Obamacare Stands, Now Focus Shifts to Costs

The Patient Protection and Affordable Care Act appears firmly in place as long as President Obama remains in office. But affordability remains the Achilles heel of the healthcare reform law, observers say.

Certainty is one of the most solid and sought after building blocks for any market.

Last week's Supreme Court decision upholding subsidies for health plans purchased on federally operated insurance exchanges provides a measure of certainty to the health insurance market. For the foreseeable future, the highest court in the land has signaled emphatically that it will not overturn the Patient Protection and Affordable Care Act. And for the next two years, President Obama is certain to protect and build out the PPACA, his signature domestic policy.

After last week's ruling, Theda Skocpol, a professor of government and sociology at Harvard University in Cambridge, MA, co-authored a New York Times opinion piece that cast the King v. Burwell decision as a PPACA turning point.

"The new framework being put in place by the Affordable Care Act is taking hold—this thing moved rapidly," Skocpol told me this week. "The court ruling makes it impossible to undo it."

The president has gained an edge in PPACA politics, she says. "There's going to be a lot of chest thumping from Republicans. House Republicans are going to hold more hearings. Barack Obama is not signing off on any of that."

SCOTUS Upholds Obamacare, Leaders React

For the second time since passage of the PPACA in 2010, Chief Justice John Roberts wrote the majority opinion in a case that could have disrupted or derailed the healthcare reform law. For the second time, the Supreme Court upheld a key element of the PPACA, and further existential challenges to the healthcare reform law in the highest court in the land appear unlikely.

Roberts, who is widely viewed as a conservative on the court and who wrote the minority opinion in last week's landmark decision legalizing gay marriage, has sent a pro-PPACA signal to the Republican Party, Skocpol says.

"Roberts is saying, 'Forget it guys, this is here.' He kept control of this case. He sided with the business wing of the Republican Party… The thing to remember about this law is it's a huge leap forward. Remember what was here before. People were losing their insurance policies when they got sick. Deductibles were increasing. All those things were going on and the system was under enormous stress. It's not a leap to 100% coverage, but it's a leap to 90% coverage."

She says Roberts began his ruling with a telling passage, linking the PPACA to its GOP-forged prototype in Massachusetts, under the guidance of former Republican Gov. Mitt Romney. "This is their own plan. This is Romneycare. That part of Roberts' decision was fascinating," Skocpol says.

The Affordability Gap Remains
Harold Bishop, a senior writer analyst at New York-based Wolters Kluwer Law and Business, says the ruling is a clear victory for President Obama, but it leaves Democrats dealing with their principal PPACA problem: making the healthcare reform law work. "[Presidential candidate] Hillary Clinton and the rest of the Dems must now defend the ACA: with its high premiums, deductibles, co-insurance, and co-pays; the loss of plans and providers that the enrollees encounter; and the unpopular individual and employer mandates."

Plugging the PPACA's affordability gap for the middle class must be a priority for proponents of the healthcare reform law, Bishop says.

"The middle class taxpayer, who currently has insurance either through his employer, other private coverage, or through an exchange, where he probably does not qualify for a subsidy, will not only have to continue paying for the millions of new Medicaid recipients but also for millions of subsidized exchange enrollees… For example, about a year ago, I accessed the Illinois exchange and checked out the cost of the BlueCross BlueShield PPO that I presently have through my employer and found that if I had to go through the exchange, my premium would double, mainly because my employer would no longer be contributing. My deductible would triple, from $500 to $1,500, my annual coinsurance maximum would increase from $1,500 to $3,500, and my office visit copays would go from $25 to $60 per visit. This could cost me an additional $6,000-plus per year. In addition, I might lose some doctors and hospitals from my network."

Affordability is the Achilles heel of the healthcare reform law, he says. "The data certainly seems to support the claim that the high cost of the ACA exchange health plans is a major problem with the law. According to the LA Times, a recent survey in California shows that 44% of ACA policy holders find it difficult paying their monthly premiums. In addition, a similar percentage of uninsured Californians say the high cost of coverage is the main reason they go without health insurance."

Hospital CEOs Weigh In on King v. Burwell Ruling

Katherine Hempstead, health insurance director at the Robert Wood Johnson Foundation in Princeton, NJ, says Medicaid expansion under the PPACA is now the last hot battlefront in the partisan struggle over the healthcare reform law. Medicaid expansion also presents an opportunity for health insurance carriers, she says.

"This ruling will really put the heat back on the Medicaid expansion discussions that are going on in a number of states, some of which had been sidelined due to concerns about King. This ruling will embolden advocates of 'alt-Medicaid' ideas that take a private-option approach, since these markets are now on a firmer footing. Since Medicaid enrollment has been very healthy in states that have expanded versus [exchange] enrollment, which has been a little light in some places, carriers that have Medicaid business are in a good position to grow."

She says the ruling in King v. Burwell is likely to reinforce a market strategy that could become one of the enduring legacies of the PPACA: consolidation. "The interest we have seen from national carriers in growing larger and entering more state markets will only be strengthened by this decision."