Court ruling won’t kill Affordable Care Act, Evanston hospital chief predicts

Mark Neaman, CEO and president of NorthShore University HealthSystem, offers a provider's perspective on health care reform at the North Shore Senior Center Tuesday. | Tamara Bell~Sun Times Media

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Updated: February 13, 2012 8:41AM

Most provisions of the Affordable Care Act will likely move forward even if the U.S. Supreme Court rejects the mandate requiring individuals to buy health insurance. That viewpoint was offered Tuesday by Mark Neaman, chief executive officer of NorthShore University HealthSystem, as he gave a provider’s perspective on the new health-care law.

“My own personal view is that whether the individual mandate stands or is overturned, it will not overturn the rest of the act,” said Neaman, head of a four-hospital system that includes Evanston, Glenbrook, Highland Park and Skokie hospitals.

“But it is a pretty important decision,” Neaman told the audience at the North Shore Senior Center in Northfield. “If you are not responsible for having health insurance, what does that mean for the rest of the people that do spend money to buy health insurance? It is an unlevel, or unfair playing field.

“We may see some of the bizarre activities that take place in other states, where they have a similar provision. People literally buy their insurance in the ambulance on their way to the hospital and drop it when they no longer need it.”

On justices’ docket

The Supreme Court is set to hear arguments in late March on the constitutionality of requiring individuals to purchase health insurance, enforced by tax penalties. The insurance mandate was written into the Patient Protection and Affordable Care Act of 2010 to spread health costs and risks across a large pool that includes healthy people.

Though some features of the health reform law already have kicked in, such as extending children’s dependent coverage until their 26th birthdays, most provisions are scheduled to start in 2014. That’s when state and federal health insurance exchanges are to be up and running with the enrollment period starting in October 2013. The exchanges are organized marketplaces for individuals and small businesses to purchase insurance.

In Neaman’s view, how employers react to the employer mandate to provide coverage will be critically important and could lead to a revolution in how health care is financed.

“The Affordable Care Act says that if you have 50 or more employees, then you must do one of two things. You must offer health insurance at a high federal level, and you must subsidize it so it is ‘affordable,’” said Neaman.

The alternative is to pay a $2,000 fine per employee, which would go into the exchange to support the employee’s ability to buy health insurance.

Many will drop out

“It is play or pay,” said Neaman, who pointed to studies, including a McKinsey survey, suggesting that many employers will drop the coverage they now provide their employees.

“The predictions are that 30 percent of large employers and 50 percent of small employers who today already offer health insurance will drop out,” he said.

Why? It boils down to math.

“Would you rather spend $10,000 per employee (to provide coverage) or $2,000 per employee? That is the choice that employers will face,” he said.

In his own organization, with 9,000 employees, the difference amounts to a $72 million line item in the budget.

“Watch this employer mandate,” he said, “because the implications are huge. Keep in mind that employers really drive the financing of health care in America,” said Neaman, noting that about one-half of Americans receive health coverage through an employer. “If employers opt out, is the Affordable Care Act affordable?”

The primary goal of the Affordable Care Act was to extend health insurance to about 30 million uninsured people. About 15 million people would be added to the Medicaid rolls, while another 15 million would receive subsidies to purchase coverage through the exchanges.

State a slow payer

Neaman said the planned expansion of Medicaid raises questions because the state is slow to pay its bills and few physicians accept Medicaid patients.

“The payments are so low, and it’s so impossible to get paid through all the bureaucracy that almost no physicians take Medicaid assignment,” Neaman said. “If you give an additional one million people in Illinois a Medicaid card, what is that worth? It is worth something to be sure. But if a physician is not going to take that card or that assignment, are we really providing health insurance coverage that has the value that it should have in American society?”

Subsidies, credits

Many individuals who purchase their own insurance would be eligible for subsidies and tax credits. The law envisions subsidized premiums for people with incomes up to 400 percent of the poverty level, which is currently about $44,000 for an individual or $88,000 for a family of four.

Neaman offered an alternative approach to fixing the broken health-care system.

“The first thing we need to do is fix the cost issue,” he said, noting that would go a long way toward improving access.

“We need to break the Medicare monopoly pricing” and provide premium support for Medicare beneficiaries to shop for their own Medicare coverage, he said, “and not simply be locked into the Medicare system.

“We need to have some price sensitivity at the point of service,” said Neaman, noting that consumers and patients who don’t pay anything are more likely to over-use the system.

He also put in a plug for malpractice reforms that could reduce health-care costs by reducing the need to practice defensive medicine.

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