Exploring US Healthcare’s Administrative State | AEI

TL/DR –

The Supreme Court is preparing for a decision on two cases relating to the Chevron doctrine, which has led to discussion around the role of the Centers for Medicare and Medicaid Services (CMS), the executive agency responsible for public health insurance. The CMS was given authority over rules regarding payments, quality standards, access for underserved populations, and other areas, growing especially after the Affordable Care Act gave it new regulatory powers. With these powers, CMS has issued numerous extensive rules and regulations, and it’s viewed as an unavoidable part of the healthcare industry; its power may continue to grow due to ongoing political pressure on Congress to ensure healthcare results.

The Supreme Court, Chevron Doctrine, and the Role of CMS

The US Supreme Court is preparing for a combined ruling on two cases related to the Chevron doctrine – a principle about the deference to executive actions not explicitly mandated or prohibited by law. This decision has sparked renewed interest in the administrative state, particularly the Centers for Medicare and Medicaid Services (CMS).

Originally, when Congress created Medicare and Medicaid, they intended for a limited federal role. However, the challenges of managing vast public insurance plans led to a significant increase in CMS’s responsibilities. The complexity of direct market intervention led Congress to delegating rule-making authority to CMS.

The Affordable Care Act (ACA) of 2010 expanded CMS’s authorities even further. The legislation included almost 3,000 references to the Department of Health and Human Services Secretary, most of which were new regulations delegations.

CMS’s Expanding Role in Healthcare

Over time, the healthcare industry has come to accept CMS’s expanding influence as a business necessity. CMS’s regulatory reach is often met with resignation. This year, CMS published a 284-page rule for insurers sponsoring Medicaid and established minimum staffing requirements for nursing homes receiving Medicare and Medicaid payments. CMS’s 2024 Medicare Advantage rule also added new restrictions and requirements.

Beyond official regulations, CMS also holds significant power within Medicaid, where states can request waivers of certain statutory requirements. The terms for these waivers are largely determined by CMS, often without substantial input from Congress or public oversight.

The Future Division of Labor between Congress and CMS

Envisioning a different division of labor between Congress and CMS would require a fundamental shift in health care policy approach. If the federal government is to run US healthcare, Congress cannot be in the driver’s seat due to its inability to predictably react to market changes and susceptibility to interest-group pressure. The most probable scenario is that CMS or a similar agency will continue to hold the reins, even in the face of less judicial leniency.

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