SCENARIOS-What's next for the U.S. healthcare law?

WASHINGTON, March 23 Wed Mar 23, 2011 11:05am EDT

WASHINGTON, March 23 (Reuters) - One year ago, President Barack Obama signed into law a sweeping healthcare overhaul to fulfill a long-standing Democratic pledge to ensure healthcare coverage for all Americans.

Passage of the law was a major legislative victory for Obama and helped change the political landscape, but not always in the way Democrats had hoped. Republicans strongly opposed the law and successfully worked public skepticism about it into sweeping election victories in November.

Here's a look at the uncertain future of the reform law.

REPEAL, DEFUND AND TAKE APART

Republicans, who say the law gives the federal government too much control and does little to reduce costs, have pushed a repeal bill through the U.S. House of Representatives after they took control in January. Full repeal, however, is unlikely unless Republicans successfully take control of the Senate and the White House in next year's presidential elections.

The Democratic-led Senate will not go along with repeal and Obama would veto any such bill. Democrats argue the law's reforms will slow the growth of healthcare costs while improving care and reducing the ranks of the uninsured.

A Republican move to withhold funds to stop implementation of the law will meet similar resistance from Senate Democrats.

That leaves Republicans the option of picking apart the law regulation by regulation. This strategy could be more successful.

Already, a revenue raising provision requiring businesses to file Internal Revenue Service forms on purchases and service totaling more than $600 a year is likely to be repealed with support from both parties.

The bill passed the House, and the Senate is expected to follow. The bill adjusts insurance purchase subsidies for middle income people as a way to cover the $22 billion cost of rescinding the so-called 1099 reporting provision.

COURT CHALLENGES

A number of states have challenged the constitutionality of the law's requirement that most Americans obtain health insurance or pay a penalty. The rulings have been divided, and the issue is certain to end up before the U.S. Supreme Court.

A U.S. District Court judge in Florida ruled the entire law unconstitutional, while a U.S. judge in Virginia ruled the insurance mandate unconstitutional and upheld the rest of the law. Other courts have dismissed cases or have found the law's mandate to purchase insurance constitutional.

The U.S. Supreme Court could decide as early as next year. Senate Finance Committee Chairman Max Baucus, who played a leading role in writing the healthcare law, and other healthcare advocates believe the law will be upheld.

Conservative critics give better than even odds that the Supreme Court will overturn the law.

If the court does decide that the coverage mandate violates the Constitution, many experts believe the judges would most likely strike down just that provision and leave the rest of the law intact.

A decision striking down the purchase mandate but leaving intact provisions requiring insurers to cover everyone regardless of medical history would wreak havoc on the insurance industry and send premiums soaring.

The law's major provisions establishing state insurance exchanges, imposing coverage mandates and requirements that insurers can no longer exclude or charge more for preexisting conditions take effect in 2014. That would give lawmakers time to act on any court decision.

STATE ISSUES

Despite the court challenges and stiff Republican opposition, the federal government is moving ahead with implementation that mostly falls on the states.

A number of state governors, primarily Republicans, have balked at the added cost of the law to already tight budgets. States must set up insurance exchanges to help consumers and small businesses purchase insurance. States also have to maintain their Medicaid coverage for the poor until the program is expanded in 2014 to cover millions more low income people.

The Medicaid healthcare program is run by the states with federal financial aid, and many governors are looking to cut Medicaid spending to help balance budgets that took a huge hit during the economic recession.

The federal government will pick up the cost of expanded Medicaid coverage for three years, but many states worry about future added costs.

Some states are dragging their feet on establishing the insurance exchanges that are to go into effect in 2014, leaving it to the federal government to step in and operate them.

SAVING THE HEALTHCARE LAW

Democrats note the popular Social Security retirement and Medicare healthcare programs for the elderly also faced stiff political opposition from conservative Republicans and survived legal challenges.

If the healthcare law survives the constitutional challenge, most likely the current political opposition will begin to subside and the law will remain on the books.

Most Americans did not think the costly U.S. healthcare system was working well before the new law. Costs were soaring and millions were going without coverage.

Polling data show that while people are skeptical about the law, most do not want to see it scrapped entirely.

Republicans have yet to put forward a proposal to replace the current law and are not likely to take a comprehensive approach. Instead they most likely would take it step-by-step, starting with limits on medical malpractice lawsuits. They also would push to allow insurers, who are regulated at the state level, to sell policies across state lines.

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