Prepared remarks: Health Care Policy in the Post-Chevron Age, Eugene S. Farley, Jr. Health Policy Center, CU Anschutz (Oct. 10, 2024)
Good afternoon. It is a pleasure to be with you today to discuss the impact of a recent U.S. Supreme Court decision on health policy development and implementation. I appreciate your interest in this topic and your attention to the shifting legal landscape. In particular, thanks to Dr. Shale Wong for your leadership at the Farley Center and for inviting me to speak about a dramatic change in the regulatory environment of our health care system on account of the Court’s Loper Bright decision. But before getting to the impact of this decision, let me offer some important context.
Thirty years ago, in 1984, the U.S. Supreme Court established what is known as the “Chevron doctrine”—a legal principle that, until very recently, served as the cornerstone of federal regulatory law. Notably, this case directed courts to defer to reasonable agency determinations when applying ambiguous federal statutes.[1] In Loper Bright Enterprises v. Raimondo,[2] the Court overruled the “Chevron doctrine” and upended forty years of precedent; in so doing, it precipitated a potentially seismic shift in the role of expert agencies in the federal government.
To underscore the significance of this case, just consider that Loper Bright invites potential legal challenges to thousands of agency rules in almost every sector of the economy. In practice, this decision promises to shift the power to make what are complex policy judgments or even technical determinations away from expert agencies to the courts. In the health care arena, for example, complex regulations related to the administration of Medicare, Medicaid, Affordable Care Act insurance plans, and other federal programs that were developed over years or even decades could be altered or unraveled on account of this decision. Put simply, this case is a big deal.
To preview my conclusion, it is actually too soon to tell how this fairly recent decision will play out in a range of policy areas, including health care. Nonetheless, there are important questions we must ask about what lies ahead. But before tackling that topic, let me discuss a bit more about the role of the Chevron doctrine and its importance in regulatory policy.
The Rise and Fall of Chevron
For non-lawyers, and even some lawyers who do not practice regulatory law, the Chevron decision is a bit of a mystery. In the Chevron case, the Supreme Court evaluated the U.S. Environmental Protection Agency’s decision on how to treat the Clean Air Act’s term of a “stationary source.”[3] The case was a watershed one not because of the particular facts at issue; as with many regulatory law cases, it was a relatively esoteric one. Rather, Chevron was significant because of the general legal principle established by the court’s decision.
In an opinion written by Justice John Paul Stevens, the Chevron case announced a two-part test as to whether an expert agency charged with implementing a regulatory law deserves deference in its reading of statutes that are ambiguous, have gaps, or are otherwise open to multiple interpretations. To capture the impact of that ruling, courts and commentators began to refer, for short, to expert agencies receiving “Chevron deference” in the interpretation and implementation of regulatory statutes within their jurisdiction.[4] The goal of this test, as Justice Elena Kagan explained in her Loper Bright dissent, is to respect that expert agencies are better positioned than courts to make certain types of decisions. As she put it, “agencies often know things about a statute’s subject matter that courts could not hope to,” as they “are staffed with ‘experts in the field’ who can bring their training and knowledge to bear on open statutory questions.”[5]
The Chevron two-step analysis, as it became known, starts by asking whether the statutory term is one where “traditional tools of statutory construction” can determine whether Congress assigned a fixed meaning to the provision at hand.[6] If so, the case is decided by the court. But if Congress’ intent is not evident from such an inquiry, courts must ask whether the agency interpretation is a “reasonable one,” not whether the agency definition is the one that the court would have selected itself.[7] This rule of judicial humility, and respect for agency expertise, is the core legacy of the Chevron case.
