The fortunes of the insurance industry also rest, in part, on whether states participate in the health reform law’s Medicaid expansion, which the Supreme Court ruled was a choice rather than a requirement. There, analysts say as much as $46.3 billion in new revenue could be at stake.
Hospitals face some relief but also new pressures. Expanding health insurance to about 30 million more Americans will mean hospitals won’t have to shoulder as much cost caring for uninsured individuals. But all those added patients will need thousands more physicians than are working now.
“I don’t think we really know yet how the health insurance system will work out,” said Toby Cosgrove, chief executive of the Cleveland Clinic in Ohio. “We don’t know how many people will sign up or if states will set up insurance exchanges. All those things are yet to be determined.”
Cosgrove said that the ruling makes “planning easier,” but it doesn’t resolve one huge issue: the steep growth of health-care costs. Health spending is expected to grow 0.9 percent faster than the rest of the economy in the next decade, hitting $4.8 trillion in 2021, according to projections released last month by the Centers for Medicare and Medicaid Services.
The Affordable Care Act does take some steps toward driving health spending down
— for example, it will stop reimbursing hospitals for preventable readmissions, creating a financial incentive for doctors to get treatment right the first time.
Cosgrove, however, questions whether that will be enough to push back against two trends driving up health care: a growing elderly population, with high health-care needs, and a recovering economy that will probably increase Americans’ willingness to spend on medical bills.
Health insurers, meanwhile, face a new problem: States have the option of not participating in the health overhaul’s Medicaid expansion, which was expected to cover 17 million Americans.
Health insurers have increasingly begun to run state Medicaid programs, bringing their expertise from managing private benefit plans into the public sector. The Supreme Court decision has the potential to tamp down on that quickly expanding book of business.
Employers also face decisions about what kind of medical coverage they want to offer their workers, who may have more options as states set up “exchanges” where individuals can buy insurance at more competitive prices.
Some firms may decide to stop offering insurance if they think the costs remain too high; they now have the choice of paying a penalty instead. Others may choose to expand their coverage if they see the cost of insurance go down.