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Pulse Check: American Healthcare After Loper Bright

William Scott, Wake Forest University School of Law, JD’ 26

If Benjamin Franklin lived in modern America, his famous proverb may well have been “Nothing is certain but death, taxes, and healthcare uncertainty.” After the Supreme Court’s 2024 ruling in Loper Bright, courts no longer defer to federal administrative agencies’ interpretations of ambiguous statutory authorities.1 In dissent, Justice Kagan warned that “private parties have ordered their . . . health-care decisions . . . around agency actions that are suddenly now subject to challenge.”2 Moving to a de novo standard of review for lawsuits challenging federal agencies’ statutory interpretations gives courts more power to reject agencies’ regulatory expertise.3

Three days after Loper, the Supreme Court’s decision in Corner Post, Inc. v. Board of Governors of the Federal Reserve System dramatically extended the time in which individuals and organizations harmed by agencies’ statutory interpretations can file an Administrative Procedure Act (APA) challenge claiming injury.4 The combination of agencies’ newly limited interpretive power and extended timelines to file suit against agencies will likely impact federal healthcare regulations for years to come. American healthcare was widely considered one of the most federally-regulated industries before Loper, and the current situation is primed for legal challenge to existing healthcare regulations.5 Legal professionals have predicted a rise in healthcare litigation because courts are no longer required to accept the validity of federal agencies’ interpretations of statutory authority when private actors, such as prescription drug manufacturers, challenge federal agencies in court.6 The Loper decision will likely cause immediate and long-term instability in the American healthcare system as federal agencies and private actors navigate the new uncertainties of healthcare regulation. 

Though Loper only ended judicial deference to federal agencies’ statutory interpretation, the decision injects uncertainty into all fifty states because all states’ healthcare programs are subject to federal regulation.7 More than 220 million Americans have private healthcare insurance.8 Title XXVII of the Public Health Service Act (PHS Act) makes states the primary enforcers of standards for private healthcare insurance and state-level health insurance programs.9 Title XXVII also provides that the Centers for Medicare & Medicaid Services (CMS) is the federal agency responsible for ensuring that states uphold all requirements of the PHS Act.10 States can voluntarily request support from CMS to help meet PHS Act requirements, and CMS also has the statutory authority to compel states to comply with PHS Act requirements.11

PHS Act compliance is just one example of more than 600 regulations on healthcare that CMS and other federal agencies are responsible for overseeing throughout all fifty states.12 Ending judicial deference to federal agencies’ statutory interpretations complicates federal and state collaboration because of the increased potential for lawsuits challenging federal agencies’ methods for ensuring compliance with healthcare insurance laws and regulations. 

Following in the footsteps of Loper’s impact on federal agency regulation, a growing number of states are considering whether to end deference to state-level regulatory agencies.13 New Jersey lawmakers in particular have acknowledged that future challenges to state agencies’ interpretations of laws are “almost guaranteed.”14 American healthcare was by no means perfect before Loper, but the decision’s introduction of uncertainty into federal and state healthcare systems is concerning, partially because of the lack of a national replacement for agency deference. State legislatures will likely pass healthcare laws at different paces, which could lead to an increase in forum-shopping for healthcare litigation.15

 In contrast to private insurance, as of April 2024, more than 130 million Americans receive federal insurance through Medicare or Medicaid.16 CMS is the federal agency responsible for administering Medicare and Medicaid law.17 The Supreme Court itself has labeled the statute authorizing CMS’s responsibilities “almost unintelligible to the uninitiated.”18 CMS is responsible for negotiating the price for prescription drugs and drug treatment plans for Medicare and Medicaid recipients, the majority of whom are elderly or indigent.19  Enrollment in federal healthcare insurance is only projected to rise as the Baby Boomer generation ages.20 Federal agencies, wary of post-Loper lawsuits, will likely be more meticulous and therefore slower when creating regulations.21 Slower regulatory ability is problematic because a less-responsive set of federal agencies will be responsible for the health of a growing number of Americans already in need of federal support.22 

