Nar­row 5-4 de­ci­sion gives providers vin­di­ca­tion and crit­ics am­mu­ni­tion

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Declar­ing it was not his job to pro­tect Amer­i­cans from the con­se­quences of their po­lit­i­cal choices, Chief Jus­tice John Roberts cast his lot with the U.S. Supreme Court’s lib­eral wing and voted to up­hold most of the health­care re­form law.

“Mem­bers of this court are vested with the au­thor­ity to in­ter­pret the law; we pos­sess nei­ther the ex­per­tise nor the pre­rog­a­tive to make pol­icy judg­ments,” Roberts wrote. “Those de­ci­sions are en­trusted to our na­tion’s elected lead­ers, who can be thrown out of of­fice if the peo­ple dis­agree with them.”

The out­come fi­nally clears the way for a wave of im­ple­men­ta­tion goals in the Pa­tient Pro­tec­tion and Af­ford­able Care Act, whose ef­fects will rip­ple across the na­tion’s $2.7 tril­lion health­care in­dus­try for years to come.

All 50 states will see the es­tab­lish­ment of a pub­lic in­surance ex­change, up to 32 mil­lion more Amer­i­cans are pro­jected to re­ceive cov- er­age, and ev­ery hos­pi­tal and doc­tor in the na­tion will face fi­nan­cial penal­ties if they fail to meet goals for qual­ity of care and pa­tient safety. Un­der the in­di­vid­ual man­date, which threat­ened to sink the law be­fore the Supreme Court up­held it, vir­tu­ally ev­ery Amer­i­can will be re­quired to ob­tain health in­surance or face penal­ties on their in­come taxes af­ter 2014.

The ef­fect of the Med­i­caid rul­ing

The most im­me­di­ate ques­tion in many minds was whether the one as­pect of the court’s rul­ing that went against the Obama ad­min­is­tra­tion’s wishes—striking down the huge fi­nan­cial penal­ties for states that don’t ex­pand their Med­i­caid pro­grams—will af­fect in­surance cov­er­age es­ti­mates (See story, p. 8).

The court’s de­ci­sion left providers won­der­ing which states would choose to opt out of the Med­i­caid ex­pan­sion, which could work against the re­form law’s stated goal of us­ing the joint fed­eral-state pro­gram to cover low-in­come unin­sured Amer­i­cans. Twenty-six state gov­ern­ments sued to stop the law, though ex­perts noted that cit­i­zens in states that opt out will still pay fed­eral taxes to sup­port the ex­panded Med­i­caid pro­gram else­where.

De­spite that un­cer­tainty, health­care play­ers cheered the re­sults of the high court’s six opin­ions on June 28. The opin­ions spanned 193 pages, up­hold­ing the in­di­vid­ual in­surance man­date while re­flect­ing a deeply frac­tured court.

Many ob­servers pre­dicted the out­come, but few fore­saw the un­usual le­gal route to the crit­i­cal de­ci­sion to toss aside the Obama ad­min­is­tra­tion’s claim that the man­date was an ex­ten­sion of Congress’ power to reg­u­late com­merce—but then de­clare it le­gal any­way, as a tax on the unin­sured in a 5-4 vote.

The court also up­held the abil­ity of states to re­ceive en­hanced fed­eral funds to ex­pand their el­i­gi­bil­ity cri­te­ria for Med­i­caid. But a 7-2 ma­jor­ity of the court struck down the corol­lary pro­vi­sion in the law that sought to al­low HHS to cut off all fed­eral Med­i­caid fund­ing for fail­ing to ex­pand the pro­gram to cover the unin­sured. States typ­i­cally re­ceive about 10% of their en­tire rev­enue for the year from fed­eral Med­i­caid grants.

The highly an­tic­i­pated rul­ing trig­gered a cas­cade of re­ac­tion across the coun­try, with hos­pi­tal groups and in­sur­ers prais­ing the de­ci­sion for bring­ing sta­bil­ity and cer­tainty and Re­pub­li­can lead­ers vow­ing to turn the Novem­ber elec­tions into a ref­er­en­dum on the law.

