As the total number of people who have been hospitalized for COVID-19 continues to rise across the U.S., there is increasing interest in the pandemic’s impact on costs incurred by patients, public and private payers, and revenues for hospitals and other health care providers. With many severely ill COVID-19 patients requiring hospital care, the pandemic provides a window into the large gap between what hospitals charge private insurers and what Medicare pays. As of June 20, 2020, 43% of patients hospitalized for COVID-19 in the United States were age 65 or older,¹  virtually all of whom have Medicare coverage. Proposals like a public option or lowering the age of Medicare eligibility would give more people access to coverage with lower payments rates and premiums, while also resulting in lower revenues for health care providers.

This issue brief analyzes hospital payments paid by private payers and by Medicare for a selection of inpatient services, including services requiring similar inpatient treatments for COVID-19, using data from the IBM MarketScan Commercial Claims and Encounters Database and the Medicare Provider Payment and Utilization Data public use files for 2014 to 2017. For each of these services, we compare average payments made by private payers and Medicare, show the 75^th and 25^th percentile in Medicare and private insurance payments. We also examine the growth in average payments paid by private insurers and Medicare, relative to inflation.

Our analysis finds:

• Private insurance payment rates were between 1.6 and 2.5 times higher than Medicare rates, with some variation among the ten DRGs included in our analysis.
• Private insurance rates varied more widely than Medicare rates.
• The average private insurance payment rates paid for diagnoses related to COVID-19 increased between 9.3% and 22.4% from 2014 to 2017, much faster than Medicare rates.

Background

Private insurance payments for inpatient services vary based on several factors, most notably hospitals’ market power relative to that of insurers.²  In contrast, reimbursements in traditional (fee-for-service) Medicare depend on a set of federal policies and formulas. Inpatient services are categorized into “diagnosis-related groups” (DRGs), which group together patients with similar clinical needs that are expected to require similar levels of hospital resources. Each DRG has a payment weight assigned based on the average resources required to treat Medicare patients grouped in that DRG. These weights are then adjusted for hospital-based factors such as local labor costs and case mix, as well as patient-specific factors such as severity and comorbidities. Hospitals that treat a higher share of low-income Medicare and Medicaid patients receive increased reimbursements, as do teaching hospitals. Medicare also makes additional outlier payments to reimburse hospitals for cases that are particularly costly.

To shed light on differences in Medicare and private payer reimbursement rates for COVID-19-related care, this analysis examines payments for respiratory infections and inflammation with major comorbidities or complications, the principal DRG now used by Medicare to reimburse for COVID-19,³  as well as payments for respiratory system diagnoses with ventilator support. The Trump administration has stated that Medicare rates will be used to reimburse hospitals and other providers that treat uninsured patients with COVID-19, subject to the availability of funds. The CARES Act includes a 20% increase in inpatient reimbursement for Medicare patients with COVID-19 during the COVID-19 Public Health Emergency (PHE) period. This 20% increase was not factored into our analysis because it was not in effect at the time source data were collected, the increase is temporary, and the Department of Health and Human Services has stated that it will not apply to payments for uninsured patients.⁴  Because we did not account for the 20% temporary increase, the differences we show between private and Medicare payment rates for the three respiratory DRGs in this analysis are somewhat overstated during the period of the public health emergency, as explained below.

In addition to the three respiratory DRGs that include patients requiring similar treatments to those used for patients with COVID-19, we examined seven other inpatient services that had a comparably large number of hospitalizations in both datasets: hip and knee replacements, angioplasties, major bowel surgeries, bariatric surgeries, uterine surgeries, treatment for esophagitis or gastroenteritis, and treatment for cellulitis.⁵  This group of services includes elective procedures (hip and knee replacements and bariatric surgery), non-elective procedures (treatment for cellulitis and gastroesophageal disease requiring hospitalization), and procedures that can be performed electively for patients who do not emergently require them (major bowel surgeries, uterine surgeries, and angioplasty⁶ ).

