Holding Your Breath

Here’s why you don’t need to be holding your breath while awaiting the announcement of the Supreme Court’s decision on the Affordable Care Act.

Its immediate impact on you may be a whole lot less than you think.

And here’s why you should be holding your breath.

How the Court rules could ultimately determine whether private health insurance or public health insurance is the way we finance health care in the future.

The reason is this.  ACA expanded both the role of private insurance and public insurance in providing healthcare coverage in the future.  It added a projected 13 million people to the private insurance rolls and 17 million to Medicaid. 

The 13 million were added to private insurance primarily through a mandate that individuals who can afford it buy insurance.  The 17 million were added to Medicaid through a mandate that the states expand the Medicaid-eligible population.

The Supreme Court was asked to rule on the constitutionality of both mandates at the same time. 

If it chooses one over the other – by finding one expansion constitutional and the other unconstitutional – it may well determine just how health financing unfolds for decades to come.

Here are a few things to keep in mind as you listen to the result.

• Despite all the rhetoric, ACA will have little long term effect on overall health spending.  The cost of health care services is projected to rise by an average of 5.7% per year over the next ten years, from $2.6 trillion to $4.5 trillion.  The amount that the entire Affordable Care Act will contribute to this increase is not 100%, or even 50%.  It is around 5% – or an average of three-tenths of 1% per year.

• The share of the nation’s health care bill that private insurance will pay in 2011 is 34 percent, much of which is either paid or subsidized by government.  If all the provisions of the Affordable Care Act – including the individual mandate – remain in place through 2021, then private insurance will pay 33% of the bill, one percent less than it pays today.

One reason – the individual mandate, at the crux of the rest of the legal challenge to ACA, will affect fewer than one in 50 Americans.

• States have claimed that the Medicaid expansion is the real budget back-breaker of the Affordable Care Act.  But a majority of the new Medicaid costs that states attribute to the Affordable Care Act are actually the costs of enrolling currently eligible people.  The Medicaid bill is going up either way; the only question is how big a share of new costs the federal government will pay.

The ACA decision may well be a momentous one politically, but I’m not really convinced about this. 

The only truly “politically framed” issue in the whole debate has been about the fairness of the individual mandate.  Presidential candidates Obama and Romney both opposed it, while public officials President Obama and Governor Romney both supported it.  Maybe one of them will get a lasting boost from the decision about its constitutionality; maybe not.

What will matter more for public policy in the near term is this:  whether either of the provisions, if ruled unconstitutional, is found to be severable from other parts of the law.  That’s because many other parts of the law, such as the consumer protections and the Medicare expansions, are popular and affect most of the voting public.

But neither of these things will matter most in the long term.  What will matter down the road is what we learn from the ruling about the fundamental health financing policy choice of at least the last fifty years – public or private?    

I’ll be looking at this question and more in a series of five OHPM columns that will be published over the next few days. 

The first column will be out tomorrow, shortly after the decision is announced. 

The second, on Friday, will be entitled What the ACA Decision Means for You.

The third, on Saturday, will discuss the implications of the ACA decision for the future of private health insurance.

The fourth, next Monday, will discuss the implications of the ACA decision for the future of Medicare and Medicaid.

The fifth, next Tuesday, will take a look at the post-ACA world for health, public health, and mental health policy.

Of course, if the Court delays its announcement at the last minute, then the columns' publication will be postponed as well. 

In the meantime, let’s just take a deep breath and see what the Court has decided.

If you have questions about this column, please contact gionfriddopaul@gmail.com.  Paul  Gionfriddo will be presenting on the implications of the Supreme Court's ACA decision on Friday, June 29, at noon, at the Mental Health Association of Palm Beach County.  For more information, click here.