Health Reform Arguments Reach Crescendo in US Supreme Court; Decision Expected in June
A historic debate ensued in the US Supreme Court over the legitimacy of key elements of the new healthcare reform law that could potentially see a dynamic change in the way Americans receive care and pay for it.
IHS Global Insight Perspective
Three days of intense arguments over the new healthcare reform law came to a conclusion yesterday (28 March), with the courts examining whether the individual mandate to buy insurance is unconstitutional and the impact of Medicaid expansion on states.
The main point of contention was on the individual mandate, and if struck down, whether it will mean the entire law is defunct or whether the legislation can be unravelled to accommodate that distinction. The notion that the individual mandate could be dropped is detrimental to the health insurance industry, which has already made changes to accommodate the expected expansion in membership count.
The court will have until June to make a decision and the pivotal point is to distinguish whether the individual mandate is considered as a tax or not. It is likely that the law will survive despite the scepticism shown by the justices towards the individual mandate issue.
The US Supreme Court's nine judges this week examined key parts of the new healthcare reform law announced in early 2010 as part of President Barack Obama's commitment to improve healthcare access in the country. For the first three days of the week, arguments were heard from the government and the critics of the Patient Protection and Affordable Care Act spotlighting the benefits and rights of Americans with respect to healthcare. There were essentially three key areas on which the arguments were primarily centred. These are set out below.
The centrepiece of the legislation, wherein every American should hold some form of health insurance or pay a penalty. This law is to be effective from 2014 as the rollout of the reform process continues from 2010. To critics, the decree challenges the very right of choice and free market, and they have labeled it unconstitutional. The justices questioned the realm of the decree, examining whether the decree was a tax. Conservative judge Antonin Scalia questioned the veracity of the law, asking where it will stop if the government can force Americans to buy insurance. Although it was agreed that people would require healthcare at some point, the option of buying insurance just before the delivery of care was discussed as a potential move to provide greater flexibility to patients. This issue only highlighted the fact that insurance would be required, however, whether it is purchased at the point of care or much earlier. The government put its weight behind the latter.
Can The Law Be Unravelled
Following the individual mandate discussions, the justices also took into account whether striking down the individual mandate aspect of the legislation would automatically bring down the entire reform legislation. There were arguments in effect seeking to examine if some parts of the law could be scrapped. Indeed, it was accepted that unravelling of the healthcare reform law would be "messy", particularly as the mandate rules are tied to various other aspects of the legislation. Interestingly, the government contended that a preferred outcome against a repeal of the entire law could be to scrap certain rules tied to the mandate, if the court was inclined to strike down the mandate (source: Wall Street Journal). This would mean, however, that the Supreme Court would have to go through each and every clause in the legislation to make a decision that was not receptive to the justices.
State Medicaid Expansion
On a separate note, the justices also examined whether the Medicaid expansion plans requiring state governments to implement the norms or risk cuts in funding was legitimate. Here too, the issue moved towards whether the federal government was expanding its remit by forcing state governments to execute the expansion. The Medicaid expansion programme would essentially add 10 million onto the healthcare scheme over the next 10 years, with the federal government providing funding for 90% of the cost of the coverage for newly eligibles. Here, the federal government faced lawsuits from 26 states, which argued that the state government did not have a choice in accepting the new requirements.
Outlook and Implications
The arguments of the past three days brought to the fore key areas of the healthcare law that are under scrutiny and have faced increasing criticism from some quarters. It is important to note that this is as much a political debate as a healthcare one, as the decision from the US Supreme Court is expected in June, and it is likely that whatever the decision is, it will have a tangible impact on the US presidential election. At this point, it is increasingly difficult to predict what the justice's decision will be, but given the arguments, it appears that there is enough scepticism over the individual mandate aspect of the law. If this aspect is struck down, it is likely that the overall healthcare reform legislation will still survive.
Such a measure will, however, have intense repercussions on the health insurance market, which has essentially been overhauled based on the expectation of minimum coverage and expansion of membership spearheaded by the mandatory healthcare insurance norm. Health insurers have invested in accommodating and catering to this rise in membership and change in the way health plans could be provided, namely the concept of health-insurance exchanges. For healthcare providers in the United States, the changes in the insurance industry would affect the reimbursement structure and to some extent the delivery of care. The latter may not be majorly affected, however, if the individual mandate is struck down and the other aspects of the law remain, which includes quality and extent of care.
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