Overall, hospital volume has declined for services not related to COVID-19 treatment. The largest decreases have been seen for elective procedures, many of which have been delayed or cancelled based on Centers for Medicare & Medicaid Services (CMS) recommendations designed to preserve hospital capacity and personal protective equipment and to help minimize the risk of coronavirus infections.⁷  As states begin to loosen social distancing restrictions, CMS has issued recommendations related to restarting health care that is not related to COVID-19.⁸ 

Key Results

Private insurance paid more than twice what Medicare paid on average for all three respiratory diagnoses related to COVID-19.  For patients on a ventilator for more than 96 hours, the average private insurance payment rate is about $60,000 more than the average amount paid by Medicare ($40,218 vs. $100,461). On average, private insurance reimbursement for services related to COVID-19 were between 2.1 and 2.5 times higher than average Medicare reimbursement (Figure 1, Appendix Table 1). The private-to-Medicare payment ratio for both respiratory infections and respiratory diagnosis with ventilator for more than 96 hours are higher than the ratios for any of the seven other DRGs included in this analysis (Figure 2, Appendix Table 1).

If the 20% add-on that hospitals now get paid by Medicare for COVID-19 inpatients had been in effect in 2017 and if it had been applied to these claims, the difference between Medicare and private payments would be smaller. For example, the average Medicare payment rate for patients on a ventilator for more than 96 hours would increase from $40,218 to $48,262 if all claims were subject to the 20% add-on. Even with the 20 percent increase in Medicare payments for COVID-19 hospitalizations, private insurance payment rates would still be roughly double Medicare rates, ranging from 1.8 to 2.1 times Medicare rates.

Private insurance paid at least $10,000 more than Medicare rates on average for four of the seven other diagnoses we analyzed. When comparing the ratio of average private insurance and Medicare payments for services not related to coronavirus, private insurance payment rates ranged from 1.6 to 2.2 times higher than average Medicare payment (Figure 2, Appendix Table 1). The three procedures with the highest private-to-Medicare payment ratios are either elective procedures (knee and hip replacements and bariatric surgery) or procedures that can be performed electively for patients who do not emergently require them (angioplasty). The high private-to-Medicare payment ratio for procedures that are often elective helps to explain the financial impact that delays and cancellations of elective procedures have had on hospitals.

There is much wider variation in private insurance payment rates than Medicare payments for all services we analyzed, with particularly wide variation for the three diagnoses similar to COVID-19 treatments. For the ten diagnoses we analyzed, private insurance payment rates at the 75^th percentile were between 1.7 and 2.6 times higher than private insurance payments at the 25^th percentile for the same diagnosis. In contrast, the 75^th percentile payment rates paid by Medicare were about 1.3 to 1.4 times the 25^th percentile payment rate. For seven of the ten conditions we analyzed, the 75^th percentile private insurance payment rate was at least $10,000 more than the 25^th percentile private insurance payment rate. The DRG for respiratory diagnosis with ventilator support for more than 96 hours had the widest variation of the diagnoses in our study, with about a $74,000 difference between the 75^th and 25^th percentiles of private payment rates.

As discussed earlier, Medicare payments vary only based on several factors including cost of labor where the hospital is located, patient comorbidities, and higher reimbursement for particularly expensive cases, leading to greater uniformity in rates across hospitals compared to private insurance. The substantially larger variation in payment rates paid by private insurers suggests that geographic differences in labor costs and patient severity alone may not fully explain variation in private payment rates. Instead, much of the literature suggests that variation in private insurers’ payments is better explained by local market dynamics, including the degree of hospital consolidation.⁹ 

The average private insurance payment rates paid for diagnoses related to COVID-19 increased between 9.3% and 22.4% from 2014 to 2017, much faster than Medicare rates. Those increases are well above inflation over the same time period, which was 3.5%,¹⁰  as measured by the Consumer Price Index for All Urban Consumers (CPI-U) (Figure 4). In contrast, the average payment rate increases in Medicare were either close to inflation or—in the case of the respiratory diagnosis—the average payment declined. This decline is likely partly due to a drop in the relative weight used by Medicare to determine payments for that DRG over the same period.¹¹  Other factors could include a decrease in the average length of stay, a healthier case mix, or a decrease in the number of patients for which hospitals received outlier payments.

Between 2014 and 2017, private insurance payment rates for the seven non-COVID related services we analyzed increased more than twice the rate of inflation. The growth in private insurance payment rates substantially outpaced Medicare. This finding is consistent with recent Peterson Center on Healthcare and KFF analysis showing that per enrollee spending has been grown much more quickly for private insurance spending than for Medicare.¹²  The largest percentage increase in payment rate was seen for uterine procedures, which had a payment increase of 21.1% (Figure 5). The three conditions with the smallest percent increase in average payment for private insurance were also the three conditions with the highest private-to-Medicare payment ratio among the seven non-COVID-19 related conditions we analyzed. It is possible that private insurance payment rates increased at a lower rate for these services because their payment rates were already relatively high in 2014 relative to Medicare.

