WASHINGTON – The Supreme Court on Wednesday appeared skeptical that state officials have the power to require health insurers to turn over reams of data revealing how much they pay for medical claims.
Most of the justices seemed to agree during a one-hour argument that efforts by Vermont and other states to collect and publicize the data conflict with federal law governing certain health plans.
Vermont is one of at least 18 states that gather health care claims data in an effort to keep down health costs, increase competition and improve quality. More than a dozen other states are interested in starting up similar databases to compile health claims and allow consumers to compare plans.
But that has run into resistance from Liberty Mutual Insurance Co., which operates a self-insured health plan for its workers and refused to turn over the data to Vermont officials.
A federal appeals court sided with the company, saying its plan already is subject to reporting requirements under the federal Employee Retirement Income Security Act, or ERISA.
Justice Stephen Breyer said he was concerned that some 93 million people are covered under self-insured health plans in which the employer pays out claims with its own funds rather than going through an insurance company.
“There can be 50 different states with 50 different sets of regulations, imposing a huge financial burden upon health care,” Breyer said.
Justice Elena Kagan said the prospect of every state developing different rules and formats “just all adds up to a lot of hassle, which all adds up to a lot of money.”
Breyer wondered if the Department of Labor could set uniform national regulations on data reporting or issue a regulation allowing states to do so. But Justice Antonin Scalia said he doubted the department could simply approve state plans that conflicted with federal law.
Vermont’s solicitor general, Bridget Asay, argued that the state is using its traditional powers to ensure the health and safety of its citizens. She said the state simply takes information the company has already generated, which doesn’t impose a burden or interfere with any of ERISA’s requirements.
But Justice Samuel Alito noted that President Barack Obama’s health care law now authorizes federal officials to collect data similar to what states are gathering.
“I don’t see how that does not undermine your principal argument,” Alito said.
The Obama administration has backed Vermont in the case. Justice Department lawyer John Bash told the justices that the state’s law is “incidental” to ERISA and used for state interests such as hospital budget review and oversight of health insurance rates.
That met with skepticism from Chief Justice John Roberts, who pointed out that “one of the things ERISA plans do is report data and compile data.”
Arguing for Liberty Mutual, lawyer Seth Waxman argued that federal law intended self-funded insurance plans to run without burdensome state regulations. He said a patchwork of conflicting reporting requirements from states would hinder those plans.
Both Kagan and Justice Ruth Bader Ginsburg later pressed Waxman on whether the cost of compliance is really so high. They noted that Liberty Mutual was already passing along much of the same data to other agencies.
Waxman said specific compliance costs were not available from Liberty Mutual’s plan administrator, Blue Cross Blue Shield of Massachusetts. But he said Vermont is requiring “that we keep records that we don’t keep, and that we display them and provide information in ways that we don’t.”
“This doesn’t end at Vermont,” Waxman said. Every dollar spent complying with data reporting “comes directly out of the benefits that they can pay.”