While the Supreme Court last month closed the door on a major constitutional question, the justices appear to have created a new era of uncertainty surrounding a key provision of health care reform.
In its landmark 5-4 ruling on the Patient Protection and Affordable Care Act, the court made it more difficult for the federal government to withhold existing Medicaid funds from states that refuse to participate in the law's Medicaid expansion. Nearly 17 million people were projected to gain health insurance coverage under Medicaid expansion, mainly childless adults and people earning just above the poverty line. But the court's ruling opened the door for states to opt out.
In an individual opinion, Chief Justice John Roberts, who sided with the majority, wrote, "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."
Immediately after the ruling, there was a flurry of speculation on what states might do.
"There is a lot to learn, in particular, whether states opt out or not," Rich Umbdenstock, president and CEO of the American Hospital Association, said that day.
Officials in states including Mississippi, Missouri and Wisconsin initially indicated that they would not go through with Medicaid expansion.
Whatever course the states take, those decisions — which will be both financial and political for elected state government officials — will ripple across the health care landscape.
"Hospitals will need to focus in coming weeks on the Medicaid provision," Greg Moore, who chairs the national health care group for law firm Clark Hill, said following the court's decision. "If there's not an expansion, theoretically there's going to be an issue with uncompensated care that remains."
For patients who can't afford to buy insurance but live in states that decide not to participate in the new Medicaid expansion, a chunk of patients could continue to be uninsured.
"A portion of the population will simply ignore the taxing issue," Moore said. "There will be uncompensated care that remains."
That will continue to add financial pressures to hospitals and health systems that are already looking to trim upward of 20 percent from their cost structure, says Doug Fenstermaker, managing director, owner and vice president of health care, Warbird Consulting Partners. "The issue of providing and writing off charity care will continue to be a burden," he said.
Still, for all of the questions now surrounding Medicaid, hospital leaders generally reacted positively to the court's ruling. Alan Channing, CEO of Mount Sinai Hospital in Chicago, said he was "pleasantly surprised" by the ruling, noting that 15 percent of his hospital's patients are currently uninsured. "This will address two-thirds of them," Channing said.
Umbdenstock said that the "promise of coverage can now become a reality" for millions of Americans, adding, "transforming the delivery of health care will take much more than the strike of a gavel or stroke of a pen."