The average Medicare payment for knee and hip replacements as well as bariatric surgery decreased 1.6% and 2.6%, respectively. The Medicare relative weight for those DRGs also declined.¹³   The declines in the average Medicare payment rates may also be partly due to a healthier case mix or a change in one of the other factors that impacts hospital payment for a DRG.

Discussion

Our analysis shows that the pattern of private insurance payment rates vary widely and average about twice Medicare rates, consistent with a robust set of literature comparing private insurance and Medicare rates.¹⁴  Notably, we found that private insurance payment rates are more than twice Medicare rates for the services most likely to be used by patients who are hospitalized with COVID-19. The temporary 20% increase in inpatient reimbursement for COVID-19 inpatients during the public health emergency will narrow this gap for these DRGs, but will not impact other DRGs or reimbursement for patients without COVID-19 who receive treatment for respiratory conditions. For the non-COVID-19 DRGs, we found that the private-to-Medicare payment rate ratio was close to two-to-one for most of the seven diagnoses we analyzed, with the highest private-to-Medicare ratios for DRGs that are often elective.

Our analysis also shows a much wider variation in private insurance payment rates when compared to Medicare. Past studies have found that market consolidation has contributed to higher private insurance hospital prices.¹⁵  If the coronavirus pandemic leads to even greater hospital consolidation, hospitals may gain even greater leverage to demand higher prices from private insurers, further widening the difference between private and Medicare payment rates, and increasing premiums and other costs for people with private insurance. Proposals to create a public option or allow people to enroll in Medicare earlier could constrain payment rates and make health coverage more affordable, but also decrease revenues for health care providers.

This analysis uses a sample of claims obtained from IBM Health Analytics MarketScan Commercial Claims and Encounters Database (IBM Corporation), as well as Medicare payment data obtained from the Medicare Provider Payment and Utilization Data public use files (Centers for Medicare and Medicaid Services). MarketScan is a convenience sample of health care claims provided primarily by large employers and health plans. We used a subset of MarketScan claims provided by large employers, as well as Medicare-reported provider-level payment reports, from 2014 through 2017 to conduct this analysis. The specific Diagnosis-Related Groups (DRGs) examined were selected either due to their relevance to COVID-19-related hospitalizations (DRG 177 – respiratory infections and inflammations with major comorbidities or complications, DRG 207 – respiratory system diagnoses with ventilator support for over 96 hours, and DRG 208 – respiratory system diagnoses with ventilator support for up to 96 hours), or due to their comparably large volume of hospital admissions in both datasets. The latter group includes DRG 470 (major hip and knee replacement without major complications or comorbidities), DRG 247 (percutaneous cardiovascular procedures with drug-eluting stent without major complications or comorbidities), DRG 330 (major procedures of the small and large bowel with complications or comorbidities), DRG 621 (operating room procedures for obesity without complications or comorbidities), DRG 743 (uterine and adnexa procedures for non-malignancy without complications or comorbidities), DRG 392 (esophagitis, gastroenteritis, and miscellaneous disorders without major complications or comorbidities), and DRG 603 (cellulitis without major comorbidities or complications).

To calculate private insurance payment rates, we analyzed a sample of medical claims obtained from the 2017 IBM Health Analytics MarketScan Commercial Claims and Encounters Database. We only included claims for people under the age of 65. This analysis used claims for almost 19 million people representing about 22% of the 86 million people in the large group market in 2017. Weights were applied to match counts in the Current Population Survey for enrollees at firms of a thousand or more workers by sex, age, and state. Weights were trimmed at eight times the interquartile range.  Averages represent the charges paid to the hospitals for an admission.  Across all the DRGs, hospital spending represented about 86% of the total cost of the admission.  Costs include both amounts paid by enrollees in the form of cost-sharing and spending by the plan.  Hospital costs are trimmed to exclude the lowest 1.5% and highest 0.5% of hospital costs within DRG. These data reflect cost sharing incurred under the benefit plan, but do not include balance-billing payments that beneficiaries may make to health care providers for out-of-network services or out-of-pocket payments for non-covered services.

