Summary: Everyone is waiting for the US Supreme Court's decision on the individual health care mandate anticipated the week of June 25, 2012. The hype is considerable, and the average individual is trying to figure out what this means. Experts disagree what the outcome will be.
Everyone is waiting for the US Supreme Court's decision on the individual health care mandate anticipated the week of June 25, 2012. The hype is considerable, and the average individual is trying to figure out what this means. Experts disagree what the outcome will be. This articles tries to summarize some of the likely results of the decision.
I personally believe the mandate will be rejected by the Court, although it isn't an obvious outcome. If rejected, this will have an impact on health care reform as currently defined. It is important that everyone is subject to the same rules so the various situations are consistently handled. For example, if one class of individuals do not have to participate in the reformed system, then the goal of significantly reducing the uninsured and under-insured will not be met. The Patient Protection and Affordable Care Act fails to eliminate the uninsured but takes a significant step towards that goal.
The development of exchanges, the additional rules required for rate filing and associated approvals of rates, the transition to government approved "metallic" plans will slow and perhaps even stop if the mandate is rejected. The benefit of this might be reduced administrative costs and may even result in a spike in health plan earnings as the pressure is relieved.
If the Patient Protection and Affordable Care Act is unraveled a bit, it actually might have a positive impact on the Federal deficit if spending is reduced and related provisions of the Patient Protection and Affordable Care Act are de-funded.
For example, some of the innovation will likely disappear (i.e., Accountable Care Organizations, comparative effectiveness research, electronic medical records, etc.). The Medicaid expansion will likely slow. Employers will reconsider their near term benefit strategies, perhaps taking a more serious look at what they can do to reduce costs in light of the easing of federal oversight.
However, what about the economy? What about the likely impact to the cost of care? One of the frequently ignored reasons why health care reform was so important is the impact on our national economy. The cost of care continues to escalate faster than general inflationary levels. The US health care system continues to be one of the most expensive both in terms of dollars and also as a percentage of Gross Domestic Product.
The continued economic woes facing the general economy exacerbate the health care cost problem.
Affordability is at an all-time low and costs continue to grow faster than we can afford. Providers are increasingly resistant to discount their charges further driving up prices.
The Patient Protection and Affordable Care Act, although imperfect at best, did provide some hope to control the unbridled increase in health care costs. The rejection of the mandate at a minimum disables any hope of meaningfully controlling health care costs within the Patient Protection and Affordable Care Act.
We still need a health care solution. We still need a broad solution that all can effectively be a part of. If the mandate fails to survive, we need a back-up plan to get everyone on board to solve the health care problems we all face whether we admit or not.
My prediction is that we are faced with two undesirable options:
I still am a big fan of the private sector taking the lead in creating a viable solution rather than succumbing to a government solution. Unfortunately, I don't see a sense of urgency like we need to be seeing. Too many ignore the reality of the seriousness of the financial issue and the significant impact on our overall economy.
I hope for good news and moderate reaction to the Supreme Court decision.
David Axene started Axene Health Partners in 2003 after a successful career at Ernst & Young and Milliman & Robertson. He is an internationally recognized health consultant and is recognized as a strategist and thought leader in the insurance industry. He earned an MS Degree in Applied Mathematics from the University of Washington and a BS degree in Physics and Engineering from Seattle Pacific University.
More articles, videos, and podcasts by David Axene:
Unintended Consequences Of Exchange Rate Filings
19 Specific Taxes Directly Related To Healthcare Reform
So What Is the Actuarial Value Of My Health Benefit Plan?
Medicare Implements Value-Based Purchasing
The Insurance Rate Public Justification & Accountability Act - Does It Get To The Real Problem?
Insurance Thought Leadership exists to "simplify the complex." The insurance industry is fraught with complexity so our defining vision is to aggregate and deliver best practice solutions from highly respected experts in their field. Insurance Thought Leadership provides knowledge and experience at a time when its needed most, times of sweeping change and market uncertainty.
Whether it's Healthcare, Worker's Compensation, Property & Casualty, Auto, Sophisticated Life Insurance designs, Directors & Officer's, Safety, Risk Control or other Claims Management, Insurance Thought Leadership promises to deliver the most relevant mind share the industry has to offer, thus our defining vision … to "simplify the complex."