Most medical businesses already prepared to follow law

Blue Cross Blue Shield
Officials at Blue Cross Blue Shield of Minnesota said the Supreme Court's ruling on the Affordable Care Act does not change anything for the non-profit. But like other businesses in the medical and health care industries, there remain issues to sort out when it comes to implementing the law.
AP Photo/Carlos Osorio

The Supreme Court's decision to uphold the constitutionality of President Barack Obama's health care law doesn't change much for Minnesota's big medical device companies, hospitals, or health insurers.

Those businesses had been preparing to follow the law, but have concerns about how it'll be implemented.

With about 90 percent of Minnesotans already in a health plan, the insurers covering most Minnesotans do not expect a surge in enrollment.

"I wouldn't say we're expecting a significant number of uninsured to suddenly become insured," said Andrea Walsh, an executive vice president of HealthPartners, whose health care plans cover some 1.4 million Minnesotans.

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"About half of the individuals in Minnesota who are uninsured are actually eligible for state public programs but haven't signed up."

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Officials at Blue Cross Blue Shield of Minnesota said the ruling does not change anything for the non-profit. But there remain issues to sort out when it comes to implementing the law.

UnitedHealth headquarters
The for-profit insurer, UnitedHealth Group, provides or administers health care plans covering about 36 million people. Although the Minnetonka-based company did not provide comment today about the ruling's implications on business, Morningstar analyst Matthew Coffina says that the law is good for UnitedHealth.
Photo Courtesy of UnitedHealth Group

"The challenges that were there yesterday with respect to timing and transition, are here today," said Scott Keefer, vice president of policy and legislative affairs. "But at Blue Cross Blue Shield, I think this is really business as usual for us and we're trying to do our best to implement the law as required."

With the law's constitutionality now resolved, the court's ruling gives a little more certainty to organizations planning for new customers and new regulations.

However, the decision isn't the final word. Depending on the outcome of the November elections, Congress could substantially change the law. Opinion appears mixed as to whether the ruling is a net positive for UnitedHealth Group, the for-profit insurer that provides or administers health care plans covering some 36 million people.

The Minnetonka-based company didn't have anything to say Thursday about the business impact of the ruling.

But Morningstar analyst Matthew Coffina says that the law is good for UnitedHealth.

"Over the long run, United is particularly well-positioned to benefit from the expansion in the insurance pool," he said. "About 32 million people are expected to gain insurance. About half in Medicaid and about half in the individual market, thanks to the subsidies. United has its hands in all of the different buckets and should benefit all around."

Wall Street didn't react like that, though. UnitedHealth's stock fell as much as 4 percent Thursday, before squeaking out a half-percent gain, closing at $59.60.

Minnesota hospitals were already planning for the law to go into effect.

Supreme Court protests
Affordable Care Act supporters and protesters gather in front of the U.S. Supreme Court's to find out the ruling June 28, 2012 in front of the U.S. Supreme Court in Washington, DC. The Supreme Court has upheld the whole healthcare law of the Obama Administration.
Alex Wong/Getty Images

Lawrence Massa, president of the Minnesota Hospital Association said the ruling is good for the state's hospitals.

"It keeps us on the track to continue to move toward a reform payment and delivery system," he said. "It provides resources to provide more coverage for Minnesotans and creates some clarity in terms of where we're going."

The decision arguably doesn't change much for the state's medical device makers, either.

Even though the law is expected to expand health coverage to tens of millions of Americans, most of them are not likely customers for implantable devices.

"An estimated 90 to 95 percent of pacemakers in the U.S. are implanted in Medicare patients," said Debbie Wang, a medical device analyst with Morningstar. "A lot of these device products are actually already skewing toward the Medicare population, who are already covered."

The law includes a 2.3 percent tax on medical devices to help fund the expansion of health care coverage.

But device companies have been preparing to offset the tax by lowering costs, including opening plants overseas to take advantage of tax breaks and lower labor costs while positioning themselves to increase overseas sales.