To calculate Medicare payment rates, we analyzed average provider-level total payments (Medicare payments plus enrollee cost-sharing) to hospitals for admissions identified through the diagnostic-related group (DRG) assigned to them in the database, as reported in the Medicare Provider Payment and Utilization Data public use files. These files are prepared by the Centers for Medicare and Medicaid Services (CMS) using Medicare Provider Analysis and Review (MEDPAR) data, employing trimming and weighting methods developed by CMS (see https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/Inpatient2017 for further information). Provider-level average payments were further weighted by provider-level case volume. This analysis used Medicare payment data representing hospital-specific payments for over 3,000 Medicare-qualified hospitals, encompassing more than 7 million enrollee discharges, or approximately 75% of total Medicare IPPS discharges in 2017. These data reflect Medicare-allowed cost sharing, but do not include balance-billing payments or other payments made outside of the Medicare claims process.

In Medicare, hospital admissions are reimbursed based on DRGs that reflects a patient’s clinical conditions and treatment. In contrast, private insurers pay for hospital admissions using different approaches that may vary with the procedures performed during the stay, including per diem payments, discounted fee-for-service payments, DRGs or other combinations of payments and performance incentives. IBM assigns a DRG to each admission using the Centers for Medicare & Medicaid Services (CMS) Grouper 35. This method selects a DRG for the admission based on the diagnosis and procedures a patient received during the case. The total payments to hospitals in the Marketscan data reflect the payments actually made to the hospitals. Some variation in the payment rates of admissions is accounted for by differences in the intensity or types of services that a patient receives, and not differences in the rates paid for those services. The rates Medicare uses to reimburse DRGs are designed to account for this variation in the intensity of cases and services. This analysis compares the average of DRG payment rates in Medicare to the average amounts paid for admissions by insurers and enrollees in Marketscan.

1. Hospitalizations reported from March 1, 2020 to June 13, 2020 according to CDC data, https://gis.cdc.gov/grasp/COVIDNet/COVID19_5.html (accessed June 29, 2020). ↩︎
2. Eric Lopez, Tricia Neuman, Gretchen Jacobson, and Larry Levitt, How Much More Than Medicare Do Private Insurers Pay? A Review of the Literature (Washington, D.C: Kaiser Family Foundation, April 2020), https://modern.kff.org/medicare/issue-brief/how-much-more-than-medicare-do-private-insurers-pay-a-review-of-the-literature/   ↩︎
3. “ICD-10 MS-DRGs Version 37.1 R1 Effective April 1, 2020,” Centers for Medicare & Medicaid Services, 2020, https://edit.cms.gov/files/document/icd-10-ms-drgs-version-371-r1-effective-april-1-2020-updated-march-23-2020.pdf ↩︎
4. “CARES Act Provider Relief Fund: General Information,” Department of Health & Human Services, accessed May 15, 2020, https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/general-information/index.html#targeted   ↩︎
5. See the Methods section for the formal definitions used by the Centers for Medicare and Medicaid Services for each of these diagnosis-related group (DRG) codes. ↩︎
6. Peterson, Eric D et al,  “Contemporary mortality risk prediction for percutaneous coronary intervention: results from 588,398 procedures in the National Cardiovascular Data Registry,” Journal of the American College of Cardiology 55 (May 4, 2010): 1923-32. doi:10.1016/j.jacc.2010.02.005   ↩︎
7. “Non-Emergent, Elective Medical Services, and Treatment Recommendations,” Centers for Medicare & Medicaid Services, 2020, https://www.cms.gov/files/document/cms-non-emergent-elective-medical-recommendations.pdf; “Hospital volumes hit unprecedented lows $1.4B daily revenue losses mean long recovery ahead,” Crowe, May 1, 2020, https://www.crowe.com/news/hospital-data-analysis-examines-the-financial-impact-of-covid-19.   ↩︎
8. “Opening Up America Again: Centers for Medicare & Medicaid Services (CMS) Recommendations, Re-opening Facilities to Provide Non-emergent Non-COVID-19 Healthcare: Phase 1,” Centers for Medicare & Medicaid Services, 2020, https://www.cms.gov/files/document/covid-flexibility-reopen-essential-non-covid-services.pdf ↩︎
9. Examining the Impact of Health Care Consolidation: Statement before the Committee on Energy and Commerce Oversight and Investigations Subcommittee, 115th Cong. (2018), https://docs.house.gov/meetings/IF/IF02/20180214/106855/HHRG-115-IF02-Wstate-GaynorM-20180214.pdf   ↩︎
10. The annual averages of the Consumer Price Index for all Urban Consumers (CPI-U) were 236.736 and 245.120 in 2014 and 2017, respectively. ↩︎
11. The value of the relative weight for MS-DRG 177, respiratory infections and inflammation with major comorbidities or complications, decreased from 1.9934 in FY 2014 to 1.8672 in FY 2017—a 6.3 percent change decrease. ↩︎
12. Rabah Kamal, Daniel McDermott, and Cynthia Cox, How has U.S. spending on healthcare changed over time?(Washington, DC: Kaiser Family Foundation, December 2019), https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/#item-start   ↩︎
13. The value of the relative weight for MS-DRG 470, knee and hip replacement, decreased from 2.1463 in FY 2014 to 2.0671 in FY 2017—a 4 percent change decrease. ↩︎
14. Eric Lopez, Tricia Neuman, Gretchen Jacobson, and Larry Levitt. How Much More Than Medicare Do Private Insurers Pay? A Review of the Literature (Washington, DC: Kaiser Family Foundation, April 2020), https://modern.kff.org/medicare/issue-brief/how-much-more-than-medicare-do-private-insurers-pay-a-review-of-the-literature/   ↩︎
15. Zack Cooper, Stuart V Craig, Martin Gaynor, John Van Reenen, “The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured,” The Quarterly Journal of Economics 134, no. 1 (Feb.  2019): 51–107, https://doi.org/10.1093/qje/qjy020   ↩︎

