On June 28, 2012, the United States Supreme Court declared constitutional the entirety of the Affordable Care Act of 2010 (“ACA”). In particular, the Court declared that the taxing clause of Article I of the U.S. Constitution does permit Congress to require individuals to purchase health insurance or pay a penalty – the so-called “individual mandate.” With the entire Act now declared constitutional, health care reform under the ACA will continue to move forward.
We are analyzing the full opinion of the Court but offer these immediate observations:
Effect on Hospitals and other Health Care Providers
- Many provisions of the ACA already have taken or soon will take effect and, with the Court’s decision today, the law will continue to be implemented.
- Hospitals and other health care providers can expect the wide variety of programs implemented by the ACA and the administrative rules already in place to proceed. These include such provisions as the hospital value-based purchasing program, the Medicare Accountable Care Organization (ACO) Shared Savings Program, the Pioneer ACO program, and other significant efforts under the ACA designed to provide coordinated, quality care at lower cost.
- Similarly, today’s decision validates sections of the ACA that are scheduled to commence in subsequent years, such as, the “Sunshine Act” requiring disclosures of financial relationships that teaching hospitals and physicians have with drug and device manufacturers.
- In 2014 many individuals will be required to purchase health care insurance (or pay the penalty) and health care exchanges will be required in all states. Hospitals and other health care providers can expect to see states begin to fully implement health care exchanges, although some will elect to leave it to the federal government.
- The reimbursement payment cuts laid out in the ACA also will be implemented. Thus, hospitals and health care providers will have to balance the effect of decreases in Medicare and Medicaid reimbursement with an anticipated increase in patient volume as a result of the projected increase in the population of insured citizens.
- Providers will continue to benefit from the existing requirements in the ACA upheld by the Court concerning insurance coverage, such as allowing young adults to remain on their parents’ policies to age 26, removal of lifetime limits on policies, covering cancer screenings and other preventive care without copayments, the prohibition on retroactive rescission of policies and the requirement that insurers cannot exclude people based on pre-existing conditions.
Effect on Long Term Trends in Health Care
- Today’s decision clarifies the manner in which the nation addresses its rising health care costs. We think the trend toward reimbursement based on measurement of quality and outcomes now will continue in full force, affecting both hospitals and other health care providers. While the fee-for-service environment was under pressure prior to today’s ruling, many significant facets of the ACA promote patient-centered care and the coordination and collaboration of care to enhance quality while controlling costs, and reimbursement will become increasingly dependent upon outcomes, not procedures.
- We can expect to see the trend of partnerships between commercial insurers and hospitals and physician groups to continue and grow as private insurers move in the same direction as public payors with regard to health care delivery and reimbursement.
- We also foresee that such changes in reimbursement will continue to stimulate greater collaboration and consolidation in the healthcare industry.
Political Considerations
- Some in the Republican Party have emphasized that they will seek to overturn the ACA by legislative action; however, because some of the provisions in the ACA are popular, it seems likely that even opponents of the ACA will try to retain certain elements of it.
- The outcome of the November elections also will be a factor. If the Republicans dominate Congress, the ACA will be under greater likelihood of successful attack than if the Democrats control. Regardless of how the elections in November play out, today’s decision will serve to mobilize many in the political community to demand action to change or eliminate the law or to continue to implement it. The Supreme Court’s decision is not the end of the story.