The scholarly literature that emerged around the Chevron decision examined the doctrine from several angles, including democratic legitimacy, institutional competence, statutory interpretation, and the letter and spirit of the Administrative Procedure Act.[8] A central idea, however, was that the rule should be viewed as a default rule for what Congress intends to happen when it passes a complex regulatory law. The Supreme Court explained this understanding as “a presumption that Congress, when it left ambiguity in a statute meant for implementation by an agency, understood that the ambiguity would be resolved, first and foremost, by the agency, and desired the agency (rather than the courts) to possess whatever degree of discretion the ambiguity allows.”[9]
In the Loper Bright decision, the majority suggested that it left intact the ability of Congress to expressly delegate authority to expert agencies to make policy determinations using their discretion. But the majority did not grapple with the core rationale of Chevron that, when Congress passes an otherwise uncertain regulatory statute, it is implicitly delegating authority either to the courts or the expert agency.[10] In the Chevron case itself, the Supreme Court recognized that interpreting terms that are open to multiple understandings—like the Clean Air Act’s concept of a “stationary source”—“is often more a question of policy than of law,” and thus better suited to resolution by policymakers rather than judges.[11] To be sure, the courts can make such determinations, but their tools to do so are inferior to those available to expert agencies.[12] In that sense, Chevron set forth a rule of judicial humility that recognized the significant likelihood that agencies implementing complex regulatory regimes possess a greater appreciation than courts for the “statutory policy in the given situation” and can rely on “more than ordinary knowledge in reaching [their] judgments.”[13]
Justice Kagan’s dissent in Loper Bright calls out the majority for its refusal to engage in a practical evaluation of the impact of its decision. Invoking Chevron’s grounding in comparative institutional competence (that is, who is better positioned to make decisions), she wrote that:
Congress knows that it does not—in fact cannot—write perfectly complete regulatory statutes. It knows that those statutes will inevitably contain ambiguities that some other actor will have to resolve, and gaps that some other actor will have to fill. And it would usually prefer that actor to be the responsible agency, not a court.[14]
In a similar vein, she blasted the majority for replacing a “rule of judicial humility” with one of “judicial hubris” and “turn[ing] itself into the country’s administrative czar.”[15]
In essence, Justice Kagan delivered a stinging critique of the majority decision, writing that:
[The majority] insists that “agencies have no special competence” in filling gaps or resolving ambiguities in regulatory statutes; rather, “[c]ourts do.” Score one for self-confidence; maybe not so high for self-reflection or -knowledge.[16]
Her dissent goes on to criticize the majority’s reasoning further, stating that “the idea that courts have ‘special competence’ in deciding such questions whereas agencies have ‘no[ne]’ is, if I may say, malarkey.”[17] In the language of Chevron, she explained, courts are well-suited to answer Chevron step one questions, but “answering [Chevron step two] questions right does not mainly demand the interpretive skills courts possess.”[18]
Unfortunately, Justice Kagan’s critique of the majority as making an important decision without regard to its consequences is hardly unique to Loper Bright. Indeed, it is increasingly a feature of recent Supreme Court decisions ranging from rolling back protections for reproductive rights to inviting constitutional challenges to gun safety protections to prohibiting the use of diversity as a goal in college admissions.[19] In all of these settings, like in Loper Bright, the Supreme Court overturned a long-established precedent, fueled litigation, paved the way for legal uncertainty, and established a heightened role for itself vis-a-vis other institutions.
Chevron and Health Policy
For health care policy, the overturning of Chevron promises litigation and uncertainty. In her Loper Bright dissent, Justice Kagan turned to health care regulation as an example of why courts should defer to expert agencies. Focusing on the Medicare program, she highlighted that reimbursement rates for hospitals are adjusted as per the law to reflect “differences in hospital wage levels” across “geographic area[s].”[20] The statute does not define, however, a “geographic area,” leaving that issue as—under Chevron at least—an implicit delegation to the U.S. Department of Health and Human Services (“HHS”) to determine its meaning.[21] As Justice Kagan noted, this determination would, ideally, involve gathering “hard information about what reimbursement levels each approach will produce, to explore the ease of administering each on a nationwide basis, to survey how regulators have dealt with similar questions in the past, and to confer with the hospitals themselves about what makes sense.”[22] Hammering home her point about the value of viewing Chevron as a presumption that such ambiguities be viewed as an implicit delegation, Justice Kagan concluded that “Congress knows the Department of Health and Human Services can do all those things—and that courts cannot.”[23]
Twenty-five years ago, I published my first article as a law professor on the topic of deference to expert agencies. In arguing for such deference, including as to state agencies implementing cooperative federalism regulatory programs like Medicaid, I invoked the history of judicial oversight of rate-making decisions. My article focused on telecommunications regulation, and I discussed the history of ratemaking in that context, but I also discussed health policy regulation. In so doing, I explained that, in the Medicaid context, courts traditionally have refused to “engage in an independent assessment of what rates [they] believe would be reasonable and adequate,” but instead have deferred to expert agencies.[24]
Under the Affordable Care Act, a range of policy issues are now open to litigation and second-guessing by the courts. To appreciate the potential impact, harms, and upheaval from such litigation, consider, for example, the recent litigation about access to Mifepristone, an abortion care medication long approved by the Food and Drug Administration. In a recent district court opinion, a judge overturned the FDA’s expert judgment, refusing to acknowledge its expertise, overlooking the established science cited by the agency, and instead turning to rhetoric about abortion, including its focus on protecting against a drug that “starves an unborn human until death.”[25] Ultimately, the Supreme Court overturned that decision on procedural grounds,[26] but the fear of future decisions along these lines remains real and warranted.
