ACUS Recommendations Stand the Test of Time

Administrative Implications of the Affordable Care Act

*This article is not an official communication from the Administrative Conference of the United States, nor does the Conference express any views  on the Affordable Care Act or any of the ACA provisions referenced in this article.

By Blair Druhan, ACUS Legal Intern

The Patient Protection and Affordable Care Act (ACA) enacts the largest expansion of Medicaid in the program’s history by expanding access to Medicaid to all adults under age 65 who are U.S. citizens and have incomes at or below 133 percent of the Federal Poverty Line.[1] The Congressional Budget Office estimated that this expansion would add an additional 17 million citizens to the Medicaid program.[2] The Administrative Conference’s historic Recommendation 90-8, Rulemaking and Policymaking in the Medicaid Program,[3] may be of continuing relevance to this modern expansion. In Recommendation 90-8, the Conference suggested that Congress consider the challenges of Medicaid service expansion for States when mandating changes to Medicaid and when setting statutory deadlines associated with those changes. The Conference also encouraged the Health Care Financing Administration, which formerly oversaw Medicaid and Medicare, to act promptly when responding to a legislative change in Medicaid services and to make the associated regulations and guidance publically available to the States. These steps were viewed as necessary for States to have an adequate opportunity to respond to Congressional mandates in a timely manner. These steps are also important where agencies are required to develop new administrative structures to implement Congressional mandates, as under the ACA. After Congress passed the ACA, multiple administrative agencies began implementing the ACA through rulemaking, policymaking, and administrative transformations. The Department of Health and Human Services (HHS) is the agency most responsible for its implementation: from implementing the individual mandate to developing several healthcare related programs and grants, overseeing state healthcare exchanges, and developing standards regulating private insurance companies. The Centers for Medicare and Medicaid Services (CMS), a sub-agency within HHS, is responsible for implementing and overseeing the ACA Medicaid expansion. CMS has already undertaken rulemaking and policymaking that affects each State under the ACA. CMS responded to the passage of the ACA with guidance and rulemaking in order to prepare for the 2014 deadline well before the Supreme Court decided National Federation of Independent Business v. Sebelius.[4] After proposed rules, regulatory impact analyses, and public input, CMS issued a final rule, Medicaid Program; Eligibility Changes Under the Affordable Care Act of  2010, on March 16, 2012 in order to assist States with the Medicaid expansion.[5] In addition to addressing the enrollment provisions of the ACA, this rule “simplifies the current eligibility rules and systems in the Medicaid and CHIP programs.” This document was publicly issued twenty months before the statutory deadline. CMS also issued multiple director letters offering guidance on Medicaid eligibility and enrollment to state health officials in response to the expansion. CMS is not the only agency within HHS that will be affected by the ACA, as the Secretary of HHS also has to develop an administrative structure that will allow it to oversee and enforce the ACA individual mandate, which requires every individual to have minimal essential coverage health insurance by January 1, 2014.[6] The Secretary of HHS also has the authority to determine whether an individual is exempt from the individual-mandate penalty. An individual can be exempt from the penalty on multiple grounds, including on the grounds that the individual has “suffered a hardship with respect to the capability to obtain coverage under a qualified health care plan.”[7]  However, Congress did not provide the agency with guidance on how to implement this exemption, and the agency has not publicly spoken on how it will administer the exemption process. For example, the agency might choose to create a formal hearing process where independent Administrative Law Judges would hear requests for exemptions or appeals if a request is denied. HHS will have to address the implementation of this exemption in the near future, because the Secretary recently announced that this exemption would be applied to the estimated 3 million individuals who may not get coverage in the event that a State declines to implement the Medicaid expansion. On July 10, the Secretary wrote a letter to each Governor and stated that if a State chooses to opt out of the Medicaid expansion, then the individuals who would have been eligible for Medicaid coverage under the expansion would be exempt from the individual-mandate penalty under the hardship exemption. [8] The individual mandate also directly impacts the Internal Revenue Service (IRS), which must collect and enforce the penalty associated with violating the individual mandate.[9] In response to these new responsibilities, the IRS plans to increase its workforce by more than an estimated 6,500 employees.[10] As IRS and HHS work together to implement and enforce their shared responsibilities under the individual-mandate provisions of the ACA, they may need to develop appropriate policies or procedures for facilitating and documenting their coordination of these efforts. The Conference encourages such coordination in Recommendation 2012-5, Improving Coordination of Related Agency Responsibilities, another recommendation that promises continued relevance in the future of federal agencies.[11]

[1] 42 U.S.C. § 1396a(a)(10)(A)(i)(VIII) (2012).
[2] Robert Pear, Court’s Ruling May Blunt Reach of the Health Law, N.Y. Times, July 25, 2012, at A16.
[3] Administrative Conference of the United States, Recommendation 90-8, Rulemaking and Policymaking in the Medicaid Program, (Dec. 18, 1990), available at
[4]In Sebelius, the Court altered the enforcement mechanism of the Medicaid expansion. Under the ACA, if a State did not follow the expansion, the Secretary could withhold all Medicaid funds from that State. In Sebelius, the Court held that withholding all Medicaid funds would be coercive and unconstitutional. Nat'l Fed'n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2608 (2012). Though Sebelius will change how the expansion is enforced, it is likely that most States will choose to follow—or partially follow—the expansion; thus, CMS must continue to prepare for it.
[5] 42 C.F.R §§ 431, 435, 457 (2012).
[6] 26 U.S.C. § 5000A.
[7] 26 U.S.C. § 5000A(e)(5) (2012).
[8] Letter from Kathleen Sebelius, Secretary of the Department of Health and Human Services, to State Governors (July 10, 2010) , available at A recent New York Times article discusses the Congressional Budget’s Office prediction that 3 million people who were predicted to gain coverage would not gain coverage due to certain States choosing to opt out of the Medicaid expansion after Sebelius. Pear, supra note 2. Of course, a number of factors could change this prediction.
[9] 26 U.S.C. § 5000A.
[10] Jim Kouri, IRS Geared Up for Obamacare Individual Mandate Tax – OpEd, EurasiaReview (July 3, 2012),
[11] Administrative Conference of the United States, Recommendation 2012-5, Improving Coordination of Related Agency Responsibilities, (June 15, 2012), available at


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