Supreme Court case could result in loss of insurance subsidies

All eyes in the health care industry in 2015 will be on the U.S. Supreme Court case King v. Burwell.

The lawsuit challenges the ability of federally run exchanges to provide subsidies that help people purchase insurance coverage.

Wisconsin is one of 27 states that have adopted a federally-run exchange as opposed to a state-run exchange, and Wisconsin Hospital Association president and chief executive officer Eric Borgerding is concerned about what would happen if those states lose the subsidies.

“It would be significant. We have about 126,000 people in Wisconsin who are obtaining insurance through the exchange,” he said. “It would create an urgent situation for Wisconsin and the other states that have federally-run exchanges. The states will have to do something to remedy that situation quickly; otherwise, they could face a real crisis of people becoming uninsured.”

The Supreme Court is expected to begin oral arguments in March, with a decision likely to come in June.

Also in 2015, Borgerding said Wisconsin will continue to see downward pressure on health care costs.

“As a result, we will continue to see a very positive trend in Wisconsin of health care partners and hospitals doing a great job of bringing down their operating costs and doing the things necessary to reduce or minimize the cost to provide health care while at the same time continuing to deliver some of the best quality care and outcomes for health care in the country,” he said.

Gerald Frye, president of The Benefit Services Group Inc. in Pewaukee, agreed Wisconsin is adept at delivering high-quality care at lower costs. He believes this is due in part to the development of new network options for state employers, a trend he predicts will continue in 2015.

“Typically, networks are organized substantially through major carriers like UnitedHealthcare and Anthem BlueCross and Blue Shield,” Frye said. “But what we’re going to see is the networks being organized by the systems themselves, like the Integrated Health Network, abouthealth and others in the state. Those will become a more important part of the buying decision in the next year or two.”

Abouthealth is comprised of seven health care systems, including Aurora Health Care and ProHealth Care, and the Integrated Health Network of Wisconsin is also comprised of seven members, including Froedtert Health, the Medical College of Wisconsin and Wheaton Franciscan Healthcare.

These networks are not built by carriers getting unit prices, Frye said, but instead by providers that believe they can work together and integrate care across their systems.

“They’re set up by clinicians doing the work rather than insurance companies essentially treating the providers as vendors,” he said. “The reason they won’t go away and why they will only pick up intensity in 2015 and beyond is because these systems are now setting up their operations in a way that they don’t really get paid for doing more; they get paid for producing better health — not health care — health,” Frye said.

Another trend that Frye expects to continue in 2015 is employer-based clinics. He said exploring and implementing on-site or near-site care options will be a major initiative of many employers.

Although Wisconsin health care is making great strides, one area the state needs to improve upon is Medicaid reimbursements, according to Borgerding, who said hospitals are reimbursed about 65 cents by the state’s Medicaid program for every dollar they spend.

“That amounts to $960 million in unpaid Medicaid hospital costs,” he said. “That’s almost $1 billion last year added to the cost of everyone else’s health care. That’s equivalent of another corporate income tax.”

Frye

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