Self-Insurance Institute of America, Inc.
Self-Insurance Institute of America, Inc.

SIIA Statement on Pending U.S. Supreme Court Ruling - PPACA

Washington, DC, June 11, 2012 --( The United States Supreme Court is expected to issue its ruling before the end of the month regarding a legal challenge to the Patient Protection and Affordable Care Act (PPACA). When the ruling is announced there is certain to be a flurry of statements coming from stakeholder groups, political leaders and media pundits providing judicial analysis and commenting about what it means for the U.S. health care system going forward.

Given this anticipated flood of public commentary, SIIA is providing the following analysis ahead of the ruling so that its perspective is not lost amongst the "noise" that is sure to follow regardless of what the justices decide.

There are three possible outcomes: 1) The law is upheld in its entirety, 2) The entire law is deemed unconstitutional, 3) One or more specific sections of the law are deemed unconstitutional but the rest of the law is upheld. SIIA will discuss each of these outcomes as they relate to the self-insurance industry. SIIA will defer to others for general political commentary and broader analysis on how the court ruling will affect the health care marketplace as a whole.

Outcome #1 - The Law is Upheld in its Entirety
Should the Court uphold the law in its entirety, we will still need to wait until the November elections for complete clarity with regard to health care reform implementation.

The Republican candidate for president, Governor Mitt Romney, has promised to repeal PPACA should he be elected but such action is dependent on the Republicans holding their majority in the House of Representatives and taking back the Senate (likely with a 60-seat majority). This would obviously be the most dramatic change of events and we will revisit this scenario should election results dictate.

In the meantime, the rule-making process within the federal agencies will plow ahead. That said, most major regulatory announcements will likely be deferred until after the November elections so that the Obama Administration minimizes negative political attention related to health care reform.

Examples specific to the self-insurance industry include the potential regulation of stop-loss insurance, the requirement that third party administrators provide "coverage" for contraceptive services and the collection of taxes/fees on self-insured health plans.

Should the Republicans re-take the White House but fail to control both houses of Congress, it is expected that a Romney administration will look for opportunities to change or roll back various PPACA regulations through executive order. But given the huge volume of regulations expected to be promulgated by the time that a change in administrations would take place it is unrealistic to believe that every, or even most, rules will be given a second look.

Rather, a new Romney Administration and its allies in Congress will almost certainly prioritize the rules that need immediate attention. In this regard, it remains critical that SIIA continues to strengthen its political influence in Washington, DC so that self-insurance issues receive their due attention.

Absent a complete repeal, the self-insurance marketplace will continue to be under attack by proponents of health care reform who argue that the move by smaller employers to self-insure will create adverse selection in the health care marketplace and threaten the viability of state health care exchange.

Finally, the biggest unanswered question is what employers will choose to do in 2014 when the "play or pay" rule becomes effective. As you have likely seen, there have been conflicting conclusions from various consulting organizations, think tanks and other "experts" as to whether employers will drop coverage in favor of paying a penalty, which is presumably cheaper. SIIA's view is that it is premature to draw any definitive conclusions but that developments will need to be closely monitored.

Outcome #2 - The Entire Law is Deemed Unconstitutional
Obviously if the court deems the entire law unconstitutional the regulatory issues as well as the "play or pay question" referenced above are taken off the table, which could be viewed as a win for the self-insurance industry. That said, it's important to consider the longer view in order to fully evaluate such a significant development.

This is because judicial intervention will not signify the end of health care reform, but rather yet another beginning as legislative proposals will start to be floated almost immediately in Congress. The ultimate direction of this legislative process will be shaped by the November elections.

Should the Republicans take back the White House and strengthen their position in Congress watch for legislation that will encourage individuals to purchase their own health care insurance instead of getting it through their employers. This will likely be incorporated as part of a larger tax reform discussion and represents a direct threat to the self-insurance marketplace.

By contrast, it's probable that election results favoring the Democratic party will prompt the return of "Medicare for All" legislation, which was championed by many on the political left as recently as 2009. Such legislation would threaten the self-insurance marketplace from the other direction.

In the more immediate term, self-insured employers and their business partners will need figure out how to unwind their plans from various changes made over the past two years to comply with specific ACA requirements. There are certain to be complications associated with such efforts. Members can count on SIIA to provide critical education in this area should it be necessary.

Outcome #3 - One or More Specific Parts of the Law are Deemed Unconstitutional
This outcome arguably creates the most uncertainty going forward as a "split decision" ruling will not stop the regulatory process and additional health care reform legislation will be back in play in Congress. And while legislation may initially be targeted to address specific sections of the ACA struck down by the Court (such as the individual mandate), they are certain to be loaded up with extraneous provisions at the request of myriad interest groups. The self-insurance industry should watch for provisions that would prohibit the ability of employers to self-insure based on size. Again, November election results will dictate the size, scope and direction of this legislation.

Over the past three years the discussion and debate about health reform legislation and its subsequent implementation has been extensive. In many cases the "conventional wisdom" has been wrong. Based on this past experience, whatever the Court decides will set in motion a series of future events that cannot be precisely predicted by SIIA or any other organization.

SIIA understands this and will continue to take the long view of how such developments may affect self-insured employers and their business partners. This focus will be reflected in the association's government relations activities, informational resources and educational programs on an ongoing basis in effort to ensure that SIIA members are among the best educated and best represented health care reform stakeholders in the country.
Self-Insurance Institute of America, Inc.
Erica Massey
David Kirby: 410-539-6888