“I sure am glad to have the rul­ing and be on the other side of all that an­tic­i­pa­tion, but we still have a lot of work to do,” said Richard Umb­den­stock, pres­i­dent and CEO of the Amer­i­can Hos­pi­tal As­so­ci­a­tion, which sup­ported the law (See Com­men­tary, p. 10). “We are among the first ones to say it’s not a per­fect bill, and we will look for op­por­tu­ni­ties to help im­prove it or ad­dress those sub­jects that weren’t dealt with in the bill.”

Well on the way

Health­care in­dus­try ex­perts said many providers and pay­ers are well on their way to achiev­ing the many ob­jec­tives set out in the law, in­clud­ing re­duc­ing pre­ventable read­mis­sions, co­or­di­nat­ing pri­mary and acute care, en­cour­ag­ing pre­ven­tive ser­vices, ac­cept­ing bun­dled and value-based pay­ments and manag­ing pop­u­la­tion health.

Hugh Greene, CEO of three-hos­pi­tal Bap­tist Health in Jack­sonville, Fla., said he has spo­ken fre­quently of the need for those kinds of de­liv­ery-sys­tem re­forms even in a state such as Florida, which was the lead state plain­tiff in the Supreme Court case to strike down the law.

“The two fun­da­men­tal driv­ers of re­form—the num­ber of unin­sured and costs ris­ing dra­mat­i­cally—would not have gone away if the law was struck down,” Greene said. “I’m also not naive, this is not the fi­nal de­ci­sion. There is a sense that this could go back into the po­lit­i­cal process as well, and the pos­si­bil­ity that re­peal of the law could oc­cur. But this is a pos­i­tive de­vel­op­ment that gives us clar­ity go­ing for­ward.”

The 906-page re­form law fa­mously passed both houses of Congress in late 2009 and early 2010 without a sin­gle Re­pub­li­can vote in fa­vor of the fi­nal bill, and the Supreme Court’s 5-4 rul­ing up­hold­ing the man­date landed with a pres­i­den­tial elec­tion four months away.

Min­utes af­ter the de­ci­sion was an­nounced, Re­pub­li­can of­fi­cials vowed to turn the Novem­ber elec­tions into a ref­er­en­dum on the law and sched­uled plans for a House vote to re­peal the law July 11.

“The de­ci­sion to­day re­ally in­di­cates we have en­tered an age in which the gov­ern­ment—Wash­ing­ton—will be con­trol­ling health­care, un­less some­thing changes,” Re­pub­li­can House Ma­jor­ity Leader Eric Can­tor said at a news con­fer­ence af­ter the de­ci­sion.

De­spite the tenor of such po­lit­i­cal rhetoric, Iowa Health Sys­tem Pres­i­dent and CEO Bill Leaver said many Repub­li­cans ac­tu­ally sup­port the health­care de­liv­ery re­forms em­bod­ied in the law, even if they don’t say so when the me­dia are nearby.

That’s why Leaver doubted that Congress would try to undo all the man­i­fold pro­vi­sions in the law that are in­tended to make the de­liv­ery sys­tem more ef­fi­cient and ac­count­able to pa­tients.

‘Their only op­tion’

“I would think they would not try to do much about the ACO-type pro­vi­sions, be­cause re­ally, that’s their only op­tion right now to try to re­duce Medi­care spend­ing,” Leaver said, re­fer­ring to the law’s push for Medi­care ac­count­able care or­ga­ni­za­tions.

Iowa Health owns Trin­ity Re­gional Med­i­cal Cen­ter, Fort Dodge, Iowa, which is par­tic­i­pat­ing in one of the CMS’ 32 Medi­care Pi­o­neer ACOs. The Des Moines-based sys­tem has also an­nounced plans to form an ACO with Well­mark Blue Cross and Blue Shield of Iowa. Scores of sys­tems around the coun­try are do­ing the same (See story, p. 7).

In­sur­ers, mean­while, pledged to start an im­me­di­ate lob­by­ing cam­paign to make ad­just­ments to the law to pre­vent higher pre­mi­ums from un­do­ing cov­er­age projections.

Karen Ig­nagni, pres­i­dent and CEO of Amer­ica’s Health In­surance Plans, said provi-

Obama said it’s time to fo­cus on im­ple­ment­ing the law rather than fight­ing over it again.


Obama wel­comed the Supreme Court’s de­ci­sion on the health­care law, as the rul­ing af­firmed the cen­tral leg­isla­tive achieve­ment of his pres­i­dency.

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