Media Coverage
June 21, 2011
-Health Care Reform: The Debate Continues
By Kevin Woodhouse - Partner Ice Miller Health Care Practice Group
In the 2011 Indiana CEO Survey, corporate executives and other key decisionmakers expressed concerns about health insurance expenses and uncertainty regarding whether President Obama's healthcare reform law, the Patient Protection and Accountable Care Act (ACA), will lead to increased costs. Some executives thought health care reform would lower costs over the next two years, but most were uncertain or felt the ACA would increase costs. This impression is not surprising given the confusion surrounding the status of the ACA and what the future will bring.
Even many vocal opponents of the ACA would agree that it was an impressive legislative achievement for the Obama administration; however, the fight over health care reform did not end with the ACA's passage. In fact, within minutes of President Obama signing the legislation, Attorney Generals from 20 states filed an action in the Federal District Court in the Northern District of Florida challenging the constitutionality of the Act. Six other states later joined this litigation. Many other lawsuits were subsequently filed by various parties. This litigation has focused primarily on whether the individual mandate, which beginning in 2014 requires Americans (with certain limited exceptions) to purchase approved health insurance or pay a monetary penalty, exceeded the authority of Congress under the commerce clause of the United States Constitution. Some lower courts have found the individual mandate to be unconstitutional, and others have found it constitutional. On January 31, 2011, the federal judge from the Northern District of Florida issued his decision and ruled that the individual mandate is unconstitutional, and since it is so inextricably bound to the ACA and could not be severed, the entire Act is unconstitutional. This case and other cases are now being appealed to the applicable federal appeals courts. In addition to these court battles, there have also been several efforts in Congress to repeal various aspects of the Act, most of which have been defeated in the Democratic controlled United States Senate.
While challenges to the Act have continued on various fronts, many parts of the ACA have already become effective. Employers have had to review their benefit plans and determine what changes had to be made to comply with those sections of the law that went into effect for many employers and their group health plans in 2010, such as the elimination of pre existing conditions for enrollees younger than 19, elimination of certain lifetime and annual dollar limits, coverage of children up to 26, preventative care benefits for non grandfathered plans with no cost sharing, and other record keeping and reporting requirements. These changes may contribute to increased premiums for many group health plans upon renewal thus leading to some of the concerns among corporate executives regarding increased health insurance costs in the future. In fact, based on an analysis from Hewitt Associates reported in September, 2010, Hewitt projected an 8.8 percent average premium increase for employers in 2011, compared to 6.9 percent in 2010 and 6 percent in 2009. Hewitt estimated that the changes required under the ACA contributed approximately 1 to 2 percent of the 8.8 percent projected increase for 2011. Some CEOs reported in the CEO Survey that their companies are switching to health savings accounts with high deductible plans or taking other actions in an effort to counter these increased expenses.
The United States Supreme Court will ultimately need to determine whether the ACA's individual mandate is constitutional and, if not, whether it causes the entire Act to be unconstitutional. This decision will likely be issued some time in 2012. In the meantime, there will continue to be uncertainty regarding health care reform and its impact on Indiana businesses.
Please contact Kevin Woodhouse at (317) 236-2154 or Kevin.Woodhouse@icemiller.com or any other member of the health care practice group if you have any questions.
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.