Much of the discussion thus far has focused on the role of Chevron as a rule of judicial humility that reflects an assessment of whether judges or agencies are better positioned to make certain types of decisions. But Chevron also prevents courts from weighing in on policy issues where taking a side may well be seen as reflecting an ideological agenda rather than traditional adjudication. That concern is exemplified by the Supreme Court’s recent decision involving the regulation of gun bump stocks. In that case, the Court considered highly technical arguments as to whether bump stocks enable semiautomatic rifles to mimic the functioning of a machinegun that can fire more than one round with a “single function of the trigger.”[27] The Court ultimately decided that bump stocks do not have that ability and that therefore, the Bureau of Alcohol, Tobacco, Firearms and Explosives had exceeded its statutory authority in banning bump stocks.[28] Rather than deferring to agency expertise in complex areas of firearms technology, however, the Court relied on its own judgment.
In the health care context, judicial second-guessing of the Department of Health and Human Services is already taking place in the area of non-discrimination protections for members of the LGBTQ community. Just this month, a federal district court temporarily blocked the enforcement of an HHS rule that extended protections against discrimination on the basis of sex in healthcare coverage to gender identity and sexual orientation.[29] Significantly, in reaching its decision, the district court invoked Loper Bright.[30]
The Way Forward: The Rise of Skidmore Deference and Cooperative Federalism
It remains to be seen whether and to what extent the overturning of Chevron will ultimately portend an upending of agency authority and the rise of judicial arrogance. In justifying its decision in Loper Bright, the Supreme Court downplayed the disruptive impact to the status quo.[31] Over time, however, cases that upend a settled status quo and set forth an unsustainable path forward do not last, even if the Court may be reluctant to realize it for some time.[32] In the case of the overruling of Chevron, I am skeptical that the judiciary will be able to oversee all regulatory statutes going forward and serve, in effect, as a super regulator.
In terms of the potential damage of Loper Bright, it remains to be seen whether the thousands of decisions that relied on Chevron and deferred to agency action are now vulnerable to judicial second-guessing. As Justice Kagan highlights in her dissent, federal courts applied Chevron in 18,000 federal cases in what was a well-established approach to reviewing administrative regulations.[33] In the wake of an up-ending of this system, the question raised by Loper Bright is not only what happens going forward, but also whether past decisions will be up for grabs.
In terms of going forward, one promising path that could take the sting out of the Court’s Loper Bright decision is to elevate the role of “Skidmore deference,” as set forth in the Supreme Court’s 1944 Skidmore v. Swift & Co decision.[34] Under Skidmore deference, courts determine the level of deference owed to a particular agency on a case-by-case basis depending on the strength of the agency’s persuasive analysis and support for its position,[35] as opposed to the more deferential Chevron standard (which requires only that agency determinations be reasonable). In Skidmore, the Court explained that expert agency “interpretations and opinions” that are “made in pursuance of official duty” and “based upon . . . specialized experience,” “constitute[d] a body of experience and informed judgment to which courts and litigants [could] properly resort for guidance,” even on legal questions.[36]
The decision in Skidmore means, as some have remarked, that if you do good work, you get deference. For agencies, therefore, the concept of “Skidmore deference” depends on “the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.”[37] Notably, in Loper Bright, the Court referenced Skidmore with approval,[38] suggesting that agencies may well remain influential, provided they demonstrate that they actually deploy the tools Congress gave them and display the expertise envisioned for their roles.
