Biden’s Power to Make Insurance Companies Pay for Covid Tests Is Clear

P resident Biden is ordering private health-insurance companies to cover the cost of Covid-19 testing, which is surging primarily because the Omicron variant is highly infectious. (Thankfully, as our Jim Geraghty details, Omicron’s virulence has not lived up to the doomsday predictions of many experts.) On Monday, the three federal departments primarily responsible for the convergence of issues regarding insurance and public health — Treasury, Labor, and Health and Human Services (HHS) — issued insurance-coverage guidance that Biden had said would be forthcoming.

A friend asked me by what legal authority the president may direct private insurance companies to cover medical tests. One can certainly understand why that question would be at the front of people’s minds: We are at the moment waiting for the Supreme Court to rule on Biden’s Covid-vaccine mandates — specifically, on two cases that ask whether the president, and by extension the federal government, has constitutional authority to require private citizens to submit to vaccination. Yet there’s something peculiar about Biden’s directive to the insurance companies: In announcing it, the White House was vague at best about the president’s legal basis for issuing it.

To recap, on December 2, 2021, the White House announced that “expanding free at-home testing for Americans,” and “providing health plan coverage of no-cost rapid, over-the-counter (OTC) COVID-19 tests” were among the steps Biden had decided to take to address the Omicron surge. Nothing was said about the president’s legal authority. Later, White House press secretary Jen Psaki said opaquely that the administration planned to “incentivize” the insurers to cover the testing — terminology parroted by, for example, the New York Times and NPR.

Biden’s directive is undoubtedly lawful, but you will search high and low in the reporting without learning why. A bit of history is thus in order.

In an 1868 case, Paul v. Virginia, the Supreme Court held that insurance was not a commodity in interstate commerce. That dubious ruling held sway until 1944, when the Court reversed course in United States v. South-Eastern Underwriters Association. This pivot caused a stir, so the following year, Congress passed the McCarran-Ferguson Act to clarify that it was not the federal government’s purpose to pre-empt state regulation of the “business of insurance.” Lawmakers, however, reserved their prerogative to fill any gaps with federal regulation.

Since then, eras of progressive governance have produced significant federal insurance regulation. In 1974, Congress enacted the Employee Retirement Income Security Act (ERISA), which imposed minimum federal standards for private-employer-sponsored employee benefits, including health benefits. In the nineties, though President Clinton did not get the health-care overhaul he sought, he did get the Health Insurance Portability and Accountability Act of 1996 (HIPAA), which limited the loss of coverage that people could suffer upon switching jobs or plans.

Then, in 2010, came Obamacare, which imposed a slew of requirements on private insurance providers (among others). President Obama’s first term also featured the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which created a new Treasury Department component, the Federal Insurance Office (FIO), to monitor the insurance industry. This dovetailed with Obamacare’s creation of the Center for Consumer Information and Insurance Oversight, which is part of HHS’s Centers for Medicare and Medicaid Services (CMS).

To put it mildly, this is a broad field of regulatory authority, substantially based on the Commerce Clause, which Congress has delegated to the executive branch.

Building on this foundation, and specifically in response to the Covid-19 pandemic, Congress on March 18, 2020, enacted the Families First Coronavirus Response Act (FFCRA) and followed that just nine days later with the Coronavirus Aid, Relief, and Economic Security Act, a.k.a the CARES Act. Both of these sprawling laws contain provisions — the FFCRA’s section 6001 and the CARES Act’s section 3201 — which require health-insurance providers to provide no-cost coverage for FDA-approved Covid-19 testing if the HHS secretary has declared an emergency due to a communicable disease under the 1944 Public Health Service Act.

Then-HHS secretary Alex Azar declared a public-health emergency on January 31, 2020, (retroactively effective from January 27, 2020) triggered by the Covid-19 pandemic. That declaration has since been extended several times and remains in effect today. HHS has promised to provide states with 60 days’ notice before ending it.

The FFCRA and the CARES Act enable the executive branch to issue directives by means of policy statements, bypassing the time-consuming notice-and-comment process otherwise required by the Administrative Procedure Act. The Trump and Biden administrations have thus issued directives by having the three aforementioned departments publish sets of “Frequently Asked Questions” (FAQs), which are deemed to qualify as “sub-regulatory guidance” sufficient for this purpose under both laws.

Beginning in the autumn of 2021, the FDA began approving self-administered diagnostic tests for Covid-19, which are for home use and now available over the counter as well as by prescription. As noted above, on December 2, Biden made his announcement that, by January 15, 2022, the relevant agencies would issue guidance clarifying that individuals who obtained such tests during the public emergency would be reimbursed by their insurance providers. On Monday, January 10, the departments issued FAQs that implemented the president’s directive to have insurers pay for testing. The directive relies on the FFCRA’s section 6001, as amended by the CARES Act’s section 3201.

President Biden’s directive is thus supported by the Constitution, Supreme Court precedent, statutory law that prescribes federal policy and delegates authority to executive agencies, and guidance from the relevant agencies that consequently has the force of law. Given the way the president has repeatedly dropped the ball on testing — failing to get enough different tests approved for use, failing to arrange for sufficient testing supplies, etc. — perhaps the administration is reluctant to say anything that would prompt people to wonder why he waited so long to clarify that insurance companies would be required to cover the costs. But the legal basis for presidential action is a natural and newsworthy concern — even when a president’s mandates have not been as controversial as Biden’s. The administration should explain its authority clearly, and the press should encourage it to do so.