insurers starting in 2014 from denying individual policies based on health status.
In the past, most consumers haven't been able to look up insurers' denial rates before sending in a check to apply for coverage. Maryland is the only state that requires insurers to report information on denial rates.
But as part of the federal health law, HHS last November started posting the coverage-denial rates, which can be searched by ZIP code at www.healthcare.gov [ blocked::http://www.healthcare.gov/ ].
Using the data from the website, a Government Accountability Office study of 459 insurers published earlier this year found an average of 19% of applicants nationally were denied coverage. But the study showed a wide range of denial rates. A quarter of insurers had denial rates of 15% or below and a quarter had rates of 40% or higher.
A House Energy and Commerce Committee investigation into four large for-profit insurers last year found that the denial rates have steadily increased from 11.9% in 2007 to 15.3% in 2009. The companies reviewed were Aetna, Humana, UnitedHealthcare and WellPoint.
The denial rates are an important tool for helping consumers select an insurer, said Deborah Chollet, a senior fellow with Mathematica, a non-partisan think tank. That's because the application process can take a month or more, and carriers typically require the first month's premium with the application.
Sara Collins, vice president of the non-partisan Commonwealth Fund, said the denial data underscore the need for the industry changes that will occur in 2014. "It's not surprising that denial rates are high, because insurers have an incentive to only enroll the healthy risks," she said. "If a person comes in with a health problem that will potentially cost (the insurer) money, they are probably not going to cover them."
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a non-profit, non-partisan health policy research and communication organization not affiliated with Kaiser Permanente.
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