THAT WAS CLOSE
Narrow 5-4 decision gives providers vindication and critics ammunition
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-