With the election behind us and President Obama settling in for a second term, the healthcare industry can look forward to a more certain regulatory landscape in which the federal government will likely move full steam ahead on health reform. In this post-election landscape, the following issues and challenges come into focus:

  • The rapid implementation schedule for state and federally-run health insurance exchanges; 
  • State government decision-making on expanding Medicaid programs;
  • The fiscal cliff’s effect on the American healthcare system and the urgent need to rein in medical costs;
  • A muddled verdict on voter preferences for Medicare reform; and
  • The Patient Protection and Affordable Care Act’s (PPACA’s) remaining legal and legislative challenges.

Health Insurance Exchanges

Medicaid Expansion

The Fiscal Cliff’s Effect on Healthcare

The fiscal cliff, an automatic set of major tax and spending policy changes beginning January 1, 2013, applies considerable pressure on both political parties to make healthcare spending cuts as part of the deal to avoid "going over the cliff." President Obama and Speaker Boehner said they would work together on healthcare spending reform:

  • On November 8, Speaker Boehner stated that the alternative to going over the Fiscal Cliff involves making "real changes to the financial structure of entitlement programs." 
  • The next day, President Obama stated: "I intend to work with both parties to do more, and that includes making reforms that will bring down the cost of health care, so we can strengthen programs like Medicaid and Medicare for the long haul."
  • However, on November 21, Speaker Boehner published an op-ed declaring that Obamacare is unaffordable and "has to stay on the table as both parties discuss ways to solve our nation’s massive debt challenge."

Pressure to reduce spending could mean limiting insurance premium subsidies in the exchanges, cutting back Medicaid payments to primary care doctors, and making major structural and payment reform in the Medicare Program. The main goal for both the public and private healthcare sectors is to contain costs. As Karen Ignagni, President and CEO of America’s Health Insurance Plans, has stated, with the presidential election decided and PPACA set to increase coverage through the insurance exchanges and Medicaid expansion, the healthcare industry will change its focus from expanding the insurance market to reining in healthcare costs.

Muddled Verdict on Voter Preferences for Medicare Reform

By preserving the current balance of power, the election – which brought Paul Ryan’s Premium Support Plan to the national spotlight – does not give a green light to either party on its Medicare reform proposals. Yet, barring interruption to PPACA’s implementation, Medicare will undergo significant changes under PPACA, including the following:

Conclusion: PPACA Survives, with Legal Challenges

President Obama’s reelection and the sustained Democratic majority in the Senate guarantees PPACA’s survival, but opponents continue to press forward on making the following legal challenges:

  • The federal insurance subsidies do not apply in states that abstain from running their own exchanges (and therefore, since the health law exempts people from the individual mandate to have insurance coverage if coverage is not affordable, and since insurance coverage would not be affordable for many people in the absence of subsidies, the individual mandate cannot apply to those people in such states).
  • The individual and employer mandates violate the right to free exercise of religion, especially in the case of contraception requirements.
  • The law is invalid because it originated in the Senate, whereas the Constitution requires tax legislation to come from the House.

In immediate terms, as outlined by Ms. Ignagni, President Obama’s reelection gives the health industry certainty that PPACA’s implementation will proceed. It remains unclear if the remaining legal challenges will alter this course.