Introduction

Since the Supreme Court’s 1973 landmark decision in Roe v. Wade, abortion has been squarely in the middle of political debates at the national and state levels. The Supreme Court last ruled on an abortion case, Whole Woman’s Health v. Hellerstedt, in June 2016, when President Obama was in office and there were eight justices on the Supreme Court, including Anthony Kennedy, the swing vote. On March 4, 2020, the Supreme Court will hear oral arguments in June Medical Services LLC v. Russo, a challenge to a Louisiana admitting privileges law that is nearly identical to the Texas law struck down by the Supreme Court in 2016. In Whole Woman’s Health, the Court ruled 5 to 3 in favor of the abortion providers, with Justice Kennedy siding with the majority.

Since that decision, the makeup of the Court has significantly changed. In 2018, Justice Kennedy retired. President Trump has nominated two new Justices: Justice Gorsuch to replace Justice Scalia and Justice Kavanaugh to replace Justice Kennedy. Emboldened by the new make-up of the Supreme Court, some states have passed new abortion restrictions with the goal of reaching the Court to re-consider Roe v. Wade. While the current case, June Medical Services LLC v. Russo, is unlikely to overturn Roe v Wade, the Court’s ruling could have significant implications for women’s access to abortion and could eliminate the right of abortion providers to bring legal challenges to state and federal laws and policies. This issue brief explains the legal and factual issues in dispute and the reviews the potential implications of different rulings.

What is the law in controversy?

The June Medical Services LLC v. Russo case is a challenge to a Louisiana law, Louisiana Unsafe Abortion Protection Act (“Act 620”), which requires physicians who perform abortions in the state to have “active admitting privileges” at a hospital within 30 miles of the facility where the doctor provides abortions. Doctors who perform an abortion without having admitting privileges, may be imprisoned or fined and the clinics that employ them can have their licenses revoked and may also be fined or face civil liability. According to the Louisiana Department of Health, approximately 10,000 women obtain abortions in Louisiana annually. Clinics and doctors have brought this litigation to the court, questioning the constitutionality of the Louisiana law, and the State of Louisiana has brought a counter challenge questioning the right of doctors and clinics to sue on behalf of their patients.

Louisiana’s then Governor, Bobby Jindal, signed the bill in June 2014, and it was scheduled to go into effect September 1, 2014. On August 22, 2014, June Medical Services LLC (doing business as Hope Clinic), two other clinics (Bossier Clinic and Choice), and two doctors who perform abortions at these clinics filed a legal complaint requesting a preliminary injunction to block the enforcement of the law. When the complaint was filed, there were a total of five licensed abortion clinics in Louisiana, and six doctors performing abortions in Louisiana. Since that time, one abortion provider retired, and two clinics (Bossier City Medical Suite and Causeway Medical Clinic in Metairie) closed. There are currently three licensed clinics and five doctors who perform abortions in Louisiana.

