Health Care Reform and the Big 'What If?'

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Published June 11, 2012

| Bankrate.com

Within days, the Supreme Court is expected to decide the fate of the Affordable Care Act.

If the court determines that Congress acted within its constitutional powers in passing President Barack Obama's landmark health care reform bill in March 2010, the gradual overhaul of America's health insurance system will continue.

But what if the Supreme Court strikes down the law, in whole or in part?

That's a big "what if," given the measure's size and scope, and the fact that many of its provisions have already taken effect.

"While 'chaos' might be a bit strong, it would create a lot of uncertainty because basically we would go back to square one where we were three or more years ago in recognizing that our health care system is broken -- but not knowing exactly how to fix it," says Dr. Glen Stream, president of the American Academy of Family Physicians.

Here's how American health care might be shaken up if the Supreme Court strikes down the Affordable Care Act.

It's All About the 'Individual Mandate'

The cornerstone of the Affordable Care Act -- and the focus of the Supreme Court challenge by 26 states and the National Federation of Independent Business -- is its "individual mandate" clause, which requires Americans to buy health insurance if they don't have it. If the court rules that Congress overstepped its powers with the individual mandate, it could throw out only that part of the law, or it could toss out the Affordable Care Act completely.

The individual mandate, which is expected to add 30 million of America's approximately 50 million uninsured to the health insurance pool beginning in 2014, is considered essential to making the "guaranteed issue" clause work. That provision ensures that people with pre-existing conditions have access to coverage; it's the concession the law requires insurers to make in exchange for millions of new customers.

"They're two sides to the same coin," says Jessica Arons, director of the Women's Health and Rights Program at the Center for American Progress, a nonpartisan educational institute. "If they were to strike down the individual mandate, I think guaranteed issue unfortunately would go away."

Other reforms already in effect that could face a similar uncertain future include the following.

  • The law's elimination of lifetime and annual limits on health insurance benefits.
  • Its discount on name-brand drugs for seniors, to close the Medicare "doughnut hole."
  • The expanded coverage for young adults to age 26 under a parent's plan.
  • Customer rebates from insurers that spend too much on administrative costs and bonuses.
  • Tax credits to 4 million small businesses to help them insure their employees.
  • Expansion of Medicaid so states can insure more low-income residents.

The business case for preventive services

Some parts of the law appear to be here to stay, regardless of what the court does. For example, its elimination of copays and deductibles for preventive services such as mammograms, colonoscopies and well-baby visits may survive, at least on employer plans, which insure 3 out of 5 working Americans younger than 65.

The reason? Business has increasingly recognized that maintaining a healthy workforce is cost-effective.

"I don't see large employers rolling back 100% coverage on preventive care," says Tom Billet, a senior benefits consultant with the global consulting firm Towers Watson. "Many companies already covered that even before health reform."

But preventive services that are "free" to consumers under health care reform could cost them in the form of higher premiums if the law is struck down, Stream says.

Large employers certainly have their differences with the law, especially its scheduled excise tax set to begin in 2018 on so-called Cadillac plans geared toward executives. But "they probably view certain aspects of it as a positive," says Billet. What large employers want most is an end to the uncertainty that has scuttled their long-term planning, he says.

A Different Kind of Exchange

The law has required states to set up health exchanges, where consumers can compare prices and buy insurance under the individual mandate. If the act is struck down, are those marketplaces likely to survive?

"No, I don't think so," says Ken Sperling, national health exchange strategy leader for the global consulting firm Aon Hewitt. "Because a critical part of this law is the prohibition on medical underwriting based on preexisting conditions. In order for insurance companies to be OK with giving up the right to underwrite (based on health), they want to get healthy people into the pool." And that makes the exchanges necessary.

However, exchanges of another sort may be on the way as Aon and other consulting firms roll out private-market versions for large employers, so employees can comparison-shop for health insurance.

"We're borrowing a concept from the Affordable Care Act, but what we're doing is not dependent on anything in the legislation," he says. "So whatever the Supreme Court does, we're moving forward."

Doctors Dread the Morning After

In the event the Supreme Court strikes down health care reform, doctors will be the first ones thrown into a freefall of questions.

For example, would they immediately have to start billing Medicare patients for wellness visits, which are "free" under health care reform? How do you prescribe medications for seniors suddenly thrown into the Medicare Part D doughnut hole, who can't afford name-brand prescriptions? And who's going to pay the bill for the 25-year-old who says she's covered under her parent's plan?

"I think everyone will sort of be numb," says Stream. "There's a lot of it that would affect actual day-to-day practice. There are a whole bunch of pieces that would fall apart."

Yet Stream isn't sure a celebration will be in order if the health care reform law survives.

"It doesn't completely get the job done in terms of reforming our health care system," he says. "Whether it stands or whether it goes, there's going to be work to be done."

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