Next week the high court will hear arguments on the constitutionality of the Affordable Care Act passed two years ago. Ultimately, the justices could overturn all or parts of the law. The Republican presidential contenders have vowed to repeal the law if they win the White House.
Yet, as "death to Obamacare" gets the headlines and the fate of the nation's uninsured and most vulnerable hangs in the balance, the controversial law has already transformed the health care industry -- and left most health care companies more profitable to boot. Health insurance companies, hospitals and the rest of the health care system already have made deep changes to the way they operate: adding new consumer protections to health plans, altering the way medical providers get paid and beginning to work closer together to improve health and save money. Experts say the push by President Barack Obama's health care reform has created an unstoppable momentum.
While the court could very well kill the Act's most ambitious piece --Obama's aim to insure the roughly 30 million Americans who have no health insurance -- but they wouldn't undo health care reform's other goals: modernizing the health care system and extracting more value from the U.S. health care dollar.
The private-sector health care system has to rein in escalating costs that are making health care too expensive for more and more people. "Those were trends that were well underway in the private sector in the first place. So you take the federal encouragement away, maybe you slow it down a little bit, maybe take some money away, but it’s going on anyway,” said Robert Laszewski, the president of Health Policy and Strategy Associates, a consulting firm that works with insurance companies.
The insurance industry also isn't likely to take away new benefits the law mandated, Laszewski said. Workers can now keep their children on company health plans until they turn 26, and everyone with insurance can access preventive medical services without making co-payments. Health plans can no longer impose lifetime limits on insurance benefits, deny coverage to children with pre-existing conditions, or kick sick people off plans through "recissions" of benefits.
"These things have already been priced into standard products. Unrolling them would almost be more trouble than it’s worth, ” Laszewski said. "You are going to get some bad behavior returning to the market that is now illegal but I don’t think it’s going to be the general thrust of the market.”
It doesn't hurt that insurance companies having been doing very well since health care reform. Profit margins and stock prices for six big, publicly traded insurers rose from March 2010, when Obama enacted the law, through December 2011, according to a study from Bloomberg Government.
Still, warned Ethan Rome, the executive director of the advocacy group Health Care for America, there are reasons why the rules were created. "They can’t be trusted to behave as good actors unless they’re prevented by law from being bad actors," he said.
In addition to implementing the new rules, health insurance companies and medical providers are undergoing makeovers. The aim is to move away from an inefficient system that simply pays set fees for each procedure and toward one that links payments for care to patients' health. The reform law includes provisions meant to encourage this, such as new rules for Medicare, but the private sector isn't dependent on them.
These approaches are supposed tamp down costs and make people healthier, but there are pitfalls. Hospitals and insurance companies with bigger market shares could raise prices or limit access to costly services. The health care reform law still nudges the private sector in these directions because the need to contain costs is so great.
“Regardless of what happens with the Supreme Court case or with the reform law, we’re marching full-steam ahead,” said Mark Slitt, a spokesman for the insurance company Cigna. Cigna is banking on "accountable care organizations," arrangements that link insurers, doctors, and hospitals. They become jointly responsible for managing patients' treatments -- and share any savings from improvements in health or greater efficiency. Cigna aims to have 100 such organizations in place by 2014, no matter what happens to the health care reform law, Slitt said.
Two of the nation's biggest health insurers, WellPoint and Aetna, are boosting payments to primary-care doctors to drive down costs. Encouraging physicians to work harder on helping patients and managing patients' chronic medical conditionssaves money by keeping people healthy.
Other insurance companies are going even further. Pennsylvania nonprofit insurer Highmark is spending $500 million to rebuild itself into a full-service operation that directly provides medical care to its members at medical clinics it owns.
"We would've had to do these things anyway," said Mike Fiaschetti, Highmark's senior vice president for provider strategy. Health insurance is already unaffordable for millions of Americans, he said, meaning they've been priced out of the product his company sells. Old cost-cutting tricks like trimming benefits, cutting payments to doctors, and charging patients more don't cut it anymore, he said.
“All that low-hanging fruit has been grabbed, and now we’ve got to go to another level,” Fiaschetti said. “You’re seeing that realization over the last year or two that insurers are finally saying, ‘We’ve got to do something to be able to influence this and, frankly, to stay relevant.’”