Is Health Care Reform Here to Stay?
The Supreme Court Will Decide

I was speaking at a conference this September about health care reform and its impact on providers, and a member of the audience raised their hand. The question that followed was one I have heard around the country: “Do you think health care reform is here to stay?”

Since before the Patient Protection and Affordable Care Act (PPACA) passed in March 2010, there had been efforts to block the legislation and talk of repealing the act. More recently, states have argued that it’s unconstitutional. Now with 26 states, led by Florida, challenging the law, the Supreme Court has agreed to hear their case, and along with two others. The court will allow a record five and a half hours to hear their arguments, which will examine three fundamental areas of the law:

1. Is the individual mandate, which requires all individuals to have health insurance and imposes a penalty on non-compliant individuals who cannot demonstrate hardship, unconstitutional?
2. If the individual mandate is found to be unconstitutional, what portion of the rest of the law, if any, can stand?
3. Is it unconstitutional for the law to require states to pay 5 percent more into the Medicaid system by 2017 to cover the cost of new lives added to the program as part the act’s expansion of health coverage to all individuals?

A fourth question will also be examined: Is it premature to answer the above questions? Or, more simply stated, can the Supreme Court evaluate the constitutionality of a penalty that has not yet been imposed?

The fact that the Supreme Court has taken on this case is evidence in and of itself that the act has landed in a grey area of U.S. law. There are laws that support the constitutionality of the individual mandate and laws that do not. I will let the legal experts take on that debate in the months leading up to the hearing, which is slated to take place over a two-day period sometime in February or March of next year, with an anticipated ruling in June 2012.

So, knowing the act’s future is uncertain, how do I answer the more fundamental question of whether health care reform is here to stay? From two perspectives:

The health care provider perspective 
Even before the act was passed, informal accountable care organizations (ACOs) started to develop. Now we’re seeing formal ACOs entering the market. Bundled payments have been tested in many commercial markets, and now we see that happening at the federal level through the Center for Innovation. Market consolidation, which was already underway, has sped up, and while the commercial insurance market tackles issues like care management for the chronically ill in an attempt to reduce costs and improve care, many Medicaid markets are moving toward managed Medicaid.

There is strong evidence that a major market shift is underway to reduce health care costs and improve quality outcomes. In addition, we at LarsonAllen have argued payment reform is here to stay, because Centers for Medicare & Medicaid Services (CMS) did not need legislative authority to pursue many of the payment reforms. Additionally, there is bipartisan agreement that the United States must change how it pays for and delivers care, because the current expenditure levels are unsustainable. Whether the Supreme Court rules in favor or against the act, the health care industry will need to continue to focus on reducing health care costs and improving outcomes and access to care. The answer if you are a health care provider is, yes, many aspects of health reform are here to stay, so stay the course.

The employer perspective
On the other hand, how the Supreme Court rules could significantly affect employers and those offering health insurance. It is possible that the individual mandate will be determined to be unconstitutional. Even if that is the decision, but the rest of the law stands, insurers will remain subject to the remaining requirements. They will need to end lifetime or annual coverage limits, eliminate pre-existing condition exclusions and insurance revisions, all while being pressured to lower premium costs. Without being able to spread cost across the total population, these obligations become challenging for insurers to meet. In addition, employers will still be subject to penalties for not providing some minimum, affordable health care coverage to their employees, even though those employees will no longer be required to take it.

However, if the Supreme Court throws out the mandate and the entire law, employers will no longer be subject to penalties, nor required to offer dependent coverage to employees’ adult children up to age 26 or comply with other pieces that took effect in 2010 and beyond. This could create another set of challenges for employers, especially if they retract benefits employees have grown to expect.

Depending on the Supreme Court’s ruling, many, if not all, of the Affordable Care Act’s provisions may not be here to stay. Regardless of what happens this June, the consensus is that health care in the United States in its current form is unsustainable, and change will continue with or without the Affordable Care Act.