The Administration reported today that the Affordable Care Act will save Medicare beneficiares 208 billion dollars through 2020 and save the Medicare program 200 billion dollars through 2016.

Regardless of whether those estimates are accurate, they raise the question again – ‘So What Happens Now with Health Care Reform?’

The Supreme Court is expected to hand down its decision on the constitutionality of the Affordable Care Act just prior to the July 4 congressional recess.

In brief, there are three key issues before the Court:

1) Is the Individual Mandate unconstitutional because Congress overstepped its bounds to regulate commerce?

2) Is the Medicaid expansion unconstitutional because it is coercive to the States?

3) If one piece of the bill falls, is the bill severable so that other pieces might survive?

This third issue — severability — is crucial. Should the individual mandate not survive, the Court may or may not uphold some of the “consumer protections” in the bill such as guranteed issue and community rating of insurance policies.

If the Court strikes the mandate but upholds the consumer protections, how would insurers be able to issue policies?

Most experts say that without everyone buying in to insurance through a mandate or some other mechanism, the resulting risk selection problems would make insurance cost-prohibitive for everyone. In general, healthy people wouldn’t buy it and sick people would.

Should this scenario occur, expect Congress to want to deal with this as quickly as possible to avoid the fallout from States and the public.

This November not only determines the next President of the United States, but also the political direction the nation will take. In addition to the presidential election, 33 Senate seats, the entirety of House of Representatives, and 11 Governorships will also face the polls. All of these races will have effects on the Affordable Health Care Act (ACA) and its integration (or lack thereof) into the heath care system.

The presidential election hinges on 12 to 15 swing states, but the deciding factor will likely boil down to just 4 to 6 key states. Should President Obama win re-election, even if the both Chambers of Congress are held by Republicans, the ACA would not be repealed. However, it is to be expected that the Senate and House would increase oversight of ACA implementation and closely scrutinize any future Obama nominees to the relevant departments implementing the ACA (Health and Human Services, Office of Management and Budget, etc)

In addition to the immediate ramifications to the ACA, the results of the upcoming elections will have great influence on the health reform environment for years to come. For instance, a Romney Administration likely would look favorably upon a “block grant” style approach to the Medicaid program and a voucher program for Medicare.

Control of the Senate in 2012 is uncertain. The Democrats currently have a 53-47 majority, but 21 Democratic seats are being contested while only 10 Republican seats and 2 Independent seats are in question.

Future healthcare legislation, including the proposed Ryan plan in the House of Representatives lives or dies by who prevails this November. The Ryan plan proposes inflation rates be held lower for health care spending than historical inflation rates in exchange for increased flexibility. Such a plan would likely have significant consequences to Medicaid and Medicare reimbursement for all providers.
By the time the general election is in full swing, the Supreme Court will have likely rendered its verdict on the constitutionality of key provisions of the Affordable Health Care Act (ACA).

While there are a variety of election permutations that could impact the health care landscape, it is worth keeping in mind that should the Supreme Court affirm the constitutionality of the ACA, it would likely take 60 votes in the Senate to repeal health reform, which is an unlikely outcome even if Republicans take control of the Senate. However, a Republican presidential administration would certainly have the ability to alter significantly the regulatory environment of health care reform.

Finally, regardless of whom controls the White House and Congress, recall that automatic cuts of $500 billion in defense and $500 billion in domestic spending are slated to go into effect in January 2013. Both Medicaid and Medicare certainly would be viable options for significant reductions as they were during consideration by the “Super Committee” late last year.

Congress has yet to resolve paying for the “doctor fix” (SGR) and as a result, CMS sent notifications to physicians to hold back claims for 10 days in early January to allow Congress more time to resolve the issue.

 A one year fix would cost approximately 20 billion dollars, but the Senate passed a more modest two month extension that will be rejected by House Republicans today.

 Should Congress not resolve the SGR issue this week, physicians would see a 28 percent cut in Medicare payments – probably in late January or early February. 

 The Obama Administration is preparing its new budget for Fiscal Year 2013, which will be released in early February of 2012. 

 While no details have been leaked yet, expect that the Administration will resort to large budget savings measures, including cuts to Medicaid in some form – whether it be the elimination of provider taxes, a “blended rate” approach that was discussed with Republicans during the “Super Committee” process, or other cost cutting measures.

 Nursing home owners and operators should be ready to engage actively with Congress over the coming months as budget cutting is sure to continue.

Please stay tuned for more details.

Those in Congress who wanted a two year fix on physician payment received disappointing news last week when the Congressional Budget Office (CBO) came out with an estimate of $40 billion over ten years for the two year fix – a fix which would prevent doctors from receiving a 30 percent cut in their practice expense.

While Congress still looks to try to resolve this issue for a two year period, it seems more likely that consensus will form around a one year fix which would cost $20 billion over a ten year period. Still no news on how Congress would finance the cuts, but it seems inevitable that providers from across the spectrum would be vulnerable to reductions in payment.

With just days remaining before the November 23 deadline, the prospects for agreement among Super Committee members appear bleak.

Despite substantive progress being made in certain areas, there remain significant differences with little time on the clock to reconcile the disagreements.

As a reminder, should the Super Committee not reach consensus by majority vote, Medicare would face an across-the-board two percent cut, and the Department of Defense would receive a 600 billion dollar reduction over 10 years.

Medicaid would not be reduced, however, all entitlement programs would be vulnerable, regardless, because of the need for Congress to pay for fixing the Sustainable Growth Rate (physician payment) as the next legislative task.

Please stay tuned for further updates.

With the November 23 deadline looming, members of the Super Committee continue to meet in hopes of avoiding automatic across-the-board cuts to Medicare, Medicaid and defense programs.

Staff close to the negotiations are more optimistic now than they have been in terms of potentially reaching an agreement.

The savings number for Medicaid is rumored to be 75 billion dollars total spread across providers. This is good news in the sense that the savings number was much higher recently.

We will keep you posted on further developments.

Discussion continued yesterday in the Super Committee, where various reports had the magnitude of Medicare and Medicaid cuts at between 400 and 500 billion dollars.

No specifics on the Medicaid cuts, but the overall savings and revenue number discussed was very ambitious – upwards of 3 trillion dollars.

While no agreements were reached, it is worth noting that members of the Super Committee are discussing numbers well in excess of the 1.2 trillion dollars necessary to meet the congressional savings targets.

This can only mean that the Medicare and Medicaid programs are undergoing heavy scrutiny by the Super Committee members.

We will keep you posted as the process unfolds.

Bryant Hall is the president and founder of Tiber Creek Health Strategies. Hall partnered with Schutjer Bogar in 2011 to provide strategic consulting including the most up-to-date news on Medicaid issues and policies.