WASHINGTON (Reuters) - The U.S. Supreme Court agreed on Monday to decide the fate of President Barack Obama’s healthcare reform law in the coming year, charting a course that will have an impact on the 2012 election campaign, the law, the healthcare industry and the states.
At issue is whether Congress overstepped its powers by requiring that all Americans buy health insurance by 2014 or pay a penalty, a provision known as the individual mandate.
The Obama administration asked the highest U.S. court to uphold the insurance provision, the centerpiece of the law, after 26 states separately asked that the entire law be struck down. Oral arguments would take place in March.
Here is a look at what the case could mean on several fronts:
* NOVEMBER 2012 ELECTIONS - The court is likely to issue a ruling by July, in the midst of a presidential election campaign in which Obama, a Democrat, seeks a second four-year term. A ruling striking down the law known as the Affordable Care Act would be a huge blow for Obama months before the election and a boost for his Republican opponents who derisively describe the healthcare reforms as “Obamacare.”
Some have attributed the huge Republican gains in the November 2010 congressional elections to voter discontent over the law, Obama’s signature piece of domestic policy. The president could try to persuade Congress to pass a legislative fix for the “individual mandate,” a legal requirement that all Americans have healthcare, but he would face a tough time getting it through a Congress where Democrats no longer hold a majority in both houses as they did when the law passed in March 2010.
* THE LAW - The individual mandate is one of the more controversial issues. The Supreme Court could follow the example of one appeals court by maintaining the bulk of the reforms but throwing out the individual mandate. White House officials argue it is only by requiring healthy people to purchase insurance that they can help pay for reforms, including a provision that individuals with pre-existing medical conditions cannot be refused coverage.
* HEALTHCARE - Throwing out the individual mandate could influence how the healthcare industry approaches the reforms in the law, especially when considering how to price insurance policies. The mandate had guaranteed a large and steady pool of insurance purchasers. Some consumer groups argue a repeal of the individual mandate would lead to higher insurance premiums for Americans as a whole, as those without coverage would continue to use the emergency room as their only healthcare, shifting costs onto the insured. Higher premiums could also reduce the number of those choosing to purchase insurance, undoing the law’s promise to extend health insurance to the more than 30 million Americans currently without it.
* SMALL BUSINESSES - Small businesses are eligible for tax credits to help provide insurance benefits to their workers. They can also have more choice in insurance coverage, since state exchanges must have at least two multi-state health plans. However, businesses with more than 50 employees that do not offer health insurance by 2014, when universal coverage is set to kick in, will have to pay a fee per employee. Small firms argue the law does not address underlying high insurance costs and instead forces new requirements and taxes on companies, raising the cost of doing business.
* BIG COMPANIES - The healthcare law includes fines for larger businesses where some employees seek subsidized coverage on state insurance exchanges that are to be up and running by 2014. It also penalizes companies that fail to provide minimum health coverage levels that will be determined by the law’s essential benefits rule. The U.S. Chamber of Commerce, corporate America’s biggest lobbying group, supports the repeal of the healthcare law, which it blames for burdensome regulation and additional penalties and taxes.
* DRUGMAKERS - Those in the industry have generally been on board with the new legislation, which will give them millions more patients who need drugs, hospitals and doctors. Most industry representatives are also wary of further legal uncertainty over the law that complicates planning. The pharmaceutical industry will have to pay more than $2 billion a year in taxes to help pay for the healthcare overhaul. They also have committed to offering certain drug rebates and discounts, expecting to balance those out with a boost from newly insured people. The repeal of the individual mandate would skew that math. Rather than working to repeal the whole thing, drugmakers and others in the health industry are contesting specific provisions in the law, including a Medicare advisory board aimed at cost-cutting and another body that will closely compare the effectiveness of medications as well as other treatments.
* MEDICAL DEVICE COMPANIES - Similar to the drugmakers, medical device companies also face higher taxes starting in 2013 to help pay for the law. Some companies are vigorously working to repeal the 2.3 percent sales tax.
* PROVIDERS - The healthcare law is expected to give hospitals a flood of revenue from newly insured patients. It also cuts the cost of emergency care for uninsured patients, which hospitals are legally bound to provide. Hospitals are banking on that offsetting the payment cuts they have already started taking under the law. Obama’s legislation increases payments to physicians, although hospitals get lower payments from Medicare and Medicaid.
* THE STATES - The states are charged with carrying out a bulk of the healthcare reforms and many of those suing are still setting up state-run exchanges for health insurance and other elements by expanding their Medicaid programs to include millions of people now uninsured and setting up health insurance exchanges for uninsured people with incomes too high to qualify for Medicaid services. Along with worrying about the costs of implementation, the states say the law usurps their rights. Earlier this year, states that criticized the law, such as Missouri, adopted an attitude of “if you can’t beat them, join them.” They began setting up exchanges and moving ahead on implementation in hopes of influencing the reforms and limiting the reach of the law. But of late, they have taken a harder line, with Kansas sending back to the federal government a grant it had received to create an exchange.
Editing by Howard Goller