A second promising path forward is for states to play a significant role in implementing cooperative federalism regulatory programs like the Affordable Care Act. For the federal government, there is now a real prospect that leaving way for states to implement federal regulatory programs by exercising authority under state law will pave a path for greater deference than the federal government will receive. Notably, many states—including Colorado[39]—still employ a corollary doctrine similar to Chevron and will not necessarily change that rule because the U.S. Supreme Court did so for federal administrative law. To be sure, there is an obvious irony here that the Supreme Court’s decision that promises to shift authority from executive branch agencies to the courts creates an incentive for federal agencies to push authority from the federal government to state governments. In some cases, however, this step will be an appropriate response by federal agencies to allow for expert decision-making to hold sway.
* * *
One of the undercurrents of the Loper Bright decision is skepticism that administrative agency expertise is real and worthy of deference. That skepticism is a challenge to policymakers and academics. Part of this challenge is that we cannot simply talk to ourselves, but we must test our ideas and develop our ideas in dialogue with the public. Where the public experiences a federal regulation as, for example, undermining competition and raising prices, that is not a trivial concern.[40]
If the ultimate outcome of Loper Bright is a requirement that agencies show their work, and explain their positions in plain English, that would be a positive outcome. In the wake of this disruptive and irresponsible decision, that is certainly the most we can hope for and what we should work towards.
[1] Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).
[2] Loper Bright Enterprises v. Raimondo, 603 U. S. _, __ (2024).
[3] Chevron, 467 U.S. at 837 (1984).
[4] One corollary explained in a later case by the Supreme Court is that, where an agency lacks authority to implement a statute, it has no claim to Chevron deference. See United States v. Mead Corp., 533 U.S. 218 (2001) (ruling that a U.S. Customs Service determination was not authorized by statute, did not carry the force of law, and thus was not entitled to Chevron deference).
[5] Loper Bright, 603 U. S. __,__ (2024) (Kagan, J., dissenting) (slip op. at 9) (quoting Chevron, 467 U. S. at 865).
[6] Chevron, 467 U.S. at 843 n.9.
[7] Id. at 842-845; see also Philip J. Weiser, Chevron, Cooperative Federalism, and Telecommunications Reform, 52 Vand. L. Rev. 1, 49 (1999) (“[S]tep one of Chevron—determining whether the statute speaks to the issue at hand—is not an invitation to courts to throw up their hands in the face of a complex regulatory scheme, but rather to sort the legal principles from the policy judgments left implicit in the statutory scheme.”).
[8] See, e.g., Cass R. Sunstein, Law and Administration After Chevron, 90 Colum. L. Rev. 2071, 2086 (1990) (“[T]he Chevron approach might well be defended on the ground that the resolution of ambiguities in statutes is sometimes a question of policy as much as it is one of law, narrowly understood, and that agencies are uniquely well situated to make the relevant policy decisions.”); Jacob E. Gersen & Adrian Vermeule, Chevron as a Voting Rule, 116 Yale L. J. 676, 690 (2007) (“The real basis for agency deference, according to the Chevron opinion itself, was not an implicit congressional meta-instruction but a candid recognition by judges of the limits of their own institutional capacities.”).
[9] Smiley v. Citibank (South Dakota), N. A., 517 U. S. 735, 740–741 (1996).
[10] As Judge Posner once put it, Chevron’s “domain consists of statutory gaps (fissures, puzzles, anomalies, etc.) that Congress has left for the agency administering the statute in question to fill; the court is not to second-guess the agency’s gap-filling unless the agency is being unreasonable.” First Chicago NBD Corp. v. Commissioner, 135 F.3d 457, 459 (7th Cir. 1998).
[11] Pauley v. BethEnergy Mines, Inc., 501 U.S. 680, 696 (1991) (discussing Chevron).
[12] The Loper Bright majority’s reference to amicus briefs as a source of guidance is hardly reassuring. Loper Bright, 603 U.S. at 2267 (“Courts, after all, do not decide such questions blindly. The parties and amici in such cases are steeped in the subject matter, and reviewing courts have the benefit of their perspectives.”). Unlike regulatory agencies that have processes for investigating the policy merits of proposed options—evaluating expert submissions, independent analyses, cross-examination of testimony under oath, etc.—courts are forced to evaluate claims using a much more limited tool set. As I previously put it, regulatory agencies:
have access to the necessary information (in other words, the ability to gather and process information through methods unavailable to the judiciary), are versed in the intricacies of what often are complex, technical, and interrelated statutory schemes, and are able to respond to the concerns of democratically elected officials.
