A Health Law at Risk Gives Insurers Pause

As the Supreme Court considers the constitutionality of the federal health care law, one option that had seemed unthinkable to its designers and supporters now seems at least possible: that the court could strike down the entire law.

Although it would be folly to predict what the court will conclude, policy experts, insurers, doctors and legislators are now seriously contemplating the repercussions of a complete change in course two years after the nation began to put the law into place.

Their concerns were heightened after three days of court arguments in which some justices expressed skepticism about whether the full law could stand without the individual mandate requiring almost everyone to have insurance.

“Many of us did not get the bill we wanted, but I think having to start over is worse than having to fix this,” said Robert Laszewski, a health care industry consultant and former insurance executive who opposed the bill.

Others say, however, the last two years have made it easier for Congress or the states to revisit the issue. The effort was not a waste of time, said Christine Pollack, vice president of government affairs at the Retail Industry Leaders Association, a trade group that represents large retailers and opposed the law. “There has been an important dialogue that has happened over the last three and a half years that has been a long time coming,” she said.

The most ambitious provisions would be nearly impossible to salvage, like the requirement that insurers offer coverage even to those with existing medical conditions and the broad expansion of the Medicaid program for the poor. Popular pieces of the legislation might survive in the market, like insuring adult children up to age 26 through their parents’ policies, along with some of the broader changes being made in the health care system in how hospitals and doctors deliver care.

Abandoning the efforts and billions of dollars invested since the law was passed in 2010 would result in turmoil for hospitals, doctors, patients and insurers.

Many insurers would have difficulty changing course. “The risk of repeal and starting from zero frightens them infinitely more” than having to comply with the law as written, said Michael A. Turpin, a former insurance executive who is now a senior executive at USI Insurance Services, a broker.

Maryland’s health secretary, Dr. Joshua M. Sharfstein, said he was worried about the 50,000 people nationwide who are enrolled in a federally financed insurance program because they are seriously ill and cannot find coverage otherwise. If the entire law is thrown out, those people “don’t have other options,” he said.

Numerous provisions in the law have already gone into effect, like steps aimed at closing the coverage gap in Medicare drug plans and some of the regulations governing the profits of health insurers. The federal government has also spent about three-quarters of a billion dollars helping states set up new exchanges for people to buy coverage in 2014 when the full law goes into effect.

“The part I struggle with is how you undo two years worth of implementation,” said Dr. Glen R. Stream, president of the American Academy of Family Physicians. “It would leave tremendous uncertainty about what is the direction we’re going in and that uncertainty would obviously affect the patients directly.”

Health insurance companies, which would be freed from some of the already existing regulations limiting their profits, would have to readjust their thinking about how best to compete. While companies would continue to make money by carefully selecting which customers to cover and would adjust their business accordingly, many insurers say the health care market is deeply flawed. “The system doesn’t work,” said Mark T. Bertolini, the chief executive of Aetna. “Something has to be done.”

The law, “while imperfect in a number of ways, was a step forward,” Mr. Bertolini said.

If the law is overturned, some said Congress and the states could act to restore some of the lesser-known provisions. For example, the law reauthorized the Indian Health Care Improvement Act, which finances tribal health programs, allowed the Food and Drug Administration to approve generic versions of the complex and often expensive drugs known as biologics and imposed a 10 percent tax on tanning salons — all relatively minor provisions that could be accomplished through legislation.

But others were more pessimistic, noting that Congress is so mired in election-year politics that even such seemingly benign measures could be blocked.

And there is little hope that Congress could devise an alternative to the law anytime soon. “If this law is completely thrown out, a lot of momentum to solve some of these problems is going to be vitiated,” said Helen Darling, the chief executive of the National Business Group on Health, which represents employers that offer health benefits.

How much the states could continue on their own is unclear. “In this political environment, it’s going to be exceedingly difficult,” said Mike Kreidler, the insurance commissioner for Washington State, who supports the law.

Some states like California and Maryland have made progress in creating the exchanges, where people will be able to more easily shop for policies. But many questioned whether most states would be able to proceed without federal funding.

“There might be some states that will go forward, but it will be a crazy-quilt pattern,” said Ron Pollack, executive director of Families USA, a consumer group that supported the health care law. (He is no relation to Ms. Pollack, the retail association official.)

Both insurers and employers predicted that most insurance companies would continue popular policies that were enacted under the law. Insurers have already factored in the costs of allowing adults under 26 to be covered on their parents’ plans and eliminating co-payments on preventive services, and companies are also unlikely to reimpose lifetime limits on coverage. “It’s more trouble to roll it back,” said Mr. Laszewski, the health care consultant. “It’s part of the market now.”

Other provisions in the law tried to experiment with changes to how doctors and hospitals are paid, moving away from the current system in which they make more by performing more tests and procedures to rewarding them more for delivering better care that saves money by keeping patients out of the hospital and emergency room.

But much of the ability of hospitals to change how they care for patients, even as government programs like Medicare and Medicaid pay them less, was dependent on the tens of millions of new paying customers, said Len M. Nichols, a health economist at George Mason University who supports the law. “Everybody thought it would buy them time to become as efficient as they need to be,” he said.

Still many hospital executives and insurers say big changes in how care is being delivered will continue regardless of the law. “It’s been our experience and observation that the health care system has been undergoing reform for some time before this debate and this bill of 2010,” said Richard J. Umbdenstock, head of the American Hospital Association. “We’re already making dramatic course changes.”