As judges weigh Obamacare’s fate, panic hasn’t set in—yet
A COALITION of Republican state officials fighting to topple Obamacare had a good day in court last week, when a panel of federal appellate judges appeared open to nixing the Affordable Care Act’s now-toothless requirement that most people buy health insurance, and potentially other provisions of the law that Americans have come to rely on.
But while health insurers and hospitals—whose businesses after 10 years of operating under the ACA would be profoundly impacted by its undoing—are keeping a close eye on developments in the lawsuit, there’s little they can do to prepare for an outcome impossible to predict.
“We are proceeding as if we are going to still be in business,” said John Baackes, CEO of L.A. Care Health Plan, which covers more than 600,000 Californians through Medicaid expansion and nearly 90,000 on the ACA exchange. “We are not letting the potential of a negative outcome influence our thinking, but we’re also trying not to bury our head in the sand.”
In particular, L.A. Care is looking for ways to become more efficient to save costs, such as by cutting out third parties from its contracts with providers. That will help the publicly operated plan weather any crises that arise, be it a recession or the ACA’s demise, which would undoubtedly slash the insurer’s revenue and lead it to downsize, Baackes said.
Dr. Michael Cropp, CEO of Buffalo, N.Y.-based insurer Independent Health, similarly said the uncertain future of the healthcare law should have insurers focusing on efforts to take waste out of the system and bring premiums down. Should Medicaid expansion be rolled back, states may end up scrambling to fill the gaps where federal funding once was, he added.
But beyond crossing their fingers that the ACA will stay in place, insurers and providers aren’t yet doing much contingency planning. That’s largely because they believe the challenge, known as Texas v. United States, will ultimately end up in the Supreme Court and they are optimistic the high court will once again uphold the law.
“This case is still so much in process with the possibility of such a long pathway, we’re not at a point where hospitals would take any action related to it,” said Chip Kahn, CEO of the Federation of American Hospitals, which represents investor-owned health systems.
Paul Keckley, a healthcare consultant who has discussed
“This case is still so much in process with the possibility of such a long pathway, we’re not at a point where hospitals would take any action related to it.”
Chip Kahn CEO
Federation of American Hospitals
potential outcomes of the case at hospital and insurer board meetings, said he hasn’t sensed any panic from the industry. Healthcare companies are monitoring the case and developing scenarios that assume states will be the stopgap. They might also be deploying capital more conservatively, but “no one is paralyzed by what’s going on in that case,” he said.
Operating in a state of regulatory limbo is not something that insurers and hospitals like to do, but it’s a reality they’ve learned to live with after a Republican-controlled Congress and White House repeatedly tried to repeal the ACA or chip away at it through executive action over the past two years.
Moreover, healthcare companies have weathered previous legal challenges to the landmark healthcare law. Baackes described being even more worried about the future of the ACA back in 2012 when the Supreme Court first mulled a challenge to the law and upheld it, though the decision allowed states to opt out of Medicaid expansion.
The stakes are different now. Back then, the law was fairly new and few provisions had been fully implemented. While legal experts have said the plain
tiffs’ arguments in the current case don’t hold much weight, the group of 18 state attorneys general were able to convince a lower court to strike down the ACA. There’s a chance the same argument—that zeroing out the individual mandate penalty made it unconstitutional, and by extension, invalidated the entire ACA— will convince the 5th U.S. Circuit Court of Appeals to do the same.
Although a coalition of Democratic state attorneys general and the U.S. House of Representatives are defending Obamacare on appeal, two Republican-appointed judges on the three-judge panel seemed likely to invalidate the individual mandate. It was unclear, though, if they were open to striking the ACA in its entirety.
Abbe Gluck, a Yale University health law professor who is supportive of the ACA, said the judges on July 9 didn’t tip their cards on that so-called severability issue. However, she said the 5th Circuit did show it was reluctant to come up with a remedy in the case.
The court spent time
during oral arguments asking why Congress couldn’t pass another healthcare law keeping only the attractive pieces of the ACA. It also grappled with sending the case back to the District Court to figure out what to do.
“I think what that points to is they realize the enormity of the consequences here and (the court) doesn’t really want to have its fingerprints on it,” Gluck said.
There are several ways the court could rule. Throwing out the ACA would be the most disruptive iteration, and if such a decision ultimately sticks, it could cause millions of Americans to lose their insurance while unwinding popular consumer protections enjoyed by even those who get health coverage through their jobs. The newly uninsured may resort to getting care at costly emergency rooms; healthcare providers could see uncompensated care soar.
There’s only so much insurers and healthcare companies could do to prepare for that situation.
“It’d be tough for us, but if you roll (the ACA) back, it’d be more devastating to the community,” Baackes said. “I’m not sure there’s anything a particular insurer can do to head that off.” ●