WASHINGTON, D.C. – President Barack Obama’s administration was aware well before families started signing up for Affordable Care Act coverage that some insurers or states could refuse to sell family policies to gay and lesbian couples -- and with apparent impunity.
But the administration was hesitant to step on states’ rights to decide whether only a man and woman could head a family for insurance purposes. Records and interviews suggest several factors influenced this ambivalence, including uncertainty as to how the U.S. Supreme Court would rule in a then-pending gay marriage case.
But despite pushing Congress successfully to pass one of the broadest federal insurance laws on record, the Obama White House also was giving deference on this narrow question – what constitutes a family -- to a 1940s insurance law that has largely kept Washington out of states’ rights to regulate insurance.
What has resulted is not only a bundle of contradictions from an administration that otherwise embraces gay rights and has forced insurers in every state to offer broader health coverage to most Americans. The administration’s decisions on gay rights and insurance also are now having real consequences on families headed by same-sex couples.
Gay and lesbian couples in North Carolina and Pennsylvania have had trouble getting family health coverage under the Affordable Care Act, or ACA, although the North Carolina insurer changed its mind and is now selling to gay couples. Neither of those states recognizes gay marriage as legal. And this week, a family in Gates Mills, Ohio, sued the federal and state governments in U.S. District Court in Cleveland over its inability to get a family policy through the ACA marketplace.
Alfred Cowger Jr., left, and Anthony Wesley Jr., with their daughter, Catherine, at their June 5, 2012, wedding, performed by Judge James Fischer of the Town of Chautauqua, NY.
The family – Alfred Cowger Jr., Anthony Wesley Jr. and their 7-year-old daughter, Catherine – said in the lawsuit that this refusal violates their constitutional rights. They can buy health insurance as individuals, but this denies them the right that other families have to get tax subsidies based on their income.
It also forces them to have deductibles that are a third higher than they would be if they could get an ACA marketplace policy as a family. This disparity, and the inability to get certain coverage for the same price as they would otherwise pay with an ACA policy, is troublesome, they say, because the ACA was supposed to treat all Americans equally.
The ACA does have, in fact, a section that bars discrimination of all kinds, be it sexual, racial or physical, noted Katie Keith, an attorney and former research professor at Georgetown University who now directs research at the Trimka Group, a consulting and advisory firm.
But the U.S. Department of Health and Human Services, in charge of administering the ACA, has not yet issued rules that spell out to insurers and states how this should work. HHS only last August requested public comment on how to regulate for discrimination -- more than three years after Congress passed the ACA and just as insurers were ramping up to start selling health care policies on the ACA marketplace.
As for how to define a family and whether HHS should have defined it already so as to avoid the current confusion, HHS acknowledged in 2012 that it had questions. This was when HHS was proposing rules for marketing insurance policies under the ACA, which many people simply call “Obamacare." The policies are sold through computerized marketplaces, or “exchanges,” in each state.
HHS acknowledged in the Federal Register in 2012 that some members of the public as well as interest groups wanted to make sure there was no wiggle room for excluding gay families. Others, however, wanted to let states use their own definitions.
HHS asked for public comments, and a number of groups, including the Universal Health Care Action Network of Ohio (UHCAN), the Center for American Progress and gay rights organizations, responded with letters around Christmas, 2012.
Cathy Levine, UHCAN’s executive director, and Col Owens, senior legal counsel for Legal Aid of Southwest Ohio and a UHCAN board member, wrote that “many different types of families, including non-legally recognized same-sex partners and their children, are enrolled in family insurance plans. The final rule should account for different types of family compositions and ensure rating rules are broad enough to permit issuers to rate and continue to offer coverage to all families.”
But there were other views, including that of Kaiser Permanente, the California-based health insurer. Said a letter to HHS from Anthony Barrueta, the insurer’s senior vice president of government relations: “The legal definition of ‘family’ differs considerably from state to state, and it is a general rule that the federal government defers to the states in matters of law related to family structure.”
