The Decision: The Supreme Court’s Health Care Ruling

Nick Reding, Executive Director, National Journal MembershipMargot Sanger-Katz, Health Care Correspondent Meghan McCarthy, Health Care Staff Writer

June 28, 2012

Presentation Supported by

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Roadmap for Discussion

Source: National Journal Editorial Research.

Implications for Policy and Industry

Next Steps in Congress

The Supreme Court Decision

3

The Outcome of Today’s Ruling: Law Upheld

Mandate, Guaranteed Issue,

Community Rating Struck Down Medicaid Expansion Struck Down

Scenario #1

Scenario #2

Scenario #3

Entire Law Struck DownScenario #4

Source: National Journal.

Mandate Struck Down / Rest of Bill Intact

Law Upheld*Scenario #5

Anticipated“Change” Scenarios

Stay the Course: SCOTUS Ruling

The Supreme Court Decision

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What Does it All Mean? A Refresher on Key Terms

Individual Mandate Requires all individuals to maintain health insurance or pay penalty

Guaranteed IssueRequires insurers to cover all applicants, regardless of prior health history

Community RatingLimits variations in premiums insurers may charge based on certain individual characteristics such as age or health status

Insurance Exchange

Creates a regulated online marketplace for private insurance options to facilitate enrollment, stimulate insurance company competition for individual and small business customersAccountable Care

OrganizationsDoctors, hospitals and other providers who voluntarily and jointly deliver coordinated care to Medicare patients

Source: National Journal Editorial Research.

Several Doomsday Scenarios Avoided (For Now)

5

Havoc on budget/deficit planning in Congress

Extreme insurance disruption due to “adverse selection”

Exorbitant premium possibilities due to decreased consumer protection

Reallocation of hundreds of millions already invested in roll-out; scrubbing of plans and contracts underway

Potential Repercussions of Full or Partial Strikedown

6

The Affordable Care Act TimelineMajority of Provisions Will Be Implemented in

2014

2012 2014

Insurance Reforms Individual mandate, guaranteed issue, community rating

Medicare ReformsPilot programs to change

how doctors are paid, cost controls

Medicaid Expansion Intended to broaden

entitlement to everyone under 133% of federal

poverty limit in some states

Exchanges and Tax Credits Sets up a

marketplace to buy insurance and helps middle income Americans pay their

premiums

Everything ElseIndian Health Service,

restaurant menu labeling, breastfeeding rules, prevention fund, free

preventative screenings, etc.

Insurance ReformYoung adults on parents’

plan, rate review, no lifetime limits

2015Doctors

paid according to quality

of care

6Source: National Journal Editorial Research.

The Way Forward

7

A Fight Not Yet Over

Source: National Journal Editorial Research.

GOP Voicing Commitment to Repeal

• Romney and GOP leadership have vowed to repeal the law—or waive portions of it—once they have the votes to do so

• Outcome of upcoming elections could be as significant in impacting the law as the Court’s decision

• Repeal might be a powerful election platform; issue ignites the base and currently plays well with independents

Implications for Policy and Industry

8

Implementation Will Be Anything But a Cakewalk

Challenges to On-Time Rollout: Regulators have yet to spell-out key provisions; Health and Human Services (HHS) implementation is incomplete; diverse funding sources are subject to vagaries of Congress

A “Heavy Lift” at the State Level: Many states gambled that the Supreme Court would invalidate the law, and have done nothing to set up exchanges

Potential for Radical Shifts in State Budgets: 2017 and beyond, states will be held accountable for a greater share of the Medicaid funding; states may have to cut other programs or raise taxes to fund

2017

Source: National Journal Editorial Research.

Extreme Challenges at Federal and State Levels

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Business Model Changes Anticipated in Industry

Source: National Journal Editorial Research.

Insurers

• Will face increasingly limited ability to manage risk pools

• Will shift strategic, operating focus toward volume and efficiency

Key ImplicationsStakeholder

Health Care Providers

• Will face greater scrutiny from payers and employers on total cost and quality outcomes

• Must redesign delivery, financing, contracting models to inflect efficacy and efficiency of treatment through care coordination

Employers

• Will experience increasing cost of employee coverage to comply with the sponsorship mandate (Chiefly experienced among small businesses with more than 50 employees)

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What Will Congress Do Next?

Source: National Journal Editorial Research.

Next Steps in Congress

Pre-Election• Repeal vote in House likely to pass the

week of July 9, 2012• Senate will not act, Obama will not sign

Post-Election

• Major change anticipated, if Republicans sweep elections, through the reconciliation process

• Postponement of key provisions likely in divided government as well; postponement of potential interest to both sides

“Not Much”

“New Ballgame?”

The Decision: The Supreme Court’s Health Care Ruling

Nick Reding, Executive Director, National Journal MembershipMargot Sanger-Katz, Health Care Correspondent Meghan McCarthy, Health Care Staff Writer

June 28, 2012

Presentation Supported by