On August 31, 2014, the District Court issued a temporary restraining order until a hearing could be held to determine whether a preliminary injunction should be issued. Per this order, Plaintiffs were expected to continue seeking admitting privileges but the State was barred from penalizing doctors during this time for not having admitting privileges.

Do abortion providers have standing to challenge this law?

For the federal courts to be able to hear a case at all there must be a party with a real, concrete injury whose protection depends on an intervention by the court. Usually, a person can only challenge the constitutionality of a law if it infringes on their own rights, not broadly on the rights of others. However, “third-party standing” allows another person or organization to assert the rights of another individual when it is difficult for that person to assert their own rights, and the parties’ interests are closely aligned. In cases relating to the right to abortion, it is very hard for women themselves to serve as plaintiffs, and for 45 years the Court has permitted their doctors sue on behalf on women. The Supreme Court established third-party standing for abortion doctors on behalf of their patients in a 1976 decision, Singleton v. Wulff. That case was brought by two doctors challenging the exclusion of abortion in Missouri’s Medicaid program. Justice Blackmun wrote for the court, “Aside from the woman herself, the physician is uniquely qualified, by virtue of his confidential, professional relationship with her, to litigate the constitutionality of the State’s interference with, or discrimination against, the abortion decision. Singleton recognized that women are chilled from asserting their abortion rights out of concern for their privacy.

In this case, although Louisiana did not challenge the doctors’ and clinics’ third-party standing in any of the cases that had made their way through lower courts for the last five and half years, the State now maintains that the third-party standing is not appropriate. Louisiana contends the courts have incorrectly assumed that doctors always have third-party standing to assert their patients’ constitutional rights to abortion without reviewing the specific facts of each case.

The State argues that the doctors do not meet the standards for third-party standing which requires: (1) the party asserting the right [must have] a ‘close’ relationship with the person who possesses the right, and (2) there must be a “hindrance” to the possessor’s ability to protect his own interests. The State maintains that the doctors in this case do not have a close relationship with their patients, and there is an inherent conflict in clinics and doctors challenging a health and safety regulation intended to protect abortion patients. They maintain that women can and do assert their own alleged rights in litigation challenging abortion regulations. The State argues that there was no evidence in this case “that any particular Louisiana woman who has obtained or is considering an abortion would personally (1) prefer to obtain an abortion from a doctor without admitting privileges, (2) prefer to forgo the protections Act 620 was intended to provide, or (3) consider her decision to obtain an abortion to be burdened by Act 620.”

The Plaintiffs maintain that the State waived the right to object to the standing of the clinics and providers by not raising this issue in the lower courts. Louisiana did not dispute Plaintiffs’ third party standing and present any evidence in the courts below to support their challenge now to third-party standing. The Plaintiffs contend there is a long history of cases ruling that doctors have the right to challenge abortion regulations on behalf of their patients, and the Court should abide by this precedent.

If the Supreme Court rules in favor of the State of Louisiana and determines that the clinics and doctors do not have third-party standing, then the Court does not need to reach the question of constitutionality of the admitting privileges law. The admitting privileges requirement would be allowed to stand, and any new challenges would need to be brought by women impacted by the law. The district court found that abortion in Louisiana is accompanied by discrimination, hostility, and occasional violence. Women seeking abortions in Louisiana also must overcome numerous obstacles including financial limitations, and concerns for privacy and personal safety, that would likely make it difficult for them to assert their constitutional rights and challenge an abortion restriction. ­­­

This could have far-reaching implications for other cases where third-party standing has been recognized including physicians’ ability to challenge laws on behalf of their patients’ rights to privacy for contraception, and to obtain mental health services. Third- party standing has also been used for education rights, housing rights, and criminal justice cases.

What is the legal standard to evaluate whether an abortion regulation is unconstitutional?

Allowing courts to evaluate credible evidence to determine if an abortion regulation benefits women is essential to evaluating whether an abortion law is constitutional. While Louisiana is claiming that requiring abortion providers to have hospital admitting privileges will protect women, the Supreme Court found that a nearly identical provision in Texas was an unnecessary regulation that would not protect women’s health and that the burden that this regulation would put on women outweighed any benefit. The state of Louisiana is asking the Court to re-open this question in this case.

In Whole Woman’s Health, the Supreme Court clarified that abortion restrictions are only constitutional if they further a valid state interest and have benefits that outweigh the burdens placed on women seeking abortions. The benefits and burdens of the laws must be based on credible evidence. The Court emphasized that the previous standard established in Planned Parenthood of Southeastern Pa. v. Casey “[u]nnecessary health regulations that have the purpose or effect of presenting a substantial obstacle to a woman seeking an abortion impose an undue burden on the right.” The rule announced in Casey “requires that courts consider the burdens a law imposed on abortion access together with the benefits those laws confer.”

