The Supreme Court Upholds The Legitimacy of Subsidies

Submitted by on Thursday, June 25, 2015 - 05:08

Newtown, CT – June 26, 2015

And now, back to business – With the Supreme Court's 6-3 decision to uphold the legitimacy of subsidies for consumers enrolled in federal exchanges, the uncertainty over the future of the socially important component of the Affordable Care Act – providing insurance coverage to those to whom it had been denied for generations – is over. Those who would have otherwise been thrown out of exchanges and left to their own devices can be grateful that the Supreme Court acted in a rational and empathetic way to the legal dilemma instead of ideologically. Because providing access to care through insurance coverage is not an ideological issue, it's a moral and ethical one. So now, let's get back to the real business at hand, which is to forge through the difficult transformation of the delivery system that will make health care affordable and improve its overall quality. After all, the issue of how one pays for insurance coverage is a completely separate issue from how the delivery system is paid for its services, and organizes itself to optimally deliver those services. While the portions of the ACA that deal with payment and delivery system reform would have survived a negative Supreme Court ruling, the turmoil and uncertainty in the markets would have been so significant that the current energy deployed to re-engineer care would likely have been severely cut back.

What this means to you – Ensuring on-going access to adequate and affordable coverage for all Americans is now completely dependent on the pace at which the delivery system will continue to reform. And in some states the pressure is greater than others, in particular where there is the real threat of increased transparency in price and quality. That's because providers have to explain the significant variability that exists for even the most common services, and it's creating embarrassed looks in Hospital and health system boardrooms, and in meetings of clinical leaders. That's an incredibly encouraging sign and why the pressure to push for complete transparency has to be relentless. Just pause and consider that the movement to value-based payments started more than a decade ago, and while it has certainly accelerated under the ACA, the imperative to change has really set in with the realization that, sooner or later, market opacity will be a thing of the past. And if you doubt the effects it will have, or listen to the usual hand-wringers worrying about potential price collusion, consider the simple and effective facts demonstrated by CalPERS' pilot on reference-pricing knee replacements, and CastLight's data on consumer selection of discretionary services. In our work, we see episode prices with a tenfold variation between the lower and higher priced providers, and there's not much doubt in our minds what will happen when those prices go public. And there's not much doubt in providers' minds either. That's why the boardroom conversations have turned serious, deliberate, and purposeful. Supply chains have to change, efficiencies have to significantly improve, and the quality of care has to get better. There is no other option, at least in States that are pushing through public disclosure of prices and quality. And so while the decision of the Supreme Court will now enable the market for health insurance to prosper, decisions by States will enable the market for health care services to prosper. We need both to make sure that the moral and ethical decision made yesterday is not for naught.