If SCOTUS strikes health law – a money mess

Published in POLITICO

If the Supreme Court pulls the plug on health care reform, winding it down could be almost as contentious as building it up in the first place.

And the hundreds of federal employees in the agencies created or expanded by the health care law could find themselves at the center of a new round of fighting. Those positions rely on Affordable Care Act dollars that the court could take away by holding the whole law unconstitutional.

“Hang on for the second Civil War,” said the American Action Forum’s Douglas Holtz-Eakin, a former head of the Congressional Budget Office and adviser to Sen. John McCain’s presidential campaign.

There’s little precedent for rolling back federal spending when the law appropriating funds is ruled unconstitutional. A lot could still be left up to the White House and Congress to work out — and the decisions would affect the new offices and agencies, the livelihood of the men and women who work in them, and status of the multi-year contracts and projects they have embarked on.

It’s likely that some in the health care reform workforce would get reabsorbed into other HHS offices, where a number worked prior to the health law’s passage two years ago. But some could end up without a job — and, ironically, without their health benefits.

The offices created to implement the health care reform law include the CCIIO and the Center for Medicare and Medicaid Innovation. The consumer office is writing the health care law’s new insurance rules, and the innovation center is experimenting with different payment models for entitlement programs.

Neither CMS nor the White House would comment for this story, but HHS records show about 500 people work for these two offices. A recent Senate Republican analysis of federal jobs data concluded that thousands more new HHS workers are busy implementing the health law, with about 3,000 new positions in the office of the secretary alone.

HHS Secretary Kathleen Sebelius would have to decide whether to let workers go if the court takes away the health care reform-related offices’ funding and mission, or somehow use her discretion over the  department  budget to keep them on to try to advance the administration’s health goals even without the ACA.

Even if she can find ways of keeping them on, they could still be out if Mitt Romney wins the presidency.

Some employees in these offices may already be funded by dollars from the routine appropriations bills that provide HHS’s general operating budget, say budget experts. That money would not be directly affected by a ruling against the health care reform law.

But the fate of these offices depends on how the Obama administration moves around the funds that remain at its disposal.

“The issue you’re looking at here is cash flow,” said Jim Dyer, former Republican staff director of the House Appropriations Committee, who is now a principal at the Podesta Group.

The federal spending pipeline is complex and secretaries have a lot of tricks up their sleeves. Even if the courts strike down the health care reform law, Dyer said, the onus will still be on Congress to fully shut off the tap.

“If I’m an appropriator … I would want to draw a hard line in the sand,” he said. The committee could immediately demand HHS stop its spending if the court strikes down the law so that it can exert tight control over how it winds the program down. Exactly how that would shake out if a Republican-controlled House committee wanted HHS to stop the spending but a Democratic-controlled Senate one did not would be part of the uncertain political terrain.

The future of health reform’s workers is only one of the scores of questions about what happens to ACA dollars if the Supreme Court strikes down the whole law. They’re so unprecedented that few in the health care or legal worlds feel they even know how to answer them.

“Lord only knows,” said Tim Westmoreland, a long-time staffer for Rep. Henry Waxman (D-Calif.) who also headed Medicaid under President Bill Clinton. He now is a senior scholar at the Georgetown University Law Center’s O’Neill Institute for National and Global Health Law.

If the court were to hold that the whole law is unconstitutional, that could theoretically mean that all the spending done in its name is unconstitutional, too, from the checks sent out to cover Medicare beneficiaries’ drug costs to the grants given to states to help them set up their insurance exchanges.

Few experts think that the court will require the federal government to get that money back, however, even if it does strike down the entire law.

“I am presuming that anything has been committed is out and does not in any way get recouped,” said Families USA’s Ron Pollack.

But what it means for money to be “spent” is not so simple.

The government is not likely to retroactively bill a Medicare patient for that free colonoscopy. But what about the money that the Innovation Center used to underwrite multi-year contracts it signed with health systems trying out new ways to get paid under Medicare? Or similar contracts that Medicare entered into under the accountable care organization program created with ACA authority?

The federal government has committed to spending the dollars on these projects, even if all of it hasn’t gone out the door.

The fate of those agreements may depend on the details of the court’s ruling — or, if the court doesn’t give detailed instructions on shutting health reform down, on the outcomes of the next round of health care battles between Congress and the White House.

The only thing that seems certain about what happens to the ACA dollars if the court issues a broad ruling, said Georgetown Law Professor Michael Seidman, is that “unwinding all this … is going to be a mess.”

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