The Court concluded that the Texas law requiring doctors who perform abortions to have admitting privileges at nearby hospitals did not provide any benefit to women’s health and concluded each provision of the law “places a substantial obstacle in the path of women seeking a previability abortion, each constitutes an undue burden on abortion access.” Therefore, the burden the law placed on women’s access to abortion outweighed the benefit. The district court that held the Texas law was unconstitutional based the factual findings of the lack of benefits on peer- reviewed studies on abortion complications, and expert testimony.

How many women need to be burdened?

Abortion regulations have typically been challenged before they go into effect to avoid the irreparable harm that would be caused by clinics closing and women losing access to their constitutional right to abortion—the burden. The question of what constitutes a burden is also central to this case. In 1992, the Supreme Court’s ruling in Planned Parenthood of Southeastern PA v. Casey, explained that to meet the undue burden standard, a “substantial obstacle” must be present within “a large fraction of the cases in which [it] is relevant.” The Court reiterated this standard in Whole Woman’s Health: “the relevant denominator is ‘those [women] for whom [the provision] is an actual rather than an irrelevant restriction.’”

The parties do not agree on how to define the relevant group of women affected by the Act 620 or what percentage of that group is a “large fraction.” The State of Louisiana points to Justice Alito’s dissent in Whole Woman’s Health and is requesting the Supreme Court to revisit this legal standard and only invalidate a law that burdens all women of reproductive age in a state.

The parties in this case have made different calculations regarding the share of women burdened by law and have different interpretations of the standard for a substantial burden and it will be up to the Court to determine how to define the burden.

How have the lower courts ruled on the Louisiana law?

The law was initially challenged by a group of abortion clinics and physicians in the Federal Middle District Court of Louisiana, and then the ruling, in favor of the plaintiffs was appealed to the federal 5th Circuit Court of Appeals who ruled in favor of the State.

The Federal Middle District Court of Louisiana: Requiring Abortion Providers to Have Hospital Admitting Privileges Would “Cripple Women’s Ability to have an Abortion”Soon after the passage of Act 620, but before the scheduled effective date of September 1, 2014, abortion clinics and physicians filed a complaint to enjoin the law. (See Appendix 1 for the timeline of the case.) The federal district court issued a temporary restraining order on August 31, 2014, enjoining enforcement of Act 620, but requiring the Plaintiffs to continue seeking admitting privileges at the relevant hospitals. The district court held a six-day trial in June 2015.

In January 2016, the district court ruled that Act 620 is unconstitutional, finding, “The medical benefits which would flow from Act 620 are minimal and are outweighed by the burdens which would flow from this legislation.” The district court determined that only one physician and one clinic would be left in the State to continue to provide abortions if the admitting privileges requirement were to go into effect.

The Plaintiffs then appealed the decision to the 5^th Circuit Court of Appeals. After the Supreme Court decided Whole Woman’s Health in June 2016, the 5^th Circuit remanded the case back to the district court so that it could be re-considered in light of Whole Woman’s Health. The district court issued a final judgment April 26, 2017, permanently enjoining the Act, ruling the law does “little or nothing for women’s health” but would cripple women’s ability to have an abortion.” The court found that approximately 70% of the women in Louisiana seeking an abortion would be unable to get an abortion in the State. The court also found no relationship between ability to obtain admitting privileges and competency. For over one year, the doctors had attempted to get hospital privileges but were unable to obtain them for a variety of reasons. Louisiana does not have standards for hospitals admitting privileges, and there is no time period in which hospitals need to respond to an application. Some hospitals require doctors to have a record of inpatient services, something most abortion providers do not have (because there are such few complications resulting from abortions). The district court included a detailed evidentiary record of each doctor’s attempts to obtain hospital privileges and the challenges they faced.

