Health Reform at the Supreme Court

What the decision means for occupational health

The 2010 Patient Protection and Affordable Care Act carried significant implications for occupational health providers. Beyond its primary goal of extending health insurance coverage to 30 million previously uninsured Americans, the legislation sought to revolutionize reimbursement structures by tying payments to provider quality and performance.

Numerous transformations have been set in motion, with accountable care organizations, value-based purchasing initiatives, quality improvement initiatives, Medicaid expansion in select states, and updated mandates on services covered by private insurance already in progress. These shifts mark a paradigm change in the healthcare landscape, influencing how occupational health providers deliver and are compensated for their services.

Legal challenges to the law could bring all these changes to a halt. The nation’s highest court agreed last November to hear several issues related to the constitutionality of the law, arising from two cases brought by 26 states and the National Federation of Independent Businesses.

The Supreme Court is considering two key issues: the so-called individual mandate requiring that everyone carry health insurance or pay a penalty, and the required Medicaid expansion by states.

What’s at stake:

The individual mandate requires that most Americans carry a minimum level of health insurance starting in 2014. To facilitate this, the law ordered states to set up online exchanges where individuals and small businesses can purchase insurance. If states don’t want to run the exchanges, then the federal government will do so. Anyone who fails to obtain coverage will pay a financial penalty, and those penalties will rise over the years. In return, insurance companies won’t be able to deny coverage to people with pre-existing medical conditions, and they must provide a certain level of coverage. The idea is getting everyone into the pool will help lower rates, and the population will be healthier with more focus on prevention rather than treating people after they become seriously ill.

The Affordable Care Act also expanded Medicaid to cover non-elderly individuals living at or below 133 percent of the federal poverty level starting in 2014. About 16 million low-income uninsured people are expected to enter the Medicaid program as a result of the expansion. Under the law, the federal government will fund the expansion in the first year, and then gradually decrease its share, putting the financial onus on the states to continue coverage.

The plaintiffs in the case before the Supreme Court argued that the individual mandate exceeds Congress’ power, including its authority to regulate commerce and levy taxes. The 26 states argue that the Medicaid expansion is unconstitutional because it requires states to participate in the Medicaid program. The federal government contends that Congress has the power to enact both provisions.

The Supreme Court must also decide if the individual mandate is “severable” from the rest of the Affordable Care Act or if invalidating the individual mandate throws out the entire law.

During oral arguments, the justices asked tough questions about Congressional powers to compel people to purchase a private product: in this case, health insurance. “My failure to purchase something might subject me to regulation?” asked Justice Antonin Scalia. Justices asked whether Congress could therefore require people to purchase cell phones, broccoli, or burial insurance, for instance.

The Obama administration argued before the court that health insurance is different from other products because everyone needs healthcare at some point and so someone ends up paying for it. Justice Ruth Bader Ginsberg echoed that argument when she said, “They are making the rest of us pay.” Healthcare providers, including the American Hospital Association and the American Medical Association, have made similar arguments in their amicus briefs supporting the law. Both groups said that the uninsured place an ever-increasing burden on safety-net providers.

Predicting the outcome:

While the oral arguments offered some clues as to how justices will rule, it’s still difficult to predict the final outcome, close observers of the court said. “For now, the fate of the individual mandate remains too close to call,” said Dominic Perella, who was a lead author on the American Hospital Association’s legal briefs on the cases and is a litigator at Hogan Lovells in Washington, D.C.

Mr. Perella and other observers said that two swing votes – Chief Justice John Roberts and Justice Anthony Kennedy – will decide the fate of the law. “I thought the questions from Justice Kennedy and Chief Justice Roberts were tough to both sides and didn’t reveal where they’ll come out,” Mr. Perella said. “If either one of them votes in favor of the law, it likely will be upheld.”

A decision from the Supreme Court is expected in June.