Ken’s Take on the World


Hear ye, hear ye

Within the next two weeks the United States Supreme Court will issue its ruling on the Affordable Care Act (ACA). There is much speculation as to what the Court has decided (yes, the case has already been decided) when it issues its ruling on the Constitutional questions raised by the Affordable Care Act. Some think it will be completely struck down while others (you have to love dreamers) believe it will be completely upheld. Most of us who have actually read the Act, believe it is quite likely that the Justices have decided that parts of it fail to pass Constitutional muster and must be struck down while leaving large portions of the ACA intact. In any event, the ruling of the nine men and women who comprise the highest court in our land, will have far reaching effects on the lives of everyday Americans. Not only will their decision(s) affect average folks, the impact will be felt by healthcare providers, insurance companies, pharmaceutical companies, and medical device manufacturers.

For the President, the ideal situation would be for the Justices to decide that the entire Act is Constitutional, thus bouncing any attempts to modify or repeal all, or part, of it to Congress which is unlikely to muster the support for doing so. I, personally, think this scenario is unlikely for two reasons. First, I can see a lack of Constitutional backing for the individual mandate that is a key provision of the Act. Second, given the current make-up of the Court, I do not see a majority of its respected members agreeing that this provision is Constitutional. Certain members of the Court are not especially keen on having the Government require individuals to do certain things. In many ways, this is a very good thing.

For Congressional Republicans, an ideal scenario would be for the Court to strike down the entire Act. This would allow them to put forth legislation addressing the provisions of the Act that a majority of Americans have repeatedly identified are quite acceptable to them. This would allow Republicans, with very broad bipartisan support, claim they support meaningful healthcare reform. I also do not believe this scenario is very likely because precedent shows that the Court has supported the right of Congress to enact laws that address interstate commerce. The issue the Court must grapple with here is that there is no specific severability clause that would permit the Justices to only strike portions of the Act. Not that there is no precedent for allowing this, it is, however, interesting that no such clause was included in the final legislation that was sent to the President in March of 2010.

Personally, I am inclined to believe that the Justices have decided that the Act can survive with the removal of the individual mandate. It is not up to the Court to decide that the hardship forced on corporations resulting from a loss of revenue as this is not a question posed by this case. So, what happens if the individual mandate is struck down and the remainder of the Act survives intact?

Medical insurances companies will, initially, face the greatest financial burden. They will (continue to) be forced to provide coverage to anyone regardless of medical condition. Further, they will (still) not be able to drop people when they become ill. These are both extremely important issues for individuals who, inevitably, will require healthcare services at some point in their lives. Pharmaceutical companies are also on the hook for reducing the cost of medications to some groups and this would not change with or without the individual mandate. Hospitals and other healthcare providers will be hurt with the loss of an individual mandate as Medicare and Medicaid reimbursement rates are slated to be kept under a tight rein under provisions of the Act. With otherwise healthy folks showing up in Emergency Rooms, reduced reimbursement and increased volume will make it a challenge to continue to provide high-quality care.

The impact on businesses and individual purchasers of health insurance will become very noticeable without an individual mandate. These folks can expect their premiums for health insurance to rise significantly especially for those who have pre-existing conditions or who work in inherently dangerous fields. Without the guarantee of a large, relatively low-risk, pool of people purchasing insurance, companies that sell insurance will be forced to raise rates on everyone who does buy in order to maintain a healthy profit-margin and in light of the fact that individuals cannot be denied insurance. Businesses and corporations will likely decide that it may be cheaper to self-insure thus drawing even more customers out of the health insurance marketplace. As this begins to happen health insurance providers will begin to go into bankruptcy leaving millions with insurance policies that are worthless. This is the worst case scenario, however, it is what will ultimately lead to something I have recommended for more than a decade. As insurers fail, healthcare providers become sucked in by a staggering loss of revenue, and they, too become bankrupt. The Government, belatedly, recognizing that healthcare is not a commodity that cannot be satisfied by the traditional laws of supply and demand, will have to take action and a form of Universal Healthcare will be implemented.

Could this be avoided? Not likely. America has the greatest medical technology in the world. The healthcare industry in the United States makes up about 1/6 of our Gross Domestic Product (GDP). The costs associated with the development of new drugs and medical devices that are designed to improve the quantity, or quality, of life are, well, quite costly. Healthcare in this country is, literally and figuratively, too big to fail. Unfortunately, finding a way to pay for this is an issue. For far too long America and its leaders have acted as though healthcare, and access to it, is a commodity that is to be financed based on free-market principles alone with very limited regulation. American citizens have become so insulated from the actual costs associated with healthcare through employer-provided insurance benefits. We have come to expect the very best in medical innovation even though it is not always necessary. We demand the newest drugs. We know we will receive tests performed on the latest diagnostic machines and that a robotic system can be used for almost every surgical procedure. This is neither cost-effective nor wise. However, when the Affordable Care Act was introduced, critics called attempts to look at the feasibility or appropriateness of care, people balked and critics derided this, quite incorrectly, as the implementation of, “death panels.”

Instead of implementing a Universal Healthcare system, or at least the framework of such a system, when they had the opportunity, Congress attempted to circumvent the inevitable. Healthcare has become a major burden on businesses and individuals. A uniquely American model based on the healthcare systems of every other industrialized, and a significant number of developing, nations should have been seriously discussed and implemented. We had the chance to do this in 2009 (and a number of times in the century prior) and we failed. We were provided legislation that, despite its length, failed to ensure that every citizen had insurance. The final bill failed to provide sufficient cost-containment mechanisms. The expansion portions of the bill were challenged by Attorneys’ General, allegedly, acting in the best interests of their citizens. And this is why we eagerly, and anxiously, await the opinion of nine folks in black robes.

One other prediction. Whatever the ruling(s) that are presented, they will be nearly unanimous. The Court will have considered its own integrity and, realizing the view of the Court in recent years as more in lockstep with their Presidential nominator’s political affiliations, will make sure that whatever conclusion has been reached is supported by a near-unanimous Court.

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