Fifth Circuit Court of Appeals: “A minimal burden even on a large fraction of women does not undermine the right to abortion.” The Requirement for Admitting Privileges does not “Impose a Substantial Burden on a Large Fraction of Women.”On September 26, 2018, the 5th Circuit overruled the district court’s decision, finding the district court clearly erred with its factual findings, and did not apply the correct legal standard. Citing the legislative history of Act 620 and the intent to promote women’s health, the 5^th Circuit found that that Act 620 has a minimal health benefit. In reviewing the burden, the Court found that Act 620 does not impose a substantial burden on a large fraction of women. It also found that several doctors failed to seek admitting privileges in good faith and some of the burden on women would be caused by the doctors’ actions not the Act. After setting aside the district’s court’s factual findings as clearly erroneous, the 5^th Circuit ruled that the Plaintiffs did not demonstrate an undue burden on a large fraction of women; 30% of all women seeking an abortion is not a large fraction, and the women who would be affected would not be burdened substantially.

Who determines the benefit of the law: state legislatures or courts?

One of the important issues in this case is who decides whether a state law benefits or harms women. In Whole Woman’s Health, the Supreme Court stated, “the Court, when determining the constitutionality of laws regulating abortion procedures, has placed considerable weight upon evidence and argument presented in judicial proceedings.” The Court prioritized the evidence that was presented in the case and placed less emphasis on the purported purpose of the law when enacted by state legislators.

Louisiana maintains that when the legislature enacted Act 620, it held committee hearings with extensive testimony and that Act 620 improves credentialing of abortion providers, and conditioning abortion provider qualifications on hospital credentialing introduces verification of competency that would not otherwise exist. The State is requesting that the Supreme Court give deference to state legislatures to enact laws to protect the health and safety on their citizens. They conclude that the law in question is rational law to protect women seeking abortions in Louisiana.

The Plaintiffs contend that the leader of an anti-abortion advocacy groups sent the legislative sponsor an article touting H.B.2’s “tremendous success in closing abortion clinics and restricting abortion access in Texas.” In hearings on the bill, witnesses reiterated to legislator that Act 620 would shutter facilities in Louisiana, just as H.B. 2 had done in Texas.

After a six-day trial, the district court found that the Act 620 does not advance health or safety or ensure that physicians are competent to provide abortion care. In contrast, the 5th Circuit Court of Appeals found some evidence of a minimal benefit stating that “the admitting-privileges requirement performs a real, and previously unaddressed, credentialing function that promotes the wellbeing of women seeking abortion.” The 5^th Circuit cites to the legislative history of Act 620 as demonstrating an intent to promote women’s health.

Which court establishes the facts of the case?

Under most circumstances, the district court is responsible for hearing and reviewing evidence and determining the facts of the case. Only when the district court’s factual findings are clearly erroneous do the appeals courts set aside these facts and establish their own set of facts. In this case, however, the Appeals court has used their own set of facts and rejected the evidence used in the case heard by the lower federal court.

After a full trial with witnesses and evidence, the district court ruled that Act 620 would create a substantial burden for women seeking abortion services and would force two of Louisiana’s three abortion clinics to close, leaving only one physician in the state who could provide abortion services.

However, the 5th Circuit Court of Appeals rejected the district court’s findings, and ruled that only one doctor had put forth a good-faith effort to get admitting privileges. Based on its determination of the facts, the 5th Circuit found that Act 620 does not impose a substantial burden. Although the parties agree that a court of appeals should only substitute its factual findings for the district court’s factual findings when the findings are clearly erroneous, they disagree about whether that standard was met in this case.

Looking Ahead

The Supreme Court will likely release its decision in this case at the end of June 2020. With the election only months away, and party conventions in July, this case once again puts abortion right in the middle of the political debate. While the Court’s decision is unlikely to overturn Roe v. Wade, the implications could be far reaching. Here are some of the possible ways the Court could rule:

• Third-Party Standing: If the Court decides that doctors and clinics no longer have the right to challenge abortion regulations on behalf of their patients (third- party standing), abortion would remain a constitutional right, but many potentially unconstitutional abortion regulations may go unchallenged.
• Deference to Legislature on Benefit of Law: The Court could change the standard created in Whole Woman’s Health by not requiring courts to consider credible evidence but to defer to the stated reason given by the legislature for the law in its review, giving states that want to restrict abortion greater leeway.
• Standard for Substantial Burden: The Court could also alter the burden analysis by requiring a “large fraction” of all women of reproductive age to be “substantially burdened” not just the women affected by the law. This would raise the bar on the number or share of women who potentially would be harmed before a state law would be considered a “burden” to women.

No matter how the Court rules, the decision will have far reaching impact, affecting not only women in Louisiana, but potentially determining how far other states can go in limiting access to abortion services.