By Andrew Hayek
Our discussions with physicians and surgery center leaders across the country reflect two major questions regarding the Affordable Care Act (ACA) healthcare reform bill: first, will the ACA be implemented; and second, what are the implications of the new payment models in the ACA, including accountable care organizations (ACOs) and bundled payments? To the first question, we believe that there are three major variables that will determine the viability of the ACA as currently structured. Before outlining these thoughts, it is important to note that we share this analysis on a strictly nonpartisan basis, purely from the standpoint of healthcare providers analyzing the political circumstances.
The first variable is the 2012 presidential election. The leading Republican candidates have committed to repealing and replacing the ACA; therefore, the election of a Republican president would – in all likelihood – spur a national discussion of what to replace the ACA with, which will yield a dizzying array of complicated questions regarding alternative reform options.
Having a president committed to repeal and replace is one thing ... having sufficient congressional support is quite another. In the case of the Senate, 60 senators would need to support a repeal and replace law in order to overcome the minority’s ability to block legislation per current Senate rules. Such a broad consensus was very difficult to achieve in passing the original bill, led by a then highly popular president with a fresh mandate – and a repeal would be even more difficult to achieve.
The second variable is the litigation, supported by 26 states, challenging the constitutionality of the individual mandate – specifically, whether the Commerce Clause of the Constitution allows Congress to require individuals to purchase health insurance. Detractors of the ACA argue that the Commerce Clause was never intended to prohibit inactivity – i.e., prohibiting individuals from choosing not to do something. Supporters of the ACA argue that it is inevitable that every person will purchase healthcare at some point in their life; therefore, the ACA is regulating a choice that will indeed be made.
The Supreme Court has agreed to hear this case (structured as three different appeals), and most observers expect a decision in the summer of 2012 – in the midst of the run-up to the 2012 elections.
Many observers believe the case will come down to a 5-4 decision, with Justice Anthony Kennedy expected to cast the deciding vote. (Most expect Justices Ginsberg, Breyer, Sotomayor and Kagan to uphold the individual mandate and Scalia, Thomas, Alito and Chief Justice Roberts not to support the individual mandate.) One might conclude, then, that the outcome hangs on Justice Kennedy’s view of the proper breadth of the Commerce Clause. However, the analysis is not that simple, and there are three major complicating factors that further reduce the odds of the law being entirely struck down by the Court.
This first such factor relates to the Anti-Injunction Act, which prevents taxpayers from challenging tax provisions before they go into effect. Essentially, the issue is whether the individual mandate is, at its essence, a tax – and, if so, whether it can be challenged in court before it has gone into effect. If this argument holds true, then a challenge to the law could only occur in 2015 or after, by which time it will be increasingly impractical to unravel the healthcare reform law on a broad basis.
The second factor is that even if the individual mandate is overturned, the Supreme Court may not invalidate the entire healthcare reform law. A repeal of the individual mandate without a broader repeal of the reform law would be a disaster for insurance companies, as individuals could go without insurance until the point at which they became ill, then purchase insurance. This would create a monumental adverse selection problem, driving up pricing significantly on those who decide to purchase insurance when they are well.
