Wednesday, June 27, 2012

Supreme Court decision impact on health care reform in 3 scenarios

Thursday the Supreme Court will rule on the constitutionality of the Affordable Care Act (“Obamacare” to many). If the Court upholds the law, consumers will win. If the Court throws out the entire law or part of it, all consumers, those with insurance and those without now, will lose something. 

If the Court overturns the entire law, seniors will lose coverage of the drug donut hole, all consumers will lose required coverage of pre-existing conditions, and the currently 30 million uninsured will lose affordable health care insurance and access to preventative care and screening. Insurance premiums will have no brakes on future increases since costs savings features will die, too.

There will be a financial hit to all consumers if 30 million uninsured today will not be able to afford health insurance. The uninsured will continue to have a greater chance to die early, to seek care in the ER for a bad cold or for an advanced disease because they could not afford or seek preventative care or have access to a doctor. Hospitals and doctors will continue to bury their losses in higher operating costs that are passed on to the insurers who charge us, the insured, higher premiums. Estimates are that today's insured families are paying $1,000 more a year to cover the uninsured and that cost, higher copays, and reduced coverage would worsen if the now uninsured are not covered. 

Some Obamacare benefits already in effect may survive even if the whole law is struck down, but only for those who can afford insurance. Major insurers have already pledged to eliminate lifetime limits and end co-pays for mammograms, prostate screening and colonoscopies for their customers. The rest of us will be out of luck.

If the Court throws out only the mandate, the harm to all consumers will depend upon how many healthy opt to go without insurance. All insurance premiums would likely rise to some extent and coverage of pre-existing conditions and access to affordable insurance could be in jeopardy. The rest of the law could soldier on for a while. 

There is a question whether pre-existing conditions and insuring the uninsured will still be economically feasible because the mandate is their essential funding mechanism. In order for an insurance company to cover pre-existing conditions and to keep rates lower for all, they must spread the risk in a large pool that includes the sick and the healthy. The healthy paying into the pool offsets the cost of caring for the sick and if the healthy do not participate, the tab must be picked up by insurers of everyone, insured or uninsured now. States that have implemented insurance market reforms without an individual mandate – such as New York, New Jersey, and Washington – have seen premiums rise substantially. Private insurers claim so many healthy would opt out, that the only ones left in the pool will be the sick and those with pre-existing conditions and they will eventually go broke. Others think only 1 to 2 percent will free ride, but that loss still must be covered by someone.

Would Obamacare harm consumers? One myth is consumers would lose their ability to choose their doctors. Wrong. For those insured by Medicare, Medicaid, or employers, it will be no different than it is now. Those receiving subsidies to pay for insurance will have a choice of many private insurance plans. Death panels were debunked and defanged long ago and most small businesses are exempted from providing employees insurance.

What if the law is upheld by the Court, with or without the mandate approval? Gov. Romney and the GOP are pledged to repeal it, but they have no comparable plan B. Unless they give us details on a replacement plan ,including funding, they are simply blowing hot air.

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