The Supreme Court of the United States' decision in June to uphold the federal governments' ability to pay out subsidies to more than 6 million people via Healthcare.gov saved the Affordable Care Act, better known as Obamacare, from unraveling.
However, being saved, once again, by the Supreme Court doesn't guarantee that Obamacare has cleared all of its major hurdles. On the contrary, three Foolish contributors we spoke to would be quick to suggest that Obamacare still has some significant challenges ahead.
Here's what they had to say.
One of the more interesting things about Obamacare is that it doesn't have to go down in a flaming heap of glory in order to wind up as a failure. One complicated but significant challenge that far too many people aren't considering is the pricing power of insurers and drug developers.
For instance, under Obamacare, insurers can no longer pick and choose who they insure. For many insurers that may ultimately result in higher medical costs if they don't enroll enough healthier adults. In response to rising costs insurers could choose to boost their premium rates, as they've done in year's past. Under Obamacare, any request that implies a 10% or greater increase or decrease in year-over-year premiums has to be justified and explained to a state's Office of the Insurance Commissioner. While this is designed to stop insurers from enacting enormous price increases on a year-over-year basis without reason, the Insurance Commissioners in each state don't have much ability to reduce insurers' premium requests if they're justified.
That leads to the next point: personalized medicine could cause drug prices to skyrocket over the next decade. Personalized medicine involves targeting a person's unique genes to affect positive change against certain diseases and disorders. Although personalized medicine holds a lot of promise in terms of treatment efficacy and quality of life, focusing on certain genes reduces the potential patient pool that a drug could treat. Long story short, these therapies tend to be more expensive than your standard one-size-fits-all treatments. As they become more pervasive, medical cost inflation could prove unstoppable regardless of Obamacare and its transparent exchange pricing and built-in premium controls.
One ongoing challenge for Obamacare has been enrollment. High enrollment numbers are desirable not only for the program to be deemed a big success and for tens of millions of people to secure healthcare coverage. They're also critical in order for the program to work as designed, with great efficiency.
After all, health insurance is all about pooling large groups of people and spreading out the risks, with premiums from the healthier folks offsetting the costs of those with greater healthcare needs. Young people are generally a healthy, inexpensive group to insure, and including lots of them in Obamacare is good for the program. If they don't sign up in large numbers in the coming years, it will be bad news.
The good news is that overall enrollment has been solid. According to a recent poll, the percentage of uninsured adults in the U.S. is at a record low 11.9%, down from 18% in 2013. Total enrollment was recently above 32 million, with that number including people enrolled through the federal and state exchanges and those taking advantage of expanded Medicaid.
That's great, but not everyone who can enroll has done so. Recently, 35 million Americans remained uninsured, and a good case can be made that the low-hanging fruit has been plucked and that it will be harder to reach the remaining uninsured, convincing them to sign up.
Meanwhile, the enrollment of young people has lagged projections. Investor's Business Daily has estimated that enrollment among young people is 41% below target, while 29% above target for those 55 and older. That's not a death knell for Obamacare yet, but it's a worrisome trend that could lead to higher premium costs if young adults don't keep signing up.
Since Obamacare was first passed in 2010, there have been multiple ways the law could have been derailed. Even after a launch fiasco, a presidential election, a mid-term congressional election, and two crucial Supreme Court rulings, though, the health reform legislation still stands. Is Obamacare finally safe on the political front? Not necessarily.
Next year's national elections could be the beginning of the end for Obamacare. All 14 (and counting) of the GOP presidential candidates promise to repeal and replace the legislation. There appears to be a general consensus among political observers that the House of Representatives should stay in Republican control. However, what happens with the Senate is much more in doubt.
If the White House flips to the GOP and the party retains control of Congress, it's very likely that Obamacare will be tossed out -- especially if public support for the law stays below 40%. Don't expect investors to get nervous (or giddy) about that prospect until well into 2016, though. Hospital stocks will probably serve as a good signal for what the market expects. If hospital share prices take a nosedive in the weeks leading up to November, there's a decent chance that Obamacare's demise is on the way. Those are some big "ifs" at this point, however.