Weiser, supra note 4, at 27.
[13] Chevron, 467 U.S. at 844.
[14] Loper Bright, 603 U.S. at __ (Kagan, J., dissenting) (slip op. at 2).
[15] Id. at 3.
[16] Id. at 13 (quoting majority opinion at 23).
[17] Id.
[18] Id.
[19] I discussed this dynamic in a recent address. Prepared remarks: Dobbs and its aftermath (Oct. 17, 2023), https://coag.gov/blog-post/dobbs-and-its-aftermath-10-17-2023/.
[20] Loper Bright, 603 U.S. at __ (Kagan, J., dissenting) (slip op. at 6) (citing to 42 U. S. C. §1395ww(d)(3)(E)(i)).
[21] See Bellevue Hospital Center v. Leavitt, 443 F.3d 163, 174–176 (2d. Cir. 2006) (deciding, while Chevron was still binding law, that the Department of Health and Human Services’ interpretation of the term “geographic area” in 42 U.S.C. §1395ww(d)(3)(E)(i) was reasonable in light of the statutory ambiguity).
[22] Loper Bright, 603 U.S. at __ (Kagan, J., dissenting) (slip op. at 10).
[23] Id.
[24] Weiser, supra note 4, at 30 (quoting West Va. Univ. Hosps., Inc v. Casey, 885 F.2d 11, 24 (3d Cir. 1989)); see also Colo. Health Care Ass’n v. Colo. Dep’t of Soc. Servs., 842 F.2d 1158, 1167 (10th Cir. 1988) (“Reasonableness has been characterized as a zone, not a pinpoint.”).
[25] Alliance for Hippocratic Med, v. Food and Drug Admin., 668 F.Supp.3d 507, 520 (N.D. Tex. 2023).
[26] Food and Drug Admin. v. Alliance for Hippocratic Med., 602 U. S. __,__ (2024) (slip op. at 1).
[27] Garland v. Cargill, 602 U. S. __,__ (2024) (slip op. at 19).
[28] Id.
[29] Tennessee v. Becerra, No. 1:24cv161-LG-BWR, 1-2 (S.D. Miss. Jul. 3, 2024) (order granting preliminary injunction).
[30] Id. at 12.
[31] See Loper Bright, 603 U.S. at __ (slip op. at 3); see also Jesse Wegman, The Supreme Court is Gaslighting Us All, N.Y. Times, Jul. 13, 2024, at A20.
[32] See, e.g., Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528 (1985) (overruling the Court’s prior decision in National League of Cities v. Usery, 426 U.S. 833 (1976) that the provisions of the Fair Labor Standards Act requiring that employers pay minimum wage and overtime to their employees could not be applied to state and local governments without violating the Tenth Amendment).
[33] Loper Bright, 603 U.S. at __ (Kagan, J., dissenting) (slip op. at 26) (citing Kent Barnett & Christopher J. Walker, Chevron and Stare Decisis, 31 Geo. Mason L. Rev. 475, 477, and n. 11 (2024)).
[34] Skidmore v. Swift & Co., 323 U.S. 134 (1944).
[35] Id.
[36] Id. at 139–140.
[37] Id. at 140.
[38] Loper Bright, 603 U.S. at __ (slip op. at 16-17).
[39] See Coffman v. Colorado Common Cause, 102 P.3d 999, 1005 (Colo. 2004) (“[W]e must give particular deference to the reasonable interpretations of the administrative agencies that are authorized to administer and enforce a particular statute.”).
[40] See, e.g., Safety Standard Addressing Blade-Contact Injuries on Table Saws, 88 Fed. Reg. 74909 (proposed Nov. 1, 2023) (to be codified at 16 C.F.R. pt. 1264). This rule proposed by the Consumer Product Safety Commission has been opposed by Washington State Congresswoman Marie Gluesenkamp Perez and other representatives, who view a specific requirement for finger-detection technology in wood saws as creating a monopoly for the firm with a patent on such saws. H.R. 8181, 118th Cong. (2024).