4:44 pm Jun. 27, 2012
On Monday, Bank of America Merrill Lynch issued a report arguing that a Supreme Court decision striking down the entirety of Obama's health care act would be bad news for hospitals and good news for the managed care industry.
A decision striking down only the individual mandate and keeping the rest of Obama's health care legislation intact, according to the BofA Merrill Lynch Global Research report, would be bad for the managed care sector.
And if the court upholds the law it would be good for the hospitals.
Here's the analysis, which the bank distributed by email:
Supreme Court upholds the Individual Mandate: In this case, the Court would uphold the Affordable Care Act, and the next catalyst would be the upcoming elections. In addition, there remain questions as to whether the health reform law can be implemented by 2014 as many states have delayed implementation awaiting the court’s decision, and the federal government may not be able to implement exchanges in all of those states. This scenario would be positive for the hospital sector, in our view.
Supreme Court strikes the Individual Mandate, but, upholds the rest of the law: In this scenario, the Court would strike the individual mandate, but, keep in place the rest of the law, including all of the health insurance provisions. We would view this scenario negatively for the managed care sector.
Supreme Court strikes the Individual Mandate, along with related health insurance provisions (guaranteed issue, community rating, etc.): In this scenario, the Court would strike the individual mandate, along with several related health insurance provisions – particularly guaranteed issue and community rating provisions, as the Obama administration also recommended striking these down if the mandate were struck. This scenario would result in fewer covered lives (16 million vs. 32 million) according to the Congressional Budget Office, but, would maintain the Medicare payment reforms and payment reduction provisions.
Supreme Court strikes down the entire Health Care Law: In this scenario, the court would find the individual mandate unconstitutional, and not severable. This scenario would be a negative for hospitals, in our view, but generally viewed positively for managed care (other than Medicaid managed care).
Supreme Court strikes down the Medicaid expansion: In this scenario, the Court finds that the mandated expansion of Medicaid to all beneficiaries below 133% of poverty is coercive to the states, but, would leave a significant hole in coverage for low income individuals, that would need to be addressed by Congress.
