The US Supreme Court upheld the Affordable Care Act in a 6-3 vote on King v. Burwell last month, letting federal health insurance subsidies stand. This decision provides for an estimated 6.4 million Americans who had been receiving subsidies and who might have lost coverage otherwise. Partisan politics aside, the ruling continues the ACA’s impact on the nation’s health care industry, which is having to adjust to a new competitive landscape.
Industry Players Are Pleased
Many hospitals and health care providers are generally ecstatic over the ruling, as they are freed from having to spend millions covering patients who would’ve lost coverage. Such industry groups as the American Medical Association, the American Academy of Pediatrics, and the American Psychological Association responded favorably, lauding the efforts to reform the nation’s health care infrastructure and make health care more accessible. For example, AMA president Steven Stack wrote that the decision supports physicians’ chief goal of helping patients stay healthy and lets doctors move forward on reform.
Through “pay-for-performance,” an important (if controversial) part of reform efforts, medical providers are increasingly being paid based on the quality of care rather than the quantity of services provided. The method seeks to measure such factors as patient engagement, patient satisfaction, care coordination, and health outcomes, theoretically improving care over time. However, finding a successful model for pay-for-performance has been a challenge for more than a decade now.
Partnerships and Consolidation
Meanwhile, some insurance carriers, no longer able to refuse coverage to customers with pre-existing conditions, are striking deals with smaller networks of care providers in order to lower premiums. They are having to switch their former MO of seeking the healthiest, most inexpensive customers to the new normal of attracting more customers, period.
The health insurance industry is actually looking to consolidate in a major way, as a number of megamergers have been proposed. On July 3rd Aetna agreed to acquire Humana in a $37 billion deal. The top five insurers (UnitedHealth, Anthem, Aetna, Humana, and Cigna) could become three if these combinations take place. (For more on these deals, see my colleague Anne Law’s recent post “Top Five Health Insurers Spin Complex Web of Merger Negotiations.”) The ACA is partly driving these efforts, bringing in new opportunities as the business of selling policies via big employers has slowed down. However, fewer insurance providers means reduced competition, resulting in possible higher prices for consumers.
With the Supreme Court ruling, the ACA looks to be safely secured as a vital part of the nation’s health care reform efforts. The ruling allows (or forces) insurers and care providers to continue operating under the system’s new laws, and millions of citizens can continue to receive coverage. The federal government is freed up to put pressure on some 20 states that have been reluctant to expand Medicare coverage. However, some opponents remain determined to repeal the law. Time will tell if their opposition holds any weight.
Diane Ramirez has been a member of the D&B editorial department for more than a decade. She currently covers the health care and insurance industries for Hoover’s.