Teaching Hospitals, Medical Students Applaud Supreme Court's Health-Care Ruling

June 28, 2012

The U.S. Supreme Court on Thursday, in a 5-4 decision that caught many observers by surprise, upheld a sweeping health-care overhaul that provides insurance coverage to 32 million more people, allows students to stay on their parents' insurance policies until age 26, and offers a mixed bag of incentives and potential challenges to teaching hospitals.

Many pundits had predicted that the high court would strike down the centerpiece of the Patient Protection and Affordable Care Act—the requirement that nearly all Americans buy health insurance or face penalties. But the high court found that the so-called individual mandate was allowed under Congress' authority to tax.

The decision upholding the plan championed by the Obama Administration and challenged in several states was written by Chief Justice John G. Roberts Jr. and released shortly after 10 a.m. Thursday. The health law, which was enacted two years ago, is expected to have a far-reaching impact on health-care education and training, as well as on teaching hospitals.

Incentives to expand the nation's primary-care work force will survive, but so too will challenges to the bottom lines of teaching hospitals that may be forced to treat more patients with less money, experts say.

Catherine R. Lucey, vice dean for education at the University of California at San Francisco School of Medicine, said she was "delighted" by the Supreme Court ruling because it will allow the school to train more primary-care residents in underserved areas and provide pay for the doctors who train family health-care providers.

The Association of American Medical Colleges was also generally pleased by the ruling.

In a statement released Thursday morning, it lauded the decision to expand access to affordable health care, but it added a note of caution.

"With 32 million newly insured Americans entering the health-care system, addressing the nation's physician shortage—projected to climb to more than 90,000 by 2020—is now more critical than ever," it said. Medical schools have been expanding their enrollments, but the number of practicing physicians can't grow unless Congress lifts the cap on residency training slots, which have been frozen since 1997, the statement said.

The association had joined nine amicus briefs supporting the health-care law. Atul Grover, chief public policy officer for the association, helped craft key parts of the law that relate to medical education. He said that even with the law, about 20 million people will remain uninsured, and many of them will likely end up seeking treatment in teaching hospitals.

Another big question that concerns the association is the potential growth in the number of people covered by Medicaid, the government's insurance program for the poor and disabled. Teaching hospitals, which serve large numbers of Medicaid patients, often barely break even because of lower reimbursement levels.

Many community physicians are already limiting the number of Medicaid patients they'll treat, and an influx of Medicaid patients could further burden teaching hospitals, which are required to treat people regardless of whether they are uninsured or underinsured.

Under the health law, about 16 million more people would have become eligible for Medicaid, but the Supreme Court's decision appeared to give states some wriggle room to opt out. The decision, while upholding most provisions of the law, limited the amount that states can be penalized for failing to increase eligibility for Medicaid.

The American Medical Student Association released a statement commending the Supreme Court's decision but objecting to the break it gave states that fail to expand their Medicaid ranks.

"We all go to medical school because we want to serve patients, so it's really an access issue for us," Elizabeth Wiley, national president of the association and a fourth-year student at George Washington University School of Medicine, said in a phone interview.

While medical educators generally welcome the expansion of insurance coverage to more patients, many are worried about the cuts in so-called disproportionate share payments they'll receive under the health care law.

Starting in 2014, the federal government will reduce the supplemental payments it has been making, through both Medicaid and Medicare, to compensate teaching hospitals for the disproportionate number of low-income people they treat.

In Texas, where up to two million more people could gain Medicaid coverage under the health law, leaders of the state's six health-care campuses have expressed concerns about how they'll handle more patients with less money.

"If we stay on the current course, the demand for patient care will far exceed our ability to meet that demand," said Ben G. Raimer, senior vice president for health policy for the University of Texas Medical Branch at Galveston.

Texas ranks 42nd in the nation in the number of doctors per 100,000 people and by 2014, the state will be graduating more doctors than it can take in first-year residency training slots, he said.