Traditionally, juries in civil cases have not been permitted to hear evidence in malpractice and other personal injury cases that the plaintiff’s medical expenses were or would be paid by health insurance or other sources not connected to the defendant. This is known as the “Collateral Source Rule.” Effectively, the rule increases plaintiff medical damages.
The Collateral Source Rule, The American Health Care Act, Its Impact on the Affordable Care Act, and The Mitigation of Damages.
By making health insurance mandatory and guaranteeing access to insurance, the Patient Protection and Affordable Care Act (ACA) ensures that individuals will never have to pay the full “billed amount” for their medical care. On this account, it makes little sense to allow plaintiffs to recover the full “billed amount” for the care they receive. Proponents of the collateral source rule have challenged the long-term viability of the ACA. They hold that the law is speculative. Given the political turmoil surrounding Obamacare, several courts have relied on this reasoning and chosen to exclude evidence of health insurance in personal injury cases. Opponents of the collateral source rule claim that it reflects an older era when insurance was rare and most individuals would have to pay the full amount billed by their health care provider. The rule is based on the idea that the plaintiff should not be punished (in the form of reduced damages) for having the prudence and foresight to purchase insurance. Moreover, wrongdoers should not be relieved of their duty to pay for the plaintiff’s medical bills, which could reduce the deterrent value of tort law. Recently, in Cuevas v. Contra Costa County, the First Appellate District Court reversed an award of $9,577,000 as the present cash value of plaintiff’s future medical and rehabilitation care expenses in an action for medical malpractice against Contra Costa County. The Court stated that the trial court erred in excluding evidence that health insurance benefits under the ACA would be available to mitigate the plaintiff’s future medical costs. The Cuevas decision is important to the opponents of the collateral source rule. It affirms the idea that plaintiffs should be made whole, not experience a windfall. Furthermore, the decision reveals a growing belief among the courts that repeal of the ACA is unlikely. _______________________________
Patient Protection and Affordable Care Act (ACA) (Pub.L. No. 111-148 (Mar. 23, 2010) 124 Stat. 119) [ii] Cuevas v. Contra Costa County, 2017 Cal. App. LEXIS 390
Passage of the AHCA and the Legislative Process
With congressional passage in the House of H.R.1628, American Health Care Act of 2017 (AHCA), should those looking to modify the collateral source rule be concerned? The answer is NO. H.R. 1628 does not repeal the Affordable Care Act. Rather, it is one step in a lengthy legislative process. AHCA must move through the Senate first, a reality that becomes less likely each day. Senate political dynamics are different than in the House for a number of reasons. 1) Unlike the House, the White House has little influence over Senate Republicans. Republican Senators who are not up for reelection until 2020 or 2022 and oppose the House plan may decide they can wait out President Trump if he remains a historically unpopular president. 2) While Republicans hold a comfortable majority in the House, they hold a slim two seat majority in the Senate. Additionally, there are only eight Republican Senators up for reelection in 2018. Two of those Senators – Sen. Jeff Flake (AZ) and Sen. Dean Heller (NV) – are in vulnerable seats, and both are in states that expanded Medicaid. 3) Republican Senators intend to write their own bill. Several working groups have been established and the GOP leadership has made it clear that it will not guarantee that any of the provisions in the House compromise bill will be written into a Senate proposal. 4) Compromising with the Democrats is more likely than not. There is a Plan B on Obamacare which involves bipartisan cooperation. Republican Senators Bill Cassidy (LA) and Susan Collins (ME) have publicly stated their interest in working with Democrats and have already been talking with Democratic members.
