During oral arguments Wednesday, several U.S. Supreme Court justices hinted how they might rule in a case that some say could hinder states' healthcare reform efforts.
Gobeille v. Liberty Mutual Insurance Co. centers on whether a self-funded insurer should have to turn over certain information—such as on claims and member eligibility—to the state of Vermont for its all-payer database.
The state argues it needs the data to improve the cost and effectiveness of healthcare. It argues that a ruling against it could limit reform efforts not only in Vermont, but also in other states with similar databases. That could affect as many as 18 states, according to a recent New England Journal of Medicine article. About 63% of covered workers are enrolled in a plan that is either partially or totally self-funded, according to the Kaiser Family Foundation.
Liberty Mutual, however, says that the federal Employer Retirement Income Security Act, known as ERISA, protects it and its administrator from having to share that information. The insurer argues that ERISA pre-empts the state law, and that pre-emption is important because insurers would otherwise have to spend precious time and money navigating different states' laws for data collection, hurting both the insurers and their beneficiaries.
The American Hospital Association, American Medical Association and Association of American Medical Colleges, among others have filed briefs supporting Vermont in the case. Insurance industry group America's Health Insurance Plans and the U.S. Chamber of Commerce, among others, have filed briefs supporting the insurer.
During oral arguments Wednesday, Justice Stephen Breyer presented the most persistent line of questioning, repeatedly wondering why the state couldn't simply go to a federal agency such as the Labor Department or HHS for a rule allowing such data collection. Such a rule or regulation, Breyer argued, could solve the issue, allowing data collection without subjecting insurers to dozens of different state laws.
On one hand, Breyer said, states should be able to get the information, but “there is a problem of burden” for insurers.
“I think there are probably 100 or 200 people in the Department of Labor and HHS that could write (regulations) that reconcile these problems and allow both,” Breyer said. “I can't, because I'm a judge. So what I'm trying to figure out is how to interpret this statute in a way that achieves those objectives.”
If Breyer's line of reasoning were to carry the day that likely wouldn't bode well for Vermont in the case, acknowledged Mike Donofrio, general counsel for the Vermont Green Mountain Care Board, which appealed the case to the Supreme Court.
Donofrio called Breyer's line of questioning on the issue the most unexpected part of the oral arguments.
At least two other justices, however, expressed skepticism over Breyer's idea. Justice Antonin Scalia said it's not clear that a federal agency could eliminate the problem by simply giving states permission to collect data.
Justice Elena Kagan also said, “That sounds like a one-size-fits-all solution, and there's some value to states being able to think about their own healthcare needs.”
Kagan aimed many of her questions Wednesday morning at Seth Waxman, the attorney for Liberty Mutual. She questioned the burden on insurers of reporting such data to states.
Justice Sonia Sotomayor also wanted to know how easily insurers could gather and share such information. Waxman said it's not as simple as pressing a button.
“This requires that we keep records that we don't keep, and that we display them and provide information in ways that we don't, and that differ from one state to another,” Waxman said.
Meanwhile Vermont Solicitor General Bridget Asay said that the reporting and data collection seems complicated not because of anything Vermont has done, but rather because of standardized national procedures for how data is collected under the Health Insurance Portability and Accountability Act.
Scalia's questions also seemed to focus on what constituted a burden for insurers and seemed friendlier to the insurer's side of the argument, said Howard Shapiro, a partner at Proskauer who works on ERISA issues. But Shapiro cautioned, “It's always a mistake to try to read the tea leaves from the questions because the questions are designed to expand and explore intellectual points rather than to advertise how the justice is going to write his or her opinion.”
Overall, the justices seemed concerned Wednesday about issues on both sides of the case, said Steve Wojcik, vice president for public policy with the National Business Group on Health, an association representing large employers on healthcare and health benefits.
“The justices seemed sympathetic to the idea that this could open the floodgates to a very burdensome situation for ERISA plans,” Wojcik said. “On the other hand there was a feeling that the state has a legitimate right to this type of information.”
Wojcik called it a “very significant” case for ERISA because it could help define which state laws and regulations are pre-empted by the federal law.
Shapiro also said it's an important case “because we have this cauldron brewing both politically and socially about healthcare, and the advocates for the Vermont statute and for these other types of all-payer claims databases view this effort as a way to improve healthcare.”
A lower court, the 2nd U.S. Circuit Court of Appeals, already ruled in the case that ERISA does take precedence over state law, meaning Liberty Mutual's third-party administrator shouldn't have to turn over the data.