The highly anticipated U.S. Supreme Court decision on the legality of President Barack Obama’s Affordable Care Act will ripple through different areas of U.S. Healthcare, with different outcomes tied to each possibility.
The Supremes will this month unveil their decision on theconstitutionality of the healthcare reform law’s individual insurance mandate, which would require nearly all U.S. citizens to carry health insurance. Should they strike down the measure, they will further decide whether the rest of the health law can survive on its own.
There are 3 likely outcomes of the Supreme Court’s ongoing deliberations, each with a stream of possible effects on the U.S. healthcare system:
- The court could uphold the individual insurance mandate (and thus the entire law);
- The court could strike down the individual insurance mandate and nullify the entire law;
- The court could strike down the individual insurance mandate but uphold the remainder of the law.
Should the high court find the individual insurance mandate constitutional, for-profit hospitals would benefit from a lower debt risk among patients, according to Moody’s Investors Service. The decision would also carry with it validation of the 2.3% tax set to hit medical device makers in January 2013; pharmaceutical companies would incur similar costs associated with funding reform.
If the law is upheld, the U.S. will still have to contend with the high cost of healthcare, the New York Times reported. Republican-led states that have been largely resistant to healthcare reform may be unprepared to comply with many of its requirements, according to the newspaper.
If the court strikes down the entire law, medical device and pharmaceutical companies would find relief in the short-term, but for-profit hospitals would see continued increases in bad debt charges from patients without insurance, and the outcome would be negative for all 3 segments as they face continued uncertainty over government cost control, Moody’s predicted.
UnitedHealth, the nation’s largest insurerer, said ti will keep providing some of the services created under the Affordable Care Act, such as coverage for dependents up to the age of 26 under their parents’ health insurance and preventative care services without a co-pay, even if the law is struck down, Reuters reported. Republican lawmakers may even reinstate young adult dependent coverage, widely regarded as one of the most popular components of reform, according to the news service.
Perhaps the worst outcome, and regarded by some as the most likely, could be the stripping of the individual insurance mandate while deeming the rest of the healthcare reform law constitutional, which will have negative impacts on medical device makers, pharmaceutical companies and for-profit hospitals.
"If the court strikes down the individual mandate but leaves most of the law standing, the effect will be credit negative for all 3 industry segments," according to Moody’s.
Device makers would be on the line for the 2.3% excise tax on all U.S. sales while facing pricing pressure from hospitals; pharmaceutical companies would pay their share of taxes while selling fewer drugs; and neither group would benefit from an expanded population of insured patients that would have been created under the individual insurance mandate, Moody’s said. And hospitals would once again face increased bad-debt risks from the ever-increasing population of patients without insurance.
That decision could also expand the class of patients who wait until they are sick to purchase health insurance on the state exchanges created by the reform law, which would result in an increase in premiums, according to the Times.
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