Senate Concerns with AHCA
If the Senate considers provisions taken from the compromise House bill, it will be ones that do not lean too far away from the political center. Most Republican Senators have expressed concerns about AHCA. There is little disagreement that if a repeal-and-replace bill passes the Senate, we will see the following:
There will be no significant cuts to Medicaid like those found in the House bill
Senate Republicans opposing Medicaid cuts: Rob Portman (OH), Lisa Murkowski (AK), Shelley Moore Capito (WV), John McCain (AZ)
There will be no roll back of the preexisting condition protections found in the ACA
Senate Republicans opposing roll backs to pre-existing condition protections: Bill Cassidy (LA), Susan Collins (ME)
There will be no defunding of Planned Parenthood
Senate Republicans opposing the defunding of Planned Parenthood: Susan Collins (ME), Lisa Murkowski (AK)
There will be no discrimination (through tax credit caps or increased premiums) against older Americans based on age
Senate Republicans opposing discrimination against older Americans: Susan Collins (ME), John Thune (SD)
“As health care bill heads to Senate, 7 winners and losers” https://www.statnews.com/2017/05/04/health-care-bill-winners-losers/
AHCA and the ACA Individual Mandate and Guaranteed Issue Requirements
Whether health insurance benefits are available to mitigate a plaintiff’s future medical costs turns on the “individual mandate” and “guaranteed issue” provisions found in the ACA. The “individual mandate” requires all individuals who are lawfully present in the United States to obtain some form of minimum essential healthcare coverage or pay a penalty. The “guaranteed issue” provision prohibits insurers from denying coverage to any lawfully present individual due to a preexisting health condition. Neither of these provisions experience serious alteration in the House passed bill. Even so, the Senate bill is expected to make fewer alterations to the law.
What does AHCA “Really” Do?
AHCA does something unconsidered by the House Republicans. It unleashes debates in 50 state capitals in the country as to how Medicaid dollars will best be used. In states like New York and California these priorities are well established. But in the top 11 states, all of whom voted for President Trump, these priorities remain unclear. Moreover, these very same states have the highest percentage of people with pre-existing conditions. Though the AHCA does very little to change the basic features of the ACA, the notion that the ACA could be repealed and replaced is troubling. As predicted by former Speaker of the House, John Boehner, “[Congress will] fix Obamacare, and I shouldn’t have called it ‘repeal and replace’ because that’s not what’s going to happen. They’re basically going to fix the flaws and put a more conservative box around it.” If Congress makes any changes to the ACA, this is what will happen.
Boehner: Republicans won’t repeal and replace Obamacare https://www.politico.com/story/2017/02/john-boehner-obamacare-republicans-235303
AHCA: Fact versus Myth
Myth: AHCA eliminates the individual mandate. Fact: AHCA does not eliminate the individual mandate established under the ACA. All individuals continue to be mandated to take-up insurance coverage. AHCA eliminates the tax penalty. Instead of paying a tax penalty, consumers who do not maintain continuous coverage would pay a premium penalty (of up to 30 percent higher) to the insurer. Myth: Under AHCA insurers can deny coverage to an individual with a pre-existing condition. Fact: AHCA does not permit insurers to deny coverage to an individual with a pre-existing condition. An individual who takes up coverage after his or her coverage has lapsed – defined as a lapse of 63 days or more over the previous 12 months – can be charged up to 30 percent higher premiums for his or her pre-existing conditions for one year if they choose to take up coverage. After this period, he or she would be able to purchase less expensive coverage that is not based on health status. Myth: AHCA eliminates essential health benefits. Fact: The ACA requirement to cover 10 essential health benefit categories is not changed under AHCA. However, states may apply for waivers in 2020 to re-define essential health benefits for health insurance coverage offered in the individual or small group markets. Potential waiver applicant states include Florida, Georgia, Idaho, Mississippi, Nebraska, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin, and Wyoming. Myth: AHCA eliminates the ACA out-of-pocket maximum rule. Fact: The ACA out-of-pocket maximum rule is not changed under AHCA. Myth: AHCA eliminates the community rating rules limiting rating variation for age (limited to 3 to 1 ratio), geographic rating area, family composition, and tobacco use (limited to 1.5 to 1 ratio). Fact: AHCA does not eliminate the ACA rating rules, except age rating of 5:1 is permitted starting January 1, 2018, unless states adopt a different ratio. States that use Patient Stability Fund grants for high-risk pools or reinsurance, or that participate in the Federal Invisible Risk Sharing Program can apply to waive community rating (instead permitting health status as a rating factor) for individuals who do not maintain continuous coverage. Myth: AHCA eliminates the prohibition on lifetime and annual dollar limits. Fact: AHCA does not change the prohibition on lifetime and annual dollar limits established by the ACA. Myth: AHCA eliminates funding for Medicaid for the severely disabled. Fact: Under the AHCA, Medicaid funding would move from a federal guarantee to match all legitimate state expenditures on health care and long-term services and supports (LTSS) for eligible beneficiaries to a capped payment system that would give states a fixed dollar amount per enrolled beneficiary. What we do not know is how states will choose to use Medicaid block grant funding. What seems clear is that each state will define its own Medicaid priorities.