Supreme Court Upholds Affordable Care Act Subsidies: What it Means for the Medical Professional Liability Industry
July 2, 2015by
On June 25, the U.S. Supreme Court endorsed consumer subsidies to purchase healthcare insurance in the 36 states that have not established their own exchange under the Patient Protection & Affordable Care Act. The decisive 6 - 3 decision in King v. Burwell further cemented the reforms from President Barack Obama’s signature legislation into the American healthcare delivery system. “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” wrote Chief Justice John Roberts, explaining the Court’s rationale in the majority opinion. “If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.” With King v. Burwell decided, and the Affordable Care Act the law of the land, the question that remains to be answered is how the healthcare law will affect the medical professional liability industry. Since its passage in 2010, many medical malpractice professionals have worried that the influx of 10 to 30 million newly insured individuals carries the potential to create a spike in claims frequency. The reasoning is that individuals who have health insurance are more likely to engage the healthcare system, which creates more opportunity for unintended medical outcomes. Alarmists also point to coordinated care as a depersonalization of medicine because patients will no longer just see one doctor for their healthcare needs, and studies show that patients are less likely to sue a physician they have a personal relationship with. A contrary theory is that greater access to healthcare will equate to better preventive care, which will lead to fewer bad medical outcomes, which will lead to fewer claims of medical malpractice. An emerging legal theory expected to be tested is whether the Affordable Care Act could have a deflating effect on medical liability indemnity payments in those states that limit awards based on reimbursement from collateral sources—e.g., healthcare insurance. In a Rand Corp. white paper titled How Will the Patient Protection & Affordable Care Act Affect Liability Insurance Costs?, David Auerbach, Paul Heaton and Ian Brantley argue that the court systems that limit the collateral source rule could actually see a reduction in medical liability damage awards. Payments to victims of medical malpractice could be reduced once the injured party obtains coverage under the Affordable Care Act and payments for care made on their behalf by health insurers deducted from their award. “What we’re going to be litigating in the near future is whether covering the out-of-pocket expenses related to buying healthcare insurance can substitute for the high-dollar cost of care. That’s an interesting issue that’s going to play out throughout all the states,” said Craig Brodsky, Esq., a partner in the law firm Goodell Devries, who specializes in professional liability defense. “The defense will argue that the plaintiff’s future medical costs should be measured by the out of pocket expenses for a health insurance policy and co-pays that will provide care at no cost for the rest of the plaintiff’s life. That’s a lot less than paying for the actual care. The question is whether states will allow healthcare providers to make this argument.” The Supreme Court decision in King v. Burwell turns the page on what might be the last significant legal challenge to the Patient Protection & Affordable Care Act of 2010. What remains to be seen is exactly how it will affect medical professional liability claims frequency and severity. This article appears in the July 2015 issue of Medical Liability Monitor.