What a difference two years makes. Remember all the fearful tales of socialized healthcare under the Accountable Care Act, and how it would destroy the healthcare system?

Perhaps it's time to calmly observe that the health insurance industry is enjoying record profits, with shares of the major carriers all rated Buy. The reason. Health insurers, and the investment community, have figured out that they're going to make out like bandits from healthcare reform.

Sure, they don't like the Medical Loss Ratio rule (the one that requires them to spend 80 to 85 cents of the premium dollar on healthcare, wellness and allowed expenses). They don't like the idea of having to insure people regardless of their health history. But they do like the idea of as many as 16 million more commercial customers. Hospitals love the idea of having more paying customers and less cost-shifting. Pharma likes the notion of near-universal coverage as well, and for good reason. All those new paying patients also make for a likely shortage of physicians, and all of a sudden doctors are being courted as never before.

In short, the American healthcare industry  blessed as it is with smart capitalists  has figured out how money can be made in this new paradigm, and has adapted.

In the two years since the ACA's passage, healthcare providers across the country have invested millions, along with taxpayers millions, in electronic health information management and in new mechanisms for delivering cost-effective, quality care. Physicians, pressed to modernize their operations, have merged or affiliated with larger groups. Hospitals and health systems have consolidated and hired physicians and affiliated with groups. And while this provider concentration is troubling in some ways, it may have been inevitable. Insurers have jumped into innovative contracting and payment models, including medical homes and nascent ACOs. All in preparation for 2014.

Or not. So what happens if the U.S. Supreme Court overturns the coverage mandate in the Accountable Care Act?

The coverage mandate (the part of the ACA most vulnerable to a constitutional challenge) is arguably the critical piece of the ACA that assures that healthy people buy into the risk pool and make the goal of near-universal healthcare coverage actuarially tenable. Without the requirement, and if the other portions of the law were allowed to stand, healthy people could avoid buying insurance until they got sick, and the insurance system would collapse.

If that was the case, our notoriously fractious federal government would have to figure out what pieces of the ACA will survive or not, and quickly. (Keep in mind that those who want to repeal and replace the ACA have never said what they'd replace it with). The healthcare system, which accounts for roughly 20 percent of the gross domestic product, would be in limbo until Washington figures out what to do. Return to underwriting. Allow insurers to exclude the sick from coverage. Reinstate coverage limits

Meanwhile, there will be nothing to stop the accelerating trend of eroding commercial health coverage by employers.

And what will happen to the dramatic transformation of healthcare delivery that has been fueled by the ACA. If big insurers like UnitedHealth and WellPoint no longer have to worry about having to cover everyone within an 80 percent MLR, are they really going to invest the time, money and energy into better primary care and management of chronic disease. Probably not. Underwriting, coverage limits and pricing are surer ways to market-pleasing profits.

Without the promise of near-universal coverage that includes people with pre-existing illness, does that shrink the potential market for prescription drugs under development now. Probably.

So as the ACA draws toward its second birthday, we'll all get to see it through the Terrible Twos or just watch it get strangled in the cradle. Somehow, I think I know which I'd prefer.

 

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