The McCarran-Ferguson Act of 1945, regulating insurance, provided for this state deference in insurance regulation, noted Keith, saying that state insurance law prevails unless federal law says otherwise. HHS considered the “otherwise” in defining the meaning of family, but ultimately said in its rule, issued in February 2013: "We recognize that state laws differ with respect to marriage, adoption, and custody and believe that states are best positioned to make decisions regarding family coverage practices."
No one has suggested that the White House or HHS did this for political expedience. The ruling closely followed Obama's reelection, but Obama had already announced, in 2011, that his Justice Department would not defend a challenge in the Supreme Court to the federal Defense of Marriage Act. The act, passed in 1996 and signed by President Bill Clinton, a Democrat like Obama, defined marriage as a legal union between a man and a woman. Clinton said last March that he regretted signing the bill. The court's 5-4 decision last June struck down a section that denied federal benefits to same-sex couples.
That decision only affected couples in states that recognized gay marriage, but the White House subsequently said that it would provide the same federal benefits – for tax and Social Security purposes, for example – for any married couple, even if they wed in one state but lived in a different state that did not recognize gay marriage. Cowger and Wesley, the Gates mills couple, are such an example. They married in Chautauqua, NY, in 2012.
HHS Secretary Kathleen Sebelius, a former Kansas governor and state insurance commissioner, even said last fall that discrimination against gays would not be tolerated in health care.
But things have worked out differently when the ACA is in the mix.
In January, 20 gay and lesbian couples in North Carolina complained after Blue Cross and Blue Shield of North Carolina would not sell them ACA family coverage. The insurer said it was complying with state law, although a different, smaller insurer in the state was selling ACA policies to gay couples, according to Kellan Baker, associate director of an equal rights research program at the Center for American Progress, a liberal think tank.
Blue Cross and Blue Shield of North Carolina soon relented, saying it would amend its regulatory filing to sell family policies to gay couples in the ACA marketplace, also known as an insurance “exchange.” The state had no apparent objections, even though it does not sanction gay marriage.
Gay couples in Pennsylvania have been having a similar problem, according to Baker and Keith.
With the lawsuit of the Gates Mills couple, advocates for broader coverage say they see a pattern that needs to be addressed. Ohio voters in 2004 passed a constitutional amendment banning same-sex marriage.
In the Ohio matter, several things remain in question. Cowger and Wesley said in interviews that the insurer through which they wanted family coverage, Medical Mutual of Ohio, tried repeatedly to help them enroll. Even today, Medical Mutual spokesman Ed Byers said, “We have no control over which applications on the exchange are approved or rejected. All we know is that when someone chooses one of our plans and makes it through the system, we insure them.”
The Ohio Department of Insurance would not comment because, it says, the state is a defendant in the case brought by Cowger and Wesley. But the state insurance department does not appear to have issued rules or regulations specifically relating to ACA coverage and the definition of marriage.
However, the federal marketplace, or exchange, may be programmed in such a way to interpret the state’s constitutional ban on same-sex marriage as a prohibition against family coverage. In repeated conversations with federal employees and contractors trying to help, Wesley said, “They kept saying ‘It’s the state. We have to defer to the state.’”
Cowger said, “I’ve been told that by both people at Medical Mutual and people at the federal marketplace.” He said he has “talked with dozens” of people from both, spending “hundred of hours” on the quest to get a family policy.
This all could be resolved in a number of ways, whether through concerted action by all the parties or the courts. But the Obama administration is well aware of the problem, judging not only from the past and ongoing regulatory docket but also from a statement from HHS. Keith, the former Georgetown professor, said that HHS and its Centers for Medicare and Medicaid Services could fix the problem through regulatory guidance rather than through a new rule. A rule could take much longer.
HHS spokesman Fabien Levy said on Tuesday, "CMS is aware that same-sex married couples in some states are experiencing issues in obtaining family plans and is looking into ways to address this for the 2015 plan year.”