A Footnote in History: Why the Obamacare Ruling May Not Matter

Despite the attention lavished on President Obama's health care law, industry reform is likely to proceed with or without it.

scotus-615.jpgHealthcare law proponents walk past opponents from the Tea Party Patriots group on the sidewalk outside the Supreme Court in March. (Jonathan Ernst/Reuters)

The Supreme Court is poised next week to rule on the constitutionality of the Affordable Care Act, popularly known as "Obamacare." Assuming it strikes down the individual mandate -- a requirement that everyone purchase qualified insurance coverage -- rather than upending the Act as a whole, the impact on health reform is likely to be modest, contrary to what many believe.

The Court's decision may have significant political implications -- even though health care is rarely a top-tier voting issue in presidential elections. It could have a historic impact on judicial precedent, although the ideological bent of the current Court may limit this as well. And it would certainly affect millions of Americans who otherwise could have obtained affordable health insurance coverage with decent benefits. Many of these Americans, if polls are to be believed, are unaware that such benefits might be coming their way.

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What it is unlikely to do is make much of a difference to the future of health care reform, except as an important footnote. Here's why:

Much of the law will go forward in any case, and along similar lines. If the individual mandate is found unconstitutional, the Obama administration intends to forge ahead with the other parts of the Affordable Care Act. This means more Americans are likely to sign up for coverage voluntarily, making the (minimal) coercion contained in the individual mandate less pivotal.

Moreover, Mitt Romney, should he win in November, will find it very difficult to repeal the ACA in full. The recent divisions between some G.O.P. lawmakers and Tea Party leaders over popular provisions of the law are just a preview of that potential clash.

Should Romney and Congress choose to scrap the ACA, the problem of poor insurance coverage, rising costs, and middling quality of care will put the health care dilemma back on the table. After a brief lull, health costs will continue to rise faster than GDP and coverage and access will continue to erode.

Existing Republican proposals such as the Ryan Plan either stand no chance of gaining wide support or are too small-bore to make a dent on the big problems. This underscores the fact that the ACA was truly a bipartisan approach without bipartisan support (which hurt its popularity on all sides). Under such pressure, some form of this deal will come back, repackaged and renamed.

Assuming federal subsidies are not withdrawn altogether, state action will continue -- even if the Court's decision induces heartburn for state officials who have been putting the ACA's architecture in place. California, which narrowly failed to enact a comprehensive coverage bill that was similar to the Affordable Care Act, will go as far on its own as the state's slowly-improving fiscal conditions allow.

Even implacably anti-Obamacare states like Utah have embraced reforms, including an Expedia-like health information exchange, which could serve as interesting models for a somewhat different version of comprehensive reform, one decoupled from employer-based coverage or Medicaid.

The health care industry has made its bet on change. The compromises in the Affordable Care Act, though unsatisfying to many, were a non-refundable down payment on bringing the many wings of the $2 trillion U.S. health care industry on board.

The industry, in general, has already decided that the piecework, fee-for-service model of payment is unlikely to hold up. It has embarked upon an unprecedented path of consolidation in the expectation of new reimbursement rules.

In the process, it is undergoing the long-predicted shift toward greater scale and efficiency that most other American industries have long-since completed. The Affordable Care Act simply accelerates mounting trends -- in particular, the integration of care and consolidation of hospitals and medical groups.

For instance, over 200 Accountable Care Organizations (ACOs) -- loose but formal collaborations of hospitals, physicians, and sometimes health plans -- have been formed with the aim of coordinating patient care. Such ACOs have been launched in all but five states. The number of physician-sponsored ACOs has almost doubled in the last six months. By promising to coordinate care under hospital and physician leadership, ACOs are unlikely to run afoul of industry resentment.

The provisions that promote ACOs are unlikely to be greatly affected by the Court's ruling. Even if they were, many CEOs who are signing up for these partnerships insist that such reforms need to continue regardless of what happens with the broader health care law. As Dr. Hal Teitelbaum, the CEO of Crystal Run Healthcare, a 250 person physician group in upstate New York, put it, "Our transaction-based health system doesn't make sense. We're not in the business of selling mammograms or colonscopies. We're in the business of improving health and outcomes."

Presented by

Leif Haase

Leif Wellington Haase is president and founder of LWH Consulting, a California-based health policy research firm, and a California-based senior fellow in the Health Policy Program of the New America Foundation.

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