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Supreme Court Poised to Rule on Health Reform, but Change Is Here to Stay

By Brian Schilling

Late last month the Supreme Court heard a record-breaking five-and-one-half hours of oral arguments on the Affordable Care Act. The big issue on the table is the constitutionality of the individual mandate to buy health insurance that is at the core of the law, but the court will look at a number of other issues as well, including:

  • whether the individual mandate is severable (that is, if other aspects of the law would stand even if the mandate is struck down);
  • whether Congress can push states into expanding their Medicaid roles by threatening to withhold federal funds if they don't; and
  • whether the debate over the mandate is premature since it is not slated to take effect until 2014.

The Court's decision on these matters will surely have a substantial effect on the trajectory of the U.S. health care system over the next decade. To begin with, the coverage status of roughly 50 million currently uninsured Americans hangs in the balance. Without an individual mandate and subsidies to help secure coverage, evidence suggests this number will continue to grow.

The Court's ruling may also decide the fate of the health insurance exchanges that are forecast to help extend coverage to millions of Americans and overhaul the buying and selling of health coverage in the U.S. In states such as Alaska, Kansas, Oklahoma, and Florida, which have already refused federal health exchange start-up funds, any adverse ruling would probably doom the exchanges. In states with stronger support, the exchanges may yet emerge, albeit with a less ambitious coverage agenda. But even in states like California, where support is quite strong and health exchange-related provisions of the Affordable Care Act have already been incorporated into state law, there is broad acknowledgement that it would be difficult to cover large numbers of uninsured individuals without federal support.

We may not have to wait long for the Supreme Court ruling. Many experts believe a June 2012 decision—smack in the middle of the presidential campaign—is realistic. But whatever the ruling, certain key changes and trends will likely continue. These include:

  • Consolidation and digitization. In anticipation of a huge influx of patients as a result of the law, hospitals are consolidating and ramping up electronic health record (EHR) efforts. The consulting firm Levin Associates reported an 86 percent increase in mergers (involving some 227 hospitals nationwide) between 2009 and 2010 and expects that 2011 figures will show a continuing trend.1 With respect to EHR efforts, a 2011 American Hospital Association survey found that 81 percent of acute care hospitals planned to achieve meaningful use of EHRs and apply for incentive payments within the next two years.2 Driving interest in EHRs is, among other things, the Health Information Technology for Economic and Clinical Health (HITECH) Act, which includes billions of dollars to help fund the shift to EHRs and establishes regional extension centers to offer hands-on support.
  • Accountable care organizations. Accountable care organizations (ACOs) are provider networks formed to improve care coordination partly by sharing electronic medical records and analyzing trends in patient care. ACOs typically share some risk for the cost of care, which gives them an incentive to improve care quality and cut costs. About 100 of these organizations currently exist, but that number is expected to rise substantially according to Elliott Fisher, M.D., director of the Dartmouth Institute for Health Policy and Clinical Practice. By 2013, he projects that there will be 200 ACOs and within three years there may be as many as 1,000.3
  • Tougher oversight of insurers. The Affordable Care Act includes a raft of insurance market and oversight reforms that govern plan activities and policies related to rescissions, lifetime limits, appeals, referral processes, and spending on administrative overhead. Despite some pushback from insurers, consumers are broadly supportive of these reforms, which may make it untenable for carriers to revert back to prereform practices.
  • Coverage for dependent children up to age 26. The provisions of the health care law specifying that adult dependent children must be offered coverage under their parents' plans has proven to be extremely popular both with the public and with health plans. To date, more than half a million dependent children have been covered as a result of this rule change. Many experts suggest that since the market has already embraced this policy change, reversing the law would not result in those individuals being removed from insurance rolls.
  • Streamlined application procedures for Medicaid beneficiaries. Under the law, state programs have been given marching orders to standardize the dizzying Medicaid eligibility rules and application processes that vary from state to state. States will be required to offer a single, simple Web-based application both for Medicaid recipients and for individuals seeking coverage through the health exchanges.



1 Irvin Levin Associates, "Decade in Review: Hospital M&A Continues Recent Rebound," Press Release, Feb. 3, 2011. 
2 C.-J. Hsiao et al., Electronic Medical Record/Electronic Health Record Systems of Office-Based Physicians: United States, 2009 and Preliminary 2010 State Estimates, Dec. 2010, online at  
3 K. Kennedy, "Health Care Providers Embracing Cost-Saving Groups," USA Today, July 24, 2011, online at  

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