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Supreme Court Can't Stop Healthcare Reform

 |  By Philip Betbeze  
   March 30, 2012

Whatever the court ultimately decides will only minimally alter the business of healthcare right now. Reform has been coming organically because payers can't—or won't—suffer double-digit premium increases any longer.

If you want to bash healthcare these days, get in line.

For years, many influential people have rightly decried the high variability in healthcare.

They've also critiqued the high cost of healthcare as unsustainable. They're right. You won't get much argument from anyone that healthcare costs are a huge drain on our nation's productivity.

Some of those costs, unquestionably, come from adverse selection—that is, people don't try to obtain health insurance until they get sick—and by then, they usually can't get it. Yet in most cases, they aren't left to die; they get treatment.

Maybe their care isn't as good as care delivered under so-called “Cadillac health plans,” but you can be sure the bills will be astronomical. And often, such patients are in no position to pay those bills.

But the rest of us are, through higher deductibles, co-pays, insurance rates, and government debt. Of course, the calculus on this issue is far more complex than this  example, but the end result is the same—healthcare costs rising much faster than the rate of inflation, ad infinitum.

For its part, the Supreme Court has been taking its hacks this week, too, via the hearing of oral arguments on the Patient Protection and Affordable Care Act. The future of cost control and healthcare access, whether you like it the way it is now or whether you hope for something better, seems to hinge on the decision of nine men and women in black robes.

In fact, although I won't get into the too much into the legal reasoning, the Court's decision, when we finally have it in June or July, will rest upon that hypothetical patient I just described. Is he a participant in the market by simply requiring healthcare? Or is it possible for him to freely choose not to be a participant in the market because he doesn't require healthcare “right now.”

Whether the so-called individual mandate violates the Constitution rests on the answer to that question, which is ultimately subjective.

Many handicappers say that based on the questions asked by the justices identified as possible “swing votes,” that answer will more than likely be yes, our  patient can choose not to be a participant in the market, and thus the individual mandate is illegal.

The court may also rule on other issues within the act, it they will certainly decide on the individual mandate. Many on both sides of the political aisle believe that a determination that the individual mandate is unconstitutional would spell the death of the Act entirely.

But regardless of the outcome, does the Supreme Court's decision really alter the calculus that's changing the business of healthcare right now?

Not by very much.

Yes, it looks like lawmakers will go back to the drawing board on some or all of the Act, but much of the pressure for reform has been coming organically, in fits and starts in some regions, in leaps and bounds in others, through commercial contracting relationships with both health plans and directly with employers.

Unlike three years ago, when this legislation was being debated, hospitals, health plans, physician practices and other affiliated healthcare providers have already begun building the structures that will deliver more value for the payer. If you're an executive leader, and you're counting on the Supreme Court to return you to the good old days, you're counting on hope instead of innovation, and there's not much future in hope when the business model is changing underneath you.

I think most hospital executive leaders are keeping their head down on this. I don't mean to minimize the impact of this decision. Yes, they're following the decision, because it could cause a crisis in healthcare. Many variables will be thrown back into the mix if the law is gutted, but the new goal will not change.

Whoever is paying for healthcare is tired, and in many cases unable, to subsidize the old status quo of volume being the key success factor for healthcare businesses. They can't, or won't, suffer double-digit premium increases anymore and they won't write blank checks to “do stuff” to the patients they cover.

Instead, many healthcare executives know that they have to figure out how to work with their partners to absorb some of that risk. This would have sounded absolutely insane around the time PPACA was first being debated, but those partners now include the employer, the patient, the health plan, the physician, and many others in allied care. All will share risk. The multiple pilot programs going on across the country with almost every payer is evidence of that.

The problems a rejection of the legislation will cause will be severe, but it won't change the work you need to be doing.

In fact, it will make delivering on value even more important.

See Also:
Regardless of Court Ruling, Reform Under Way

ACA's Fate Rests with Court

 

Philip Betbeze is the senior leadership editor at HealthLeaders.

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