As Supreme Court weighs health care reform, contractors await their fate

The Public Consulting Group likens its work in implementing states’ health insurance exchanges to helping a city set up a farmer’s market for the first time: Local officials may want to provide urban dwellers with access to fresh produce, but they may not know how to organize such a venue.

Similarly, PCG is helping states determine what types of plans health insurance companies should offer and how best to merge consumers with plan providers in an open marketplace.

Or, with produce standing in for health insurance plans: “We’re helping the city tell farmers which fruits and vegetables to bring and figuring out the infrastructure they have to establish for their farmer’s market,” said Paul Buckley, the D.C. firm’s director of government affairs.

However, they may be planning a farmer’s market that never actually takes place.

Government contractors like PCG are involved in every aspect of setting up the new health insurance exchanges — the “marketplaces” for health plans that the Affordable Care Act established.

But depending on the outcome of March’s Supreme Court case, which will be revealed in June, the exchanges — along with the rest of the law— may be scrapped, leaving some health insurance contractors uncertain about the end result of their labor.

“I don’t know if the federal government will take back their grants, but many of the health exchanges likely will stop,” said Michele Kang, chief of the McLean-based Cognosante, where roughly half of all current contracts are related to a combination of the health care reform bill and the health care portions of the American Recovery and Reinvestment Act. “Our growth would continue, but we probably wouldn’t grow as fast as we hoped.”

Size of the pot

The federal government has already begun providing states with grants in order to set up the exchanges and other parts of the health care reform law, such as determining which state residents will be eligible for the income-based subsidies for purchasing health insurance.

“There’s a lot of contractor work to get the exchanges to work well,” said Mark Duggan, who worked on the Affordable Care Act as a senior economist on the President’s Council of Economic Advisors. “Each state wants to set things up so that residents can easily choose between various plans and to make that experience a very good one.”

Roughly 75 contracts have been awarded in connection with various parts of the Affordable Care Act, and between 40 and 45 of those are related to setting up the state-based exchanges, according to the enterprise software and information company Deltek. (Deltek is a content partner with On Small Business’s parent publication, Capital Business.) Overall, more than $700 million in contracting work is wrapped up in the implementation of the ACA.

How much of that work gets called off depends on which of three courses of action the Supreme Court takes. First, the Court could choose to uphold the law, and the ACA would remain in effect. Second, it could strike down the individual mandate portion of the law — the hotly contested provision that all Americans obtain health insurance or face fines — while keeping the rest of the law in place . Finally, it could overturn the entire law, thus potentially dismantling the exchanges along with it.