Implications of the Supreme Court Ruling on Healthcare Reform Legislation

The following statement is provided to Governance Institute members on behalf of The Governance Institute and National Research Corporation.

June 28, 2012 - Today the Supreme Court released its ruling on the constitutionality of one of the nation's most essential pieces of legislation in our history—expansive policy that is a first step in redesigning our very complex healthcare system into one that provides quality, cost-effective care to most U.S. citizens, while attempting to rein in the escalating costs of delivering that care.

The court ruled to uphold the Affordable Care Act (ACA), including the individual mandate. (The provision concerning the federal government's ability to take away existing Medicare funding if states choose to opt out of the Medicaid expansion was ruled as unconstitutional; the entire ruling will be available at www.supremecourt.gov and more information can also be found at www.scotusblog.com). This decision has removed any remaining barriers to full implementation of the act (provided Congress does not take further action to repeal the legislation or revoke funding for it). The mandate was an important part of legislation that was intricately linked with other provisions regulating the private insurance market. With the mandate intact, insurance coverage will be expanded to an estimated 30 million Americans through Medicare, Medicaid, state insurance exchanges, and private insurers. This increase in coverage will have unprecedented impact on the functionality of the current payer system.

On the provider side, the ACA's programs affecting care delivery (value-based purchasing, bundled payments, ACOs, etc.) will continue to be implemented. So the transition to value-based care is here to stay. More importantly, this transition is already happening on its own due to market forces and the unsustainability of the current healthcare business model. Hospitals and health systems across the country are already integrating with physicians to prepare for value-based payments, whether from Medicare/Medicaid or private insurers. Provider organizations are partnering with private insurers to create their own ACO-type arrangements. The forces driving this transition are strong and will continue, regardless of federal legislation.

The ACA has sparked a vigorous and necessary social discussion in our country. Many of the answers are yet to be worked out, but meanwhile some meaningful changes are already underway. There is still much work to be done, but today the Supreme Court made the decision to uphold this important piece of legislation. Healthcare leaders can now move on with more certainty and continue to collaborate with providers and payers to find better, more cost-effective ways to deliver the right care at the right time to all patients.

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