June 28, 2012 -- The health care reform law will remain the law of the land -- at least for now.
In a 5-4 vote, the Supreme Court upheld the Patient Protection and Affordable Care Act (ACA) as constitutional. Chief Justice John Roberts voted in the majority.
The controversial law, which fulfills a promise to expand health care to a majority of Americans, has been President Obama's signature legislation in office.
"Today's decision was a victory for people all across this country whose lives will be more secure," Obama said at a briefing shortly after the ruling.
The decision, however, does not mean an end to efforts to overturn or weaken the law, as opponents vowed to keep working on its repeal.
The court ruled that the centerpiece of the law, the individual mandate, could be upheld under the federal government's taxing authority. In other words, the government can't force people to buy health insurance, but it can give them a tax penalty if they don't.
The court has also limited the part of the act that would have expanded the coverage to uninsured Americans through Medicaid.
WebMD talked with health care experts about how the landmark decision will impact health care consumers.
Does the Supreme Court's ruling mean the debate over health care reform is over?
No. House Speaker John Boehner (R-Ohio) said the House would vote to fully repeal the law on July 11. Regardless of the outcome of that vote, though, it would be highly unlikely that the repeal would get through the Senate. In a speech soon after the ruling, Senate Minority Leader Mitch McConnell called for a repeal of the entire law. Presumptive Republican presidential nominee Mitt Romney has said he will repeal the law if elected.
What are some changes that have already taken place because of the law?
About 3.1 million young adults gained health insurance through a provision that allows them to stay on their parents' policies until age 26. In addition, nearly 62,000 Americans with pre-existing health conditions, who would otherwise be uninsurable, gained coverage through the government's Pre-Existing Condition Insurance Plans (PCIPs). Those enrolled will be able to stay in the program until it expires in 2014. At that time, they'll be eligible to buy health insurance through state-based insurance marketplaces scheduled to be up and running by fall 2013.
Other consumer protections already in effect include:
- The right to appeal an insurer's decision
- Preventive care with no co-pay
- Guaranteed insurance coverage for children under the age of 19 with pre-existing conditions
- Drug discounts for people on Medicare
- No more lifetime limits on health insurance spending
- Review of suspected unreasonable insurance rate increases
- The requirement that insurance companies spend at least 80% of the money they collect on medical expenses (this 80/20 rule so far means 12.8 million Americans will participate in $1.1 billion in rebates from insurance companies this summer, according to the HHS)
What will happen in 2014, when the so-called "individual mandate" takes effect?
Almost all individuals will be required to buy insurance beginning in 2014. Those who have insurance will be able to keep it. Those who don't have insurance through an employer can buy it through the state-based health insurance markets.
What will happen to those who don't buy insurance?
People without insurance will face tax penalties that will be phased in and increased over several years, starting with the 2014 tax filing. The penalty for the 2014 tax year will be $95 or 1% of taxable income (whichever is greater).
What if I can't afford insurance?
Tax credits will be available for people with incomes that are between 133% and 400% of the poverty level (up to $92,200 annually for a family of four in 2012).The law will also expand the number of people who qualify for Medicaid, the state and federal health insurance program for people with low incomes. An individual that makes less than $14,856 or a family of four that earns less than $30,657 will be eligible.
It's not clear yet whether these funds will be available to everyone, however. The court's ruling allows the states to decide whether they want to accept additional federal money to help cover these costs.
How many additional people are expected to get insurance?
About 32 million Americans were expected to gain health insurance under the law, starting in 2014 when it takes full effect. They would do so as a result of the law putting an end to discrimination against people with pre-existing health conditions, and in some cases by qualifying either for Medicaid or for financial assistance from the federal government to buy coverage in the new health exchanges.
The ruling from the court has possibly limited the Medicaid expansion by taking away a penalty for states that don't want to accept the extra funds, so the ultimate number of people who will gain insurance may not meet the initial estimate of 32 million.
What will the states do? Are many of them likely to refuse the money to expand Medicaid coverage?
The answer to this question won't be immediately known.
Marc K. Siegel, MD, a clinical associate professor of medicine at NYU Langone Medical Center in New York, says many states are already struggling to pay for Medicaid costs.
"I think states will turn it down. I don’t know how many out of the 26, but I think they will," Siegel says. "California is in a lot of trouble right now. Florida is in trouble. New York is in some trouble. In New York, it's a billion dollars or more to administer the Medicaid expansion. So a key problem here is not in terms of Medicaid, which the feds are picking up the cost of for the most part, but the administration of the additional Medicaid patients."
Robert Laszewski, president of Health Policy and Strategy Associates in Alexandria, Va., says the Medicaid ruling is "a really, really important decision because you've got a lot of conservative governors saying you can't force us to expand Medicaid this way, we can't afford it."
