How Chevron’s Overturn Could Complicate the Health Policy Environment

When the Supreme Court overturned the longstanding Chevron doctrine on June 28,¹ it threw into uncertainty the rulemaking and interpretation processes for laws, including those affecting health care. According to legal and policy experts speaking at an event hosted virtually by KFF, this decision could have major implications for health policy, including more legal challenges to health-related regulations.

To begin, Kaye Pestaina, JD, vice president and director of the program on patient and consumer protections at KFF, explained that Chevron deference was a framework used to make decisions when regulations were challenged in court, which usually resulted in the court deferring to the issuing agency and upholding the regulation. Now, the decision in Loper Bright Enterprises v Raimondo means that courts need to apply their own judgment to decide the interpretation, with no new framework on how to exercise this judgment.

A decision hailed by some as curbing federal overreach may instead have the effect of locking regulations into a structure that cannot keep up with changing times. | Image Credit: © fotofabrika - stock.adobe.com

Regulators and Congress Will Need to React

As a result of no longer receiving deference, agencies will likely become more cautious and exhaustive as they draft and update rules, according to Cindy Mann, JD, partner at Manatt Health and former deputy administrator of CMS. While the courts should respect explicit delegations of authority, there are many statutes containing less clear language like “actuarial soundness” that could be the target of new litigation.

Congress, too, will need to be more specific when writing legislation, said Dean A. Rosen, JD, partner at Mehlman Consulting and former chief health care advisor to Senate Majority Leader Bill Frist. But this is a challenge both politically, because some ambiguity in amendments has been used as a negotiating strategy, and pragmatically because legislators and staff aren’t always experts in technical issues like actuarial value. He predicted that it will be easier to achieve specificity when it comes to bipartisan legislation, whereas more divisive or technical areas will be more difficult to legislate around.

Legal Challenges to Federal Health Regulations

In addition to the impact on the policy-making progress going forward, the overturn of Chevron could provide an avenue for several rules to be struck down or constrained. Laurie Sobel, JD, associate director of women’s health policy at KFF, flagged the following as vulnerable:

• Section 1008 of Title X, which bars grant funding from going to programs in which abortion is a method of family planning, was interpreted by the Biden administration to allow the participation of providers that offer abortion services. Litigation is ongoing in the Sixth Circuit, with Tennessee and the US disagreeing over the impact of the Loper Bright decision on the case.²
• Section 1557 of the Affordable Care Act sets rules around nondiscrimination in health programs and activities, with the Biden administration including sexual orientation and gender identity as protected characteristics. A federal district court recently put in place an injunction keeping this definition from going into effect as a lawsuit continues.³
• The legality of FDA-approved mifepristone for medication abortion was affirmed just yesterday by a federal appeals court,⁴ but the combination of the Chevron overturn, and the Corner Post ruling⁵ could open up a new set of challenges such that a court might entertain conflicting evidence that second-guesses the FDA’s approval.

Pestaina also noted her concern that the regulations surrounding the Affordable Care Act’s health insurance marketplaces, including risk adjustment and premium tax credit eligibility, may be susceptible to challenge. Striking down those rules could upset the whole framework of access to health coverage.

One area that most likely won’t be affected by the ruling is state Medicaid waivers, including work requirements, according to Mann. She predicted that we will continue to see contention and litigation around these efforts, but Chevron deference was mostly applied to regulations with notice and comment period, rather than the regulatory guidance involved with waivers.

Health Policy-Making Strategies Moving Forward

The panelists discussed how the health policy world will react to this decision, including by writing in language to protect legislation against challenges.

“I think there will be some mechanisms that likely develop over time as you see Congress trying to protect legislation, just as we’ve seen things like severability being used as standard form,” Rosen said. “But I think in some of these cases, there’s such a diversity of potential laws and regulations that it’s also going to be difficult.”

Moderator Larry Levitt, executive vice president for health policy at KKF, noted the irony that the Loper Bright decision, hailed by some as curbing federal overreach, may instead have the effect of locking regulations into a structure that cannot keep up with changing times.

“We cannot ossify the program rules,” Mann said. “We’ve got to come to some ability to have rules evolve and modernize as the world changes without Congress stepping in every 5 minutes to adjust its statutory pronouncements.”

References

1. McCormick B, Caffrey M. Loss of agencies’ power could “slow everything down” in health care, Chernew explains. AJMC^®. July 1, 2024. Accessed July 25, 2024. https://www.ajmc.com/view/loss-of-agencies-power-could-slow-everything-down-in-health-care-chernew-explains
2. Pazanowski MA. Family planning fight poised to test score of Chevron rollback. Bloomberg Law. July 17, 2024. Accessed July 25, 2024. https://news.bloomberglaw.com/health-law-and-business/family-planning-court-fight-may-test-scope-of-chevron-rollback
3. Devereaux M. Federal court puts gender nondiscrimination rule on hold. Modern Healthcare. July 3, 2024. Accessed July 25, 2024. https://www.modernhealthcare.com/policy/section-1557-aca-hold-lawsuit-july-5
4. Pierson B. GOP states’ effort to restrict abortion pill rebuffed by appeals court. Reuters. July 24, 2024. Accessed July 25, 2024. https://www.reuters.com/legal/government/gop-states-effort-restrict-abortion-pill-rebuffed-by-appeals-court-2024-07-24/
5. Fritze J. Supreme Court lets a truck stop sue the Federal Reserve in latest threat to agency regulations. CNN. July 1, 2024. Accessed July 25, 2024. https://www.cnn.com/2024/07/01/politics/corner-post-sec-supreme-court/index.html