Without judicial deference to federal agencies’ statutory interpretations, private actors in the healthcare market will likely take the opportunity to challenge and potentially overturn established federal agencies’ regulations, such as CMS’s price negotiation policies.23 The American Cancer Society and other healthcare non-profits filed an amicus brief addressing this fear, highlighting that “resulting uncertainty [of ending deference] would be extraordinarily destabilizing, not just to the Medicare and Medicaid programs but also . . . to the operational and financial stability of the country’s health care system as a whole.” 24Prospective lawsuits against federal healthcare regulations could “challenge rate and reimbursement limits, services, and coverage determinations with greater success,” likely leading to an increase in the cost of administering federal healthcare.25 Federal healthcare would become more expensive for multiple reasons, including the costs associated with extended approval timelines for federal agencies’ drug and treatment programs.26 Private actors are also likely to pursue relitigation of cases decided in favor of healthcare agencies now that judiciaries no longer grant deference to agencies’ statutory interpretation.

Prescription drug manufacturers have already begun preparing lawsuits to challenge CMS’s ability to negotiate drug prices for Medicare and Medicaid recipients. These lawsuits could mark the beginning of a wave of challenges to federal agencies’ regulatory powers. Federal agencies are by no means infallible, but they fulfill a wide range of specific purposes within American society. Ending deference to federal healthcare agencies’ interpretation of statutory authorities threatens to embroil the national healthcare system in protracted lawsuits while states create a patchwork of health insurance plans.

Concerns within the healthcare industry center around whether courts will uphold agencies’ statutory interpretations without the automatic deference granted pre-Loper. The Supreme Court may soon give insight into its stance on federal healthcare regulation with the upcoming case of Advocate Christ Medical Center v. Becerra.27 In Advocate Christ Medical Center, the United States Court of Appeals for the District of Columbia upheld the Department of Health and Human Services’ (DHHS) interpretation granting higher Medicare reimbursements to “disproportionate share hospitals” (DSHs) treating an “unusually high percentage of low-income patients.”28 If the Supreme Court reverses the lower court’s expansive interpretation of Medicaid reimbursement, that is a grim sign for the healthcare industry.

Loper destabilized the healthcare industry by ending federal agencies’ primacy when interpreting statutes. The outcome of Advocate Christ Medical Center may serve as a litmus test to show whether federal healthcare agencies’ statutory interpretations in the future are presumed valid or considered dead on arrival. 