"The political consequences of that are to say to these conservatives, 'Put up or shut up.' If you don’t want to expand Medicaid in your states, you don't have to. Take the political consequences for that. I think that is a really huge thing to be saying to these conservatives who don't want anything to do with the ACA. 'Put up or shut up.' This is a big deal. You don't want the money, you don't have to have the money, but then you go face your constituents and tell them why you didn't expand Medicaid like the other states," Laszewski says.
Will costs go up?
The answer is yes, they might.
Karen Ignagni, president and CEO of America's Health Insurance Plans, says that parts of the law "will have the unintended consequences of raising costs and disrupting coverage unless they are addressed."
An analysis from the group found that premiums may increase on average by 1.9% to 2.3% in 2014 and by 2023 from 2.8% to 3.7%.
But written into the law are a number of things intended to lower medical costs over time, which would potentially lower costs for consumers.
In the near term, people who qualify for subsidies from the federal government to help pay for insurance may see their premiums go down. Exactly how this will affect premiums in the long-term, however, remains to be seen.
How is the Medicaid expansion supposed to work?
Medicaid is a program jointly funded by state and federal governments. The program is voluntary for states, but they all currently participate. Although states have some flexibility in how they operate their program, they are still required to follow certain rules in exchange for the money they receive from the federal government.
The health reform law was intended to expand coverage via Medicaid to an additional 16 million people who were never before eligible for the program, such as childless men with low incomes. The $931 billion expansion will be paid for in full by the federal government between 2014 (when this provision takes effect) and 2016. After that, federal funds will gradually be reduced to 90% by the year 2020. That will ultimately leave states to pick up 10% of the expansion's cost if they choose to opt in. However, the ruling today permits the state to refuse these funds, which could leave millions of people uncovered.
What about drug discounts for people on Medicare?
The law has gradually phased in discounts on prescription drugs for seniors who reach the Medicare drug benefit gap known as the "doughnut hole." According to the Centers for Medicare & Medicaid Services, more than 5.25 million seniors enrolled in part D drug plans have saved $3.7 billion between March 2010 and December 2011. Discounts on prescription drugs are scheduled to gradually increase until the doughnut hole is completely closed by 2020.
What about Medicare in general? Will it be cut?
The health reform law does reduce Medicare spending by about a projected $428 billion over 10 years, mostly with reimbursement cuts to private insurers and health providers, and overpayments to private Medicare Advantage plans.
This does not affect any benefits in Medicare part A or B plans, says Judith Stein, JD, executive director of the Center for Medicare Advocacy. She says the law means "good news for the Medicare program, as well as for Medicare beneficiaries."
The law means new, no-cost-sharing preventive services, new annual wellness visits with primary-care providers, and expansion of the Medicare trust fund by approximately 10 years. (The Congressional Budget Office says nine years.)
But former Medicare and Medicaid Director Gail Wilensky says whatever the immediate effects of the Affordable Care Act are in terms of controlling medical costs, it's failed to find a solution for Medicare.
"The whole Affordable Care Act punted on Medicare. ... We have not yet resolved how we're going to make Medicare fiscally viable in the long term."
Where did the fear of "death panels" arise?
The argument that end-of-life counseling services might ultimately become "death panels" was an effective scare tactic during the health care reform debate, according to medical ethicist Art Caplan, PhD, director of the Division of Medical Ethics in the Department of Population Health at NYU Langone Medical Center.
"The [counseling] provision was dropped from the bill, but the impact lingered and became a code word for, 'Obama is proposing a rationing of health care,'" says Caplan.
"Death panels may have killed that reimbursement idea, but they never died," he says.
What does this ruling mean for small businesses?
So far, an estimated 4.4 million small businesses that provide employee health insurance are eligible for a 35% tax credit to offset the cost of insurance premiums (as of mid-May 2011, only about 228,000 small business owners claimed the credit).
To qualify, a business must employ fewer than 25 employees and the average company salary must be less than $50,000. Businesses must also pay at least half of workers' health insurance costs.
These tax credits will remain in effect, and will increase to 50% starting in 2014.
Companies with more than 50 employees will be required to provide workers' insurance or pay a fine.
Many critics of the Affordable Care Act say that the requirement that most employers provide insurance coverage will hurt small businesses. However, Princeton health care economist Uwe Reinhardt says the Supreme Court decision will have the opposite effect.
"Some small businesses will probably dump their employees into the [state insurance exchanges] and we economists have always argued that they should. It is highly inefficient for small business firms … to go shop around for health insurance paying broker commissions of 10% if they can have access to the same insurance exchanges that General Motors operates," he says.
"This is very helpful for entrepreneurship, because it allows young entrepreneurs to start a business without worrying about an employee getting sick. I think this is a boon for small business."
Brenda Goodman, Jeff Levine, and Sonam Vashi contributed to the reporting of this story.