A coalition of Republican state officials fighting to topple Obamacare had a good day in court last week, when a panel of federal appellate judges appeared open to nixing the Affordable Care Act’s now-toothless requirement that most people buy health insurance, and potentially other provisions of the law that Americans have come to rely on.
But while health insurers and hospitals—whose businesses after 10 years of operating under the ACA would be profoundly impacted by its undoing—are keeping a close eye on developments in the lawsuit, there’s little they can do to prepare for an outcome impossible to predict.
“We are proceeding as if we are going to still be in business,” said John Baackes, CEO of L.A. Care Health Plan, which covers more than 600,000 Californians through Medicaid expansion and nearly 90,000 on the ACA exchange. “We are not letting the potential of a negative outcome influence our thinking, but we’re also trying not to bury our head in the sand.”
In particular, L.A. Care is looking for ways to become more efficient to save costs, such as by cutting out third parties from its contracts with providers. That will help the publicly operated plan weather any crises that arise, be it a recession or the ACA’s demise, which would undoubtedly slash the insurer’s revenue and lead it to downsize, Baackes said.
Dr. Michael Cropp, CEO of Buffalo, N.Y.-based insurer Independent Health, similarly said the uncertain future of the healthcare law should have insurers focusing on efforts to take waste out of the system and bring premiums down. Should Medicaid expansion be rolled back, states may end up scrambling to fill the gaps where federal funding once was, he added.
But beyond crossing their fingers that the ACA will stay in place, insurers and providers aren’t yet doing much contingency planning. That’s largely because they believe the challenge, known as Texas v. United States, will ultimately end up in the Supreme Court and they are optimistic the high court will once again uphold the law.
“This case is still so much in process with the possibility of such a long pathway, we’re not at a point where hospitals would take any action related to it,” said Chip Kahn, CEO of the Federation of American Hospitals, which represents investor-owned health systems.
Paul Keckley, a healthcare consultant who has discussed potential outcomes of the case at hospital and insurer board meetings, said he hasn’t sensed any panic from the industry. Healthcare companies are monitoring the case and developing scenarios that assume states will be the stopgap. They might also be deploying capital more conservatively, but “no one is paralyzed by what’s going on in that case,” he said.
Operating in a state of regulatory limbo is not something that insurers and hospitals like to do, but it’s a reality they’ve learned to live with after a Republican-controlled Congress and White House repeatedly tried to repeal the ACA or chip away at it through executive action over the past two years.
Moreover, healthcare companies have weathered previous legal challenges to the landmark healthcare law. Baackes described being even more worried about the future of the ACA back in 2012 when the Supreme Court first mulled a challenge to the law and upheld it, though the decision allowed states to opt out of Medicaid expansion.