Urologist Kevin R. Loughlin, MD, MBA, considers the immediate and long-term implications of the Supreme Court’s decision in King v. Burwell.
Dr. Loughlin is professor, division of urologic surgery, Brigham and Women's Hospital, Harvard Medical Center, Boston.
On June 25, the Supreme Court decided, in a 6 to 3 ruling in King v. Burwell, that the Affordable Care Act (ACA), despite cumbersome wording in the bill that insurance subsidies apply to “an Exchange established by the State,” guarantees subsidies to individuals regardless of whether they live in a state that has established exchanges.
Chief Justice Roberts went on to comment that the ACA “contains more than a few examples of inartful drafting.” If the court had ruled otherwise, elimination of the subsidy in the 31 states that use the federal exchange would have caused 6.4 million Americans to lose their subsidies. Upon hearing of the decision, President Obama declared in the Rose Garden, “The Affordable Care Act is here to stay.” Let us consider the immediate and long-term implications of the Supreme Court’s decision.
If the court had decided that individuals who live in states that use the federal exchange would lose their subsidies, the result would have been a loss of about $15 billion in health care revenue to hospitals, insurers, and pharmaceutical companies, Physician's Money Digest reported. These groups were big winners as a result of the decision.
In a longer term view, the affirmation of the ACA by the court addresses the plans of insurance companies to request significant rate hikes. Stephen T. Parente, writing in the Wall Street Journal, estimated that the cost of the average family plan will go up 11.2% in 2016 and that some plans could see hikes of 30%, 40%, or even 50%. Insurers are passing on the costs of covering sicker patients. “Through ‘reinsurance,’ taxpayers are heavily subsidizing the most expensive patients-those who had more than $70,000 in claims in 2015,” Parente wrote. The relatively cheap bronze plans, he said, could see the highest jumps: 16.6% for families and 11.5% for individuals.
One reason for these rising premiums is that patients enrolled in Obamacare are seeking more care. “We’ve seen a great pent-up demand for services,” Aaron Billger, spokesman for Highmark, a Blue Cross Blue Shield licensee in Pennsylvania, Delaware, and West Virginia, said in an article on the CNN Money website. In other words, health care that patients previously deferred because of costs is now being sought.
It is no secret that most states are experiencing severe economic exigencies and the great majority have significant budget deficits. An unintended consequence of the Supreme Court’s decision in King v. Burwell could be an accelerated shift to federalism. Rather than assume the costs and risks of state exchanges, many governors and state legislatures will likely opt to shift the economic burden of universal health care to the federal government.
To date, 31 states have not set up their own health insurance exchanges, which means their residents must use the federal exchange. More states may elect this option.
Although clearly there is a political element to whether a state seeks to enter the federal exchange, a deeper analysis demonstrates that politics is not the entire answer. Of the 31 states with Republican governors, 17 have not agreed to Medicaid expansion and 14 have, according to the Kaiser Family Foundation. It would appear that the uncertainty of the ultimate costs of Medicaid expansion has contributed to the reluctance of some states to opt for such a course.
During his Senate confirmation hearings for chief justice, John G. Roberts, Jr. said, “My job is to call balls and strikes, and not to pitch or bat,” the New York Times reported. Roberts reiterated this philosophy during the King v. Burwell case when he said, “In a democracy, the power to make the law rests with those chosen by the people. Our role is more confined-‘to say what the law is.’ That is easier in some cases than in others. But in every case we must respect the role of the legislature, and take care not to undo what it has done.”
An analysis of Roberts’ outlook is provided by Neil Siegel, a Duke University law professor, who opined in a Wall Street Journal article that “Roberts is telling people again that the place to have this fight over the Affordable Care Act is in the democratic arena, not in the federal courts.”
With the clear signal from the Supreme Court that it will not remake the ACA, any changes to the law will need to be made at the legislative level. It should also be clear that Obamacare is not immutable. There are already several bills in the House and Senate that would significantly alter portions of Obamacare, according to a New York Times editorial. Rep. Tim Griffin (R-AR) has introduced a bill to delay the implementation of the employer mandate, and Rep. Todd Young (R-IN) has introduced legislation to delay the individual mandate.
On June 25, the Senate Appropriations Committee approved a bill that would substantially cut funding for the Centers for Medicare & Medicaid Services and weaken its ability to operate Obamacare programs and manage Medicare and Medicaid.
It is predictable that the political dialogue surrounding Obamacare will only intensify during the 2016 election season. House and Senate bills (HR 1190 and S141) have been introduced to repeal the Independent Payment Advisory Board. It is inevitable that additional legislative ”fixes” will continue to be introduced in Congress. The Democrats will be faced with defending increasing costs, while the Republicans will be challenged to present a viable alternative health care plan.
It remains to be seen whether the Supreme Court’s ruling on King v. Burwell serves as the underpinning for the evolution of a two-tier health care system. While the ACA is “here to stay,” to quote President Obama, there may be modifications, but the basic concept of universal care seems likely to prevail. However, the economic consequences are daunting. Health care economists forecast increasing costs, and insurers have already requested significant rate hikes. Small businesses in particular, are already struggling with health insurance costs for their workers and these costs will undoubtedly continue to rise.
As costs continue to escalate, it is likely that co-pays will correspondingly rise, which will hit lower income groups the hardest. The co-pay phenomenon, perhaps more than anything else, may usher in the era of two-tier health care.
The rate hikes forecasted for Obamacare relate to several factors. First is delayed care. As noted, some patients had deferred elective, expensive treatments until they were enrolled in Obamacare. Second, fewer younger, healthier patients enrolled than had been expected, thereby limiting the “sharing” of costs, as reported in International Business Times. Third is the rising costs of drugs, with pharmacy costs increasing by 11% in 2014, up from 2.5% in 2013, according to a Politco.com article. Health care reform in the United States has been and will continue to be a kinetic process. Urologists must remain engaged and informed to best serve their patients and their profession.
Most Americans view health care the same way they view higher education-as a right of citizenship. Americans seem comfortable with the division and disparate costs between state and private higher education. It remains to be seen whether health care is headed in the same direction.
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