In the last few years, a renewed wave of attacks on abortion rights has captured media attention. One form of attack has been to target public funding for Planned Parenthood -- a provider of a wide range of women's reproductive and other preventive health services that some associate with abortion, despite the fact that abortion only makes up a very small percentage of the services it offers, and that some Planned Parenthood facilities do not offer abortion at all. At the national level, Republicans in the U.S. House of Representatives led an unsuccessful attempt to defund Planned Parenthood, but now states have taken up the fight. Indiana was the first to enact a law prohibiting Planned Parenthood from receiving Medicaid payments or federal funding for disease intervention services, and other states are trying to follow Indiana's lead. A successful challenge to Indiana's law in federal court, however, shows that these defunding attempts likely violate federal law.
In May of this year, Indiana enacted a law prohibiting the state from contracting with entities that perform abortions, but it exempted hospitals and ambulatory surgical centers. Effectively, this meant that the state could exclude Planned Parenthood of Indiana (PPIN) from participating in its Medicaid program, as well as prevent it from receiving other grants administered through the state, such as the Disease Intervention Services grant funded entirely by federal money. A number of plaintiffs, including PPIN, Medicaid beneficiaries, and individual health care providers, challenged the law in Planned Parenthood of Indiana (PPIN) v. Commissioner of Indiana State Department of Health. In June, a federal district court judge enjoined the state from implementing the law, holding that the exclusion from both programs violated federal law. A full hearing on the merits has not occured yet, but the plaintiffs won the preliminary injunction because they were able to prove a likelihood of winning on the merits, a lack of adequate remedy at law, and future irreparable harm if the injunction were not granted. The plaintiffs challenged the exclusions on several grounds, but the court's decision turned on plaintiffs' claim that the Indiana law conflicted with express federal spending conditions that regulated each program, and thus was preempted under the Supremacy Clause of the U.S. Constitution.
Exclusion from the Medicaid Program
Medicaid is a joint federal-state program created to provide health care coverage for the very poor and disabled. Although the program is voluntary for states, every state participates in order to get significant federal funding. As a condition of this funding, states must agree to abide by certain program requirements and beneficiary protections set forth in the federal Medicaid Act. The particular provision at issue in this case is the "freedom of choice" provision (42 U.S.C. Section 1396a(a)(23)); it requires states to ensure that "any individual eligible for medical assistance ... may obtain such assistance from any institution, agency, community pharmacy, or person, qualified to perform the service or services required ... who undertakes to provide him such services...." Plaintiffs alleged that Indiana's law excluding PPIN would violate this "freedom of choice" provision by preventing many Medicaid beneficiaries from getting their preventive and other reproductive health services from PPIN, their provider of choice.
The Indiana commissioner argued that this exclusion did not conflict with federal law by pointing to another provision in the Medicaid Act that expressly permits states to exclude providers from the Medicaid program (42 U.S.C. 1396a(p)(1)); this provision says that "in addition to any other authority, a State may exclude any individual or entity [from Medicaid participation] for any reason for which [the federal government] could exclude the individual or entity." In other words, the commissioner argued, states have unfettered authority to exclude providers for any reason as long as it is pursuant to state law, and the recently enacted law deeming providers of abortion services as "unqualified" to participate in the Medicaid program provided this authority.
Thus, the court's decision turned on its reconciliation of these two seemingly inconsistent provisions within the Medicaid Act: the freedom of choice provision for beneficiaries and the apparently broad exclusion authority granted to states. Although the court acknowledged that states have a great deal of discretion in deciding how to structure and administer Medicaid plans, it also noted that this discretion is limited by other statutory protections. The court rejected the state's interpretation that state law is the only check on its power to exclude because this would implicitly render other beneficiary protections in the Medicaid Act, such as the "freedom of choice" provision, essentially meaningless.
The court looked to federal legislative history for guidance in reconciling the two provisions and found that the provision allowing state exclusion of providers was motivated by concerns of protecting the program from fraud and abuse, and protecting beneficiaries from incompetent or inadequate providers. Given the fact that states are the primary regulators of health care quality and essential partners in policing fraud and abuse, it makes sense that state law would be viewed as an important tool for enforcing these protections. Under this interpretation, the fact that PPIN also provided abortions did not make it "unqualified" or a danger to beneficiaries. Moreover, nothing in the legislative history suggested that this provision could be used to regulate the scope of services a provider offers. The court noted that this narrower interpretation of states' exclusion power is more consistent with prior interpretations by the Supreme Court "as giving Medicaid recipients the right to choose among a range of qualified providers, without government interference."
Finally, the court pointed to the fact that the federal regulatory agency charged with Medicaid oversight - the U.S. Department of Health and Human Services (HHS) - denied the state plan amendment submitted by Indiana that contained the defunding provisions. HHS concluded that PPIN's exclusion would violate the "freedom of choice" provision and would negatively impact access to family planning services, which receive special protection in Medicaid. The Medicaid Act requires HHS approval for any significant changes in state plans to ensure compliance with federal law, and therefore it is a critical check on state abuse of discretion. In denying Indiana's amendment, HHS has made clear that it would not allow Medicaid defunding to be used as an ideological weapon against health care providers who provide abortions. In fact, on June 1 of this year, HHS issued an information bulletin for all states to this effect.
Exclusion from the Disease Intervention Services (DIS) Program
The court held that PPIN's exclusion from the DIS program also conflicted with federal law. DIS is entirely federally funded, and the federal government has created a comprehensive funding and eligibility scheme for this program. The law does not authorize states to create additional eligibility criteria, and the court found that the state's attempt to create additional eligibility criteria without federal authorization violates federal law. The court said that its finding that the state law was preempted was consistent with a number of other cases in which state laws that excluded providers from participation in federal programs who would otherwise be eligible under federal law were found invalid under the Supremacy Clause.
Lack of Adequate Remedy at Law & Irreparable Harm
With respect to each exclusion above, the court found that the potential harm to PPIN, the women it served, and Medicaid beneficiaries in Indiana generally would be irreparable and warranted protection. The court also suggested that this harm was not justified by proponents' claims of trying to prevent funding for abortion, especially because federal law already prohibited this. The reality is that only a very small percentage of Planned Parenthood's services involve abortion (around 3%), and these services are paid for through private funding sources only. The overwhelming majority of Planned Parenthood services involve comprehensive reproductive and other preventive health care, such as family planning and birth control, cervical smears, cancer screening, sexually transmitted disease testing, and self-examination instructions. These services help low-income women prevent serious illness, learn healthy behavior, and prevent unwanted pregnancies that often lead to abortion. Defunding PPIN would jeopardize access to these services for the 76,000 patients it serves.