ACA: Opinion of mass destruction—Not!

Whether you’re a worry-wart Washington policy wonk, a high-paid insurance executive or lobbyist, or a mental health or addiction treatment provider, there’s plenty at stake in tomorrow’s expected Supreme Court decision regarding the Affordable Care Act.

But beneath all the current conventional wisdom that predicts a partial or complete overturn of the ACA—the anti ACA noise created by the near-instant coverage of the Supreme Court debate, the unexpectedly hostile questioning by key justices, and the chorus of fears about the ACA’s job- and budget-killing implications—another quieter and somewhat less conventional wisdom about the possible direction of the ACA case has emerged.  Some now feel optimistic that the Supreme Court will in fact do what many thought it would prior to its March 26-28 debates:  uphold the law in its entirety.

Getting at the roots of the quiet confidence expressed by ACA proponents isn’t too difficult.  More and more signals have emerged in recent weeks. Of course, whether these signals really have any relation to the decision making of the nine justices of the Supreme Court is open to debate. But there’s no doubt that, in addition to their responsibility to rule on matters of Constitutional law, the justices cannot help but weigh the potentially gigantic political, business, and social impacts of a decision to derail all or part of the ACA now.  And, those implications are what fuel many of the optimists’ thoughts:

Here’s just a taste of some of the things that I’ve been hearing, in no particular order:  

1) SCOTUSblog publisher predicts ACA upheld:

Tom Goldstein, publisher of SCOTUSblog, the now widely-followed blog that follows the decisions of the Supreme Court, has just posted his prediction that “the mandate will not be invalidated tomorrow,” and that “the challenge to the Medicaid expansion will be rejected.”  (Note:  I started this piece before I got this information, so Tom’s prediction makes me look like a chump.  Hope you’ll read on anyway.)

2) Big health insurers clearly need and want the mandate.  For some time now, opponents of the ACA have argued that business, notably small business, is opposed to the ACA. But more recent reports and statements by big health insurers and business news organizations like Bloomberg paint a different picture.  

·         Big health insurers are fully invested in implementing the systems changes required for ACA compliance. Big insurers have clearly signaled that whether or not the Court upholds the insurance mandate, policyholders will bear most or all of the costs of ACA compliance anyway in the form of higher premiums. This begs the question: will all of those sunk costs be spread out by the big health insurers among the smaller group of current policyholders and shareholders, or will they be distributed—as envisioned by the ACA—over the much larger group of policyholders to be included in the mandate?

·         Big health insurers stand to lose $1 trillion in new premium revenue from 2013 to 2020—which includes an estimated $174 billion in profit and administrative costs for the same period—if the insurance mandate is struck down, according to a recent Bloomberg business report.

·         Big health insurers are committed to retaining a number of the most popular provisions of the ACA (end to ban on pre-existing conditions for those 19 or younger; end to lifetime limits on coverage; extension of coverage to adult children through age 26) regardless of what the court rules.  In particular, the coverage extension to age 26, they’ve found, makes excellent business sense because it retains or adds policyholders among what is normally a key group of the uninsured, the “young invincibles.”

·         They’re fearful of getting stuck with the costliest provisions of the ACA, such as the “guaranteed issue” and “community rating” provisions, without the means envisioned by the ACA—the mandate—to pay for them.

3) Eliminating the mandate would only exacerbate current health care and health insurance problems.

The cost of losing the mandate, but retaining the other provisions of the ACA, would cause howls of protest, first from health insurers, but then from policyholders.  “The only effect of the mandate being eliminated is that healthcare costs a lot more,” says Ron Manderscheid, executive director of NACBHDD and a longtime public health policy advocate.  The loss of the mandate, he explains, “ruins community ratings, the idea that all policyholders pay the same rate without regard to individual health conditions.”  While he maintains that the loss of the mandate would be “a fixable problem” by a yet to be developed means, he also pointed to “signals” by big health insurers—seen in their commitment to adopt popular ACA provisions—that they hope the mandate will be upheld.

Gauthier predicts a darker picture should the mandate be overturned.  “Managed care approaches would become even more tenacious and widespread.  They’re growing anyway as a result of the adoption of the ACA, but if the insurance mandate is struck down, they would become far me widespread.” The resulting squeeze on health insurers would “pit payers versus providers versus users,” with payers “having to double down to make back all of the past investments made for ACA compliance.” 

4) ACA opponents know that they may not get a better deal.

Though it’s often compared with the failed Clinton-era “single payer” healthcare proposal, the ACA “isn’t the old progressive, Democratic, universal coverage approach,” explains Patrick Gauthier of Advocates for Human Potential, a behavioral health industry consulting group.  

Although the ACA passed without a single Republican vote, he asserts that the ACA is a result of a left-right negotiation in Congress and that it clearly represents a Congressional compromise that’s built to address widely-recognized problems with healthcare costs, quality, and financial incentives. It’s also well known that the ACA’s blueprint includes many right-of-center ideas, including the delivery of benefits through a mix of government (Medicaid expansion) and private, for-profit insurers, with policies provided to many through free-market health insurance exchanges.  

“A lot of people have bought into [the ACA],” he says, noting that after all, the ACA was passed by Congress as federal law—a law with 40 current provisions already in effect. 

With an eye toward powerful interests on Capitol Hill, Gauthier opines, “The design of the ACA is very amenable to two very important lobbies; the health insurance and hospital lobbies are very happy with this.” He asserts that “the fact that they’re not going nuts right now is a signal that they think this is going to happen.”

Of course, while Gauthier’s thoughts can hardly influence the Supreme Court’s deliberations, his analysis has been pointing him in this direction for some time.  He held essentially the same thoughts three weeks ago when I last spoke to him.

5) My Conclusion:  Regardless of the Court’s decision tomorrow, the train of health reform has left the station and the social and political consensus represented by the ACA and its implementation cannot be easily unwound or undone. 

The Court’s decision will be historic.  My thought, and admittedly my hope too, is that our Justices will take a look not only at the Constitutional issues of the ACA, but of the reality that in a flawed world, even a flawed, compromise legislative solution like the ACA is better than no solution. To my thinking, a decision to uphold an imperfect ACA represents a far better measure of justice than the only alternative:  the high cost in years, dollars, and lives it would surely cost create a new solution.