Supreme Court and Health Reform

Supreme Court ruling on health reform will not have huge impact

The Supreme Court will issue a decision on June 25, 2012 (possibly June 18) [Update: I was wrong. Ruling will be on Thursday June 28, 2012] concerning President Obama’s 2010 healthcare law, the Patient Protection and Affordable Care Act. The court is considering a series of questions to determine whether the law, or parts of it, are constitutional. I have written previously that it will be a close decision, 5-4 with Justice Kennedy as the usual swing vote. The court heard a series of arguments in March 2012 of three basic issues:

• The Individual Mandate
• Severability
• Medicaid Expansion

The likely outcome for this decision is that the Individual Mandate will be declared unconstitutional, this will be severable from the rest of the law (allowing other parts of the legislation to stand), and Medicaid expansion will be deemed constitutional. However, there are at least two of the law’s major provisions which rely on the mandate to help offset costs: Guaranteed Issue - health insurers must take all applicants; and Community Rating - they can't charge patients different rates based on health status or demographic characteristics. The court could also throw out these portions of the law or leave this issue for Congress to fix. I believe the court will leave this for our dysfunctional legislative branch to sort out, which will create some problems.

But overall I agree with Mark Bertolini, the CEO of Aetna, and his comments in a Wall Street Journal interview where he indicates that key health reform initiatives will continue despite the court's ruling.

"I would argue, on the Supreme Court case specifically, that the individual-coverage requirement, the guaranteed issue and community rating, are all things that needed to be fixed in regulation anyway. As they were structured, they were unworkable or weren't going to work the way they were intended. The Supreme Court case, from my perspective, is important in its constitutional role, but has far less impact on the Affordable Care Act than I think the American public and the political blogosphere is giving it."

UnitedHealth Group has also announced that it will continue to offer healthcare insurance protections that were included in the health reform law, no matter how the Supreme Court rules. Humana issued a similar statement saying that

"Regardless of how the U.S. Supreme Court rules on the federal health care reform law, Humana is committed to keeping in place important patient protections contained in the law, including health care reform’s restrictions on lifetime limits, rescission standards, appeals and external review processes, coverage for dependents on family plans to age 26, and preventive services with no cost sharing."

So how will the Supreme Court ruling effect the implementation of health reform? It appears not much at all really. The money allocated for innovations in care delivery and accountable care payment models will continue to drive us towards a system that pays for value and not volume. Providers will one day be able to get paid for what they do for a patient, instead of what they do to a patient. Private sector payers, along with CMS, will continue to use technology to support these new payment and delivery models. The momentum of change is irresistibly going to continue, and while it may be possible to make slight changes in direction, the ball is rolling and reform will continue.

The real battle over health reform will be fought in the budget process at both the federal and state level...