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.
The law has several provisions that affect small businesses. It requires that any business with at least 50 workers provide insurance that is deemed affordable by the law, or pay a penalty.
Businesses with up to 25 employees also qualify for a tax credit of up to 35 percent. Starting in 2014, that credit goes up to 50 percent.
Some small-business owners were optimistic that the law would produce its promised effect of lowering the cost of insurance.
“Everybody was cheering [the Supreme Court ruling],” said Regina Wheeler, chief executive of Positive Energy, a solar installation company in New Mexico with 50 employees.
Wheeler said the company started offering health insurance to employees last year but quickly discovered that the costs were eating away 15 percent of profits. With the premium for a family each month costing $1,100, Wheeler’s company began offering a $200 monthly stipend toward the expense. But 20 of her employees still could not afford insurance.
“We really feel like the Affordable Care Act is absolutely critical to bring the cost of care down and make it accessible,” Wheeler said.
But several large business groups, including the U.S. Chamber of Commerce and the Business Roundtable, cautioned that the law would not meet expectations of lowering costs. This week, the chamber’s Tom Donohue called the health-care law “fundamentally flawed” and said its current form would “cost many Americans their employer-based health insurance, undermine job creation and raise health-care costs for all.”
There is also a looming question about who will treat all the newly insured individuals: The Association of American Medical Colleges estimates that the country will have 91,500 fewer doctors than needed by 2025. The Affordable Care Act does have some provisions to increase the health-care workforce — it has spent $167 million on training new primary-care doctors — but it will still be years until those doctors are actually in practice.
“It takes seven to 10 years to train a doctor,” said Ardis Hoven, president-elect of the American Medical Association. “This isn’t a problem you fix overnight.”