The United States Supreme Court ruling moments ago upholding key provisions of federal health care reform means that the rest of the country will continue to move down a path that Massachusetts employers have already walked under the commonwealth’s own health reform law for six years.
That’s good news because the oft-maligned 2006 Bay State reform established a foundation for the market and political changes that now promise to control the soaring cost of health insurance for Massachusetts employers.
The high court ruled in a 5-4 decision that the portion of federal reform that requires everyone to purchase health insurance – the so-called individual mandate - is constitutional. The ruling leaves intact other portions of the law, including tax credits for small business to help them cover the cost of insurance for employees; no-copay preventive care; the ability of children to remain on their parent’s health insurance until age 26; and a prohibition against insurance companies denying coverage to people with pre-existing medical conditions.
The court ruled that the mandate violates the commerce clause of the Constution, but is permissable under the taxing power of Congress.
“Our precedent demonstrates that Congress had the power to impose the exaction in Section 5000A under the taxing power, and that Section 5000A need not be read to do more than impose a tax. This is sufficient to sustain it,” Chief Justice John Roberts wrote in his majority opinion.
Massachusetts now faces the task of reconciling the details of the 2006 state reform with the federal law. Some elements of that reconciliation will require legislative action.
The Supreme Court decision also upheld the federal reform law’s Medicaid expansion, though it noted it would be unconstitutional for the federal government to withhold Medicaid funds for non-compliance with the expansion provisions. Massachusetts expects the Medicaid expansion to provide hundreds of millions of dollars in federal dollars to extend coverage to people.
"Nothing in our opinion precludes Congress from offering funds under the ACA to expand the availability of health care, and requiring that states accepting such funds comply with the conditions on their use. What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding," Roberts writes.
The 2006 law is far from perfect. Providing health insurance to people did not, as experts predicted, significantly reduce usage of expensive hospital emergency rooms. Heavy government intervention was required to control small-group premiums. And even now, AIM is asking the legislature to change the fair-share formula so employees are not penalized for workers who obtain insurance on a spouse’s plan.
But the effort - forged from a sense of shared responsibility among employers, lawmakers, doctors, hospitals, consumers and insurance companies – clearly succeeded in reducing the share of Massachusetts residents without health insurance from 6 percent to 2 percent. It ultimately addressed one piece of the health puzzle – providing people access to care – so the commonwealth could begin to solve the more important piece – reducing the cost of health care and health insurance.
The Massachusetts health care market is moving aggressively to restructure itself in ways that will benefit engaged employers. Health providers, insurance companies and employers are working together to change the way consumers pay for medical care, introducing innovative products such as tiered and limited health plans that reward consumers for receiving high-quality care in reasonably priced settings, and implementing “global payments” that reward doctors for good outcomes instead of the number of procedures they order.
The results so far are encouraging. The average health insurance premium increase approved the state’s Division of Insurance in the small group market for July 2012 is 0.7 percent, down from 16.3 percent just two years ago. Two insurers, Fallon and Tufts, actually plan to lower rates. Overall, contracts negotiated by health insurers with providers in 2011 gave hospitals and doctors groups average fee increases of 2 to 3 percent, roughly half those given in 2010 and less than in any year since 2005.