It’s been a crazy morning as everyone waited anxiously for the ruling. In fact, CNN cycled through several versions of pre-written responses to the decision flip-flopping from “The Supreme Court has struck down the individual mandate for health care” to simply “Upheld.”
Within a few moments of the decision, the big items have become clear:
- The individual mandate, a critical lynchpin of the legislation, was upheld as constitutional. The key argument against the mandate held that the government cannot compel citizens to buy a product. In a 6-3 decision, with Chief Justice Roberts joining the majority, the mandate was determined to be a tax (or, rather, the fine that individuals would be required to pay for not purchasing insurance is a tax), nothing more, which the Federal Government has the right to levy.
- Broader questions of the constitutionality of the overall Accountable Care Act (ACA) were contingent on the fate of the individual mandate and were therefore not an issue.
- The other key issue relating to the Federal Government’s ability to force an expansion of Medicaid. This too was ruled constitutional, but with the caveat that states would lose only a portion of Medicaid funding. Essentially, new funding that was added along with the new eligibility requirements, rather than all of their Medicaid funding.
Surprisingly simple, really.
So let’s remind ourselves of what this actually means for our healthcare organizations.
For starters, there’s no need to unwind all of the changes that are already in place. These include expanded insurance coverage for children with pre-existing conditions and the ability for parents to keep their children on their insurance plans well into their twenties. In addition, fledgling initiatives to drive health system innovation as well as pilot Accountable Care initiatives and other programs to shift the way in which care is compensated will continue.
Yes, this ultimately means that health systems are going to get less money in the door to care for patients. I hear many referring to this as “living on Medicaid reimbursement rates” but that’s not entirely accurate either. If health systems try to act as they always have, they’re going to get paid a lot less and they’ll likely fail, financially speaking. That’s not the goal here. The goal is to care for the U.S. population in different ways. That’s the shift that needs to begin.
And it needs to begin soon as the expansion of the insured is coming. With some 32 million additional insured on the way, healthcare organizations will have a greater responsibility for the outcomes of their care.
There’s an important role here for the strategy disciplines in guiding the change that’s coming. In the near future, we’ll be serving different markets with different services. This has implications across the board – new and different physical locations, different mixes of specialties and ways of delivering those services, more care delivered outside of the hospital setting, more care provided in the home through home health and various telehealth initiatives. Sorting out what to do, where to do it, and the tremendous job of educating our staff, doctors and patients will become the focus for the next several years.
The skills that healthcare organizations will need going forward are very different as well. Organization size will be a virtue. Access to capital may well be a competitive differentiator for provider organizations in the future. The accountability aspects of the future health system effectively put providers into an insurance-like role, and we will see many health systems partnering, hiring or acquiring to obtain the risk management and financial expertise that will be required.
On one level, the Supreme Court decision isn’t the end of the process for the ACA. Certainly it’s a green light for the next several months, but the rhetoric to weaponize whatever decision was coming has already begun, and there are many who still look forward to killing this legislation through the November elections. It’s not yet clear if this court decision helps or harms President Obama’s hopes for a second term so much as draws a distinct line of differentiation between the parties.
Of course, if Governor Romney takes the White House in January it won’t necessarily amount to the dramatic change of course that he suggests. Reimbursements are going to go down one way or another as their growth is unsustainable. Several insurance companies have indicated that the inclusion of adult children on their parent’s insurance would likely continue. The concept of accountable health has already wormed its way into the psyche of our industry and is certain to be pushed forward by private insurers regardless of the government’s role in its development.
In other words, the way that things were in the past isn’t an option. As an industry, it’s time to move forward. To be sure, there are other ways we could move forward that are different than the path we find ourselves on now, but for today, this is our direction..
And congratulations to the Obama administration. This is a tremendous victory for the work that you’ve done and your vision for the future of healthcare in America.