By J. Stuart Showalter

Despite political rhetoric, changes to our healthcare system are inevitable regardless of the pending Supreme Court case, one expert says.

The U.S. Supreme Court is set to hear arguments March 26-28 in a set of cases challenging the validity of the health reform law, the Affordable Care Act (ACA). In anticipation of the decision, the Legal & Regulatory Forum consulted Michael Silhol, counsel for Haynes and Boone, LLP, in Dallas for some perspective.

A former general counsel for Parkland Hospital, Silhol has closely studied the ACA and the related lawsuits and recently led a panel discussion on the subject in Dallas for more than 150 providers and legal professionals. In his view, hubbub over the case, and in particular over the ACA's individual mandate (the requirement that individuals pay a penalty if they are not covered by health insurance), distracts us from the realities of today's healthcare market.

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Change Is Inevitable

"Politicians and the media are giving too much attention to the individual mandate and not enough to the changes that are already taking place," Silhol says. "The mandate and the lawsuit are important, to be sure, but there will be transformation in the healthcare system regardless of the outcome of the Supreme Court decision." He cites these examples of important reform provisions in the ACA:

  • Increased financing for anti-fraud enforcement
  • A ban on physician-owned hospitals
  • Changes to the Stark physician self-referral law
  • Elimination of annual and lifetime benefits limitations
  • Prevention of policy rescission due to illness
  • Coverage of children to age 26 on their parents' plans
  • Guaranteed coverage for children with pre-existing conditions
  • Preventive services at no cost to Medicare beneficiaries
  • Phase-out of the Medicare prescription drug "donut hole"
  • Encouragement of accountable care organizations
  • Reforms that alter insurers' underwriting practices
  • Creation of state-run health insurance exchanges
  • Expansion of Medicaid eligibility and subsidies

The industry is already adapting to these changes, so even if the Supreme Court strikes down the law, "it is going to be impossible to put the toothpaste back in the tube," Silhol says. "Regardless of what the court decides, market forces will continue to push us toward greater quality and efficiency."

Politics, Birth Control, and Broccoli

Recalling that President Nixon proposed comprehensive national health insurance in the 1970sa and that the individual mandate was originally proposed by Stuart Butler of the conservative Heritage Foundation in the late 1980s,b Silhol expressed "amazement and wonder" at how politics has twisted recent health reform discussions.

He notes that there is consensus among experts, and even the politicians, that the current cost trends in healthcare are not sustainable. And there is general agreement about a large majority of the ACA's specific provisions. "But we're fiddling while Rome burns," he says. "We have so much work to do it's a shame to waste time on distracting details like birth control and broccoli."

The latter references are to whether religious organizations can be forced to insure contraceptive services and to an analogy used by one lower court judge to strike down the mandate. The judge's reasoning (later overruled) was that if the justification for the individual mandate is valid, Congress could force people to buy broccoli because sales of broccoli have an effect on the overall vegetable market.

But Silhol emphasizes that the healthcare market is literally unique. To analyze this case by analogy does not do justice to the issues. "The broccoli analogy is a Trojan horse, a distraction, a red herring. But the media and some politicians picked up on it. It's background noise. It's not important."

The Court Won't Punt

He noted that some commentators have speculated the Court might avoid deciding the case by relying on the Tax Anti-Injunction Act (AIA), a 145-year-old law that bars challenges to taxes before they go into effect. If the individual mandate requirement is characterized as a tax rather than a penalty-so the AIA argument goes-the petitioners in the Supreme Court case would be barred from challenging the law until 2014, when the mandate is scheduled to take effect.

"I don't think the Court is going to use the AIA as a way to punt this case," Silhol said. "It's pretty clear to me that the individual mandate involves a penalty for noncompliance, not a tax, so the AIA should not come into play."

The Remaining Issues

If Silhol is right about the AIA being inapplicable, then the key remaining issues are:

  • Does Congress have the power to require individuals to buy health insurance?
    • In the main case under review, a challenge brought by 26 states and decided by the 11th Circuit, the lower court held that Congress does not have that power under the Constitution; however, two other appeals courts have found otherwise.
  • If the mandate is not valid, can it be "severed" from the rest of the statute or is the entire ACA invalid?
    • Even though it struck down the individual mandate, the 11th Circuit held that the remaining ACA provisions remain "fully operative."
  • If the ACA survives (either with or without the individual mandate), can the states be forced to expand their Medicaid programs and thus incur greater costs, at the risk of losing federal money if they do not comply?
    • The 11th Circuit held the Medicaid expansion to be valid.

The Bottom Line

Silhol was hesitant to forecast the ultimate outcome of the Supreme Court case, but he did make one prediction: "If the individual mandate does not survive, and if provisions like guaranteed coverage and prohibitions on exclusions for pre-existing condition remain in force, insurance premiums will skyrocket." For premiums not to rise sharply, the risk must be spread over as large a population as possible, and spreading risk was the intent of the individual mandate. Without it, those who choose to be insured will be the people who are most likely to need care.

This point was reinforced by a recent Robert Wood Johnson Foundation report that stated, "Insurers fear substantial adverse selection in the nongroup [individual] market in the absence of an individual mandate ... ." The report estimates that premiums would rise ten to twenty-five percent without the mandate, depending on participation in health exchanges.

As we await the Supreme Court's decision, Silhol recommends that providers continue to respond to market trends by working toward greater integration, collaboration, and efficiency.

A decision is expected by the end of the Supreme Court term, typically late June or early July.

J. Stuart Showalter, JD, MFS, is a contributing editor to HFMA's Legal & Regulatory Forum.


a. Nixon's Plan for Health Reform, in His Own Words, Kaiser Health News, Sept. 3, 2009.

b. S. Butler, Assuring Affordable Health Care for All Americans, The Heritage Lectures, Oct. 2, 1989.  


Publication Date: Friday, March 16, 2012