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01:13 PM
Kathy Burger
Kathy Burger
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Now What? Figuring Out the Impact of the Supreme Court's Surprising Ruling on the Affordable Care Act

For health insurers, the potential implications or the High Court's ruling upholding most of the ACA could affect everything from premium rates to fraud detection efforts to stock performance.

It's not too often that political junkies, journalists and business executives all wait nervously for news that will affect the insurance industry, but such has been the case this week regarding the Supreme Court's ruling on the constitutionality of various provisions of the Affordable Care Act -- otherwise known notoriously or affectionately, depending on your point of view, as Obamacare. The court's ruling this morning that upheld the constitutionality of most of the Act -- and, in particular, the individual mandate requiring the purchase of health insurance -- was a surprise to the many people who expected the conservative-leaning court to rule against the mandate. As business blogger Dan Primack (@danprimack) tweeted this morning about Chief Justice Roberts, who wrote the majority opinion, "John Roberts has just become The Most Interesting Man in the World."

According to Chief Justice Roberts, "The federal government does not have the power to order people to buy health insurance. The federal government does have the power to impose a tax on those without health insurance."

At mid-day following the announcement of the ruling the stock market was down dramatically --how much of this was because of fears for business and how much was a reflection of disappointment that President Obama prevailed is open to interpretation. For healthcare-related stocks, the performance so far was mixed. The stocks of UnitedHealth, WellPoint and Humana had dropped between two percent and six percent by mid-day. Stocks of hospitals (including Community Health Systems and HCA) had risen between six and seven percent, according to CNN.

While most of the coverage has been of the horse race variety -- analyzing the ACA and the possible Supreme Court rulings through the lens of what it means for Barack Obama's or Mitt Romney's respective prospects in the 2012 presidential election -- at Insurance & Technology we are of course most interested in what this means for the insurance industry. As I&T has reported, most health insurers have been in the process of changing their business models to prepare for the requirements, restrictions and potential opportunities of the ACA, understanding that market forces as diverse as consumerization, an aging population and non-traditional competition are driving transformation of healthcare and health insurance delivery -- regardless of specific legislation.

[Find outhow health insurers are investing in analytics to help them comply with new regulation, including the Affordable Care Act and ICD-10.]

It does look like the ruling will redirect some focus back to insurance companies, especially in terms of how they price premiums. Another possible impact on the industry could be on its efforts to address health insurance fraud, according to CNBC's Scott Cohn, who this morning suggested, "When you consider that we're looking at millions of people now coming into the system and this expansion of Medicaid, it creates all kinds of new complications in the war on fraud.”

The Insurance & Technology team will continue to analyze the ruling and its possible impact on health insurers and their IT investment strategies.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio

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