Endnotes

  1. See Loper Bright Enters. v. Raimondo, 144 S. Ct. 2244, 2273 (2024). ↩︎
  2. Id. at 2310 (Kagan, J., dissenting). ↩︎
  3. See Nowell P. Bamberger et al., After Chevron: What the Supreme Court’s Loper Bright Decision Changed, and What it Didn’t, Harv. L. Sch. F. on Corp. Governance (Jul. 18, 2024), https://corpgov.law.harvard.edu/2024/07/18/after-chevron-what-the-supreme-courts-loper-bright-decision-changed-and-what-it-didnt/. ↩︎
  4. See Corner Post, Inc. v. Bd. of Governors of Fed. Rsrv. Sys., 144 S. Ct. 2440 U.S. (2024) (determining that parties’ ability to bring an APA claim begins when that party is injured by a final agency action, not six years from the first injury from any agency action).  ↩︎
  5. See Anna Akers Hornsby et al., The Overturn of Chevron: A New Design for Healthcare Law, Nat. L. Rev. (Jul. 15, 2024), https://natlawreview.com/article/overturn-chevron-new-design-healthcare-law. ↩︎
  6. See Zachary Baron et al., Supreme Court Overrules Chevron Doctrine: Ripple Effects Across Healthcare, HealthAffairs (Jul. 19, 2024) https://www.healthaffairs.org/content/forefront/supreme-court-overrules-chevron-doctrine-ripple-effects-across-health-care. ↩︎
  7. See Laws & Regulations, U.S. Dept. Health & Hum. Servs. (Oct. 1, 2024), https://www.hhs.gov/regulations/index.html. ↩︎
  8. See U.S. Health Care Coverage and Spending, Cong. Rsch. Servs. (updated Mar. 20, 2024), https://crsreports.congress.gov/product/pdf/IF/IF10830. ↩︎
  9. See Compliance and Enforcement: Ensuring Compliance with the Public Health Service Act, Ctrs. for Medicare & Medicaid Servs. (Oct. 4, 2024), https://www.cms.gov/marketplace/private-health-insurance/consumer-protections-enforcement. ↩︎
  10. Id. ↩︎
  11. Id. ↩︎
  12. See Federal Agencies with Regulatory or Oversight Authority Impacting Hospitals, Am. Hosp. Assoc. (October 2017), https://www.aha.org/system/files/2018-01/info-regulatory-burden-federal-agencies.pdf. ↩︎
  13. See Kaye Pestaina et al., The Regulation of Private Health Insurance, Kaiser Fam. Found. (Updated Jul. 29, 2024), https://www.kff.org/health-policy-101-the-regulation-of-private-health-insurance/?entry=table-of-contents-introduction. ↩︎
  14. See Marc Rollo et. all, Impact of the “Loper Bright” Decision on New Jersey State Deference, N.J. L. J. (Aug. 8, 2024), https://www.law.com/njlawjournal/2024/08/08/impact-of-the-loper-bright-decision-on-new-jersey-state-deference/ ; see also Edward A. Hartnett, Popular Sovereignty, Constitutional Interpretation, and the New Jersey Constitution of 1947, 7 Seton Hall Const. L. J., 839-844 (1997) (explaining that the primacy of the New Jersey Constitution is a matter of the Supreme Court of New Jersey’s constitutional interpretation when the state constitution is more protective of citizens’ rights than the federal Constitution). ↩︎
  15. See Valerie Cohen & Sophia Porotsky, Healthcare Impacts in a Post-Chevron World, Venable (Jul. 8, 2024), https://www.venable.com/insights/publications/2024/chevron-decision/healthcare-impacts-in-a-post-chevron-world. ↩︎
  16. See Alena Hall, Medicare Statistics and Facts in 2024, Forbes (Sep. 3, 2024), https://www.forbes.com/health/medicare/medicare-statistics/#:~:text=As%20of%20April%202024%2C%20approximately%2067.3%20million%20U.S.,the%20remaining%2049.6%25%20are%20enrolled%20in%20Original%20Medicare; see also Elizabeth Williams et al., Medicaid Enrollment & Spending Growth: FY 2024 & 2025, Kaiser Fam. Found. (Oct. 23, 2024), https://www.kff.org/medicaid/issue-brief/medicaid-enrollment-spending-growth-fy-2024-2025/. ↩︎
  17. Hornsby et al., supra note 5. ↩︎
  18. Id., quoting Wos v. E.M.A. ex rel. Johnson, 568 U.S. 627, 648 (2013). ↩︎
  19. Michael J. Abernathy et al., Life Sciences Post-Chevron: Navigating the Range of Legal and Regulatory Challenges Raised by Loper Bright, Morgan Lewis (Jul. 8, 2024), https://www.morganlewis.com/pubs/2024/07/life-sciences-post-chevron-navigating-the-range-of-legal-and-regulatory-challenges-raised-by-loper-bright. ↩︎
  20. See Hall, supra, note 16. ↩︎
  21. See What Does the End of Chevron Deference Mean for Federal Health Care Programs?, Foley (Jul. 1, 2024), https://www.foley.com/insights/publications/2024/07/end-chevron-deference-federal-health-care-programs/.
    ↩︎
  22. Id. ↩︎
  23. See Luke Halpern, Overturning Chevron Deference Could Lead to Confusion, Chaos Across Pharmaceutical Industry, Pharm. Times (Aug. 21, 2024), https://www.pharmacytimes.com/view/overturning-chevron-deference-could-lead-to-confusion-chaos-across-pharmaceutical-industry. ↩︎
  24. See Brief for American Cancer Society et al. as Amici Curae Supporting Respondents at 22, Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244, 2273 (2024) (No. 22-451). ↩︎
  25. Abernathy, supra, note 19. ↩︎
  26. Id. ↩︎
  27. See Advocate Christ Med. Ctr. v. Becerra, 80 F. 4th 346, 355 (D.C. Cir. 2023). ↩︎
  28. Id. at 349. ↩︎

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