The U.S. Supreme Court's decision upholding "Obamacare" will have major implications for patients, insurers and hospitals. It will also determine the future of jobs in the health-care industry.
Upholding the federal health-care law, formally called the Patient Protection and Affordable Care Act (PPACA), as well as the mandate that everyone buy insurance could bring as many as 30 million new customers into the industry, causing significant uptick in both use and spending, said Linda J. Blumberg, senior fellow at The Urban Institute Health Policy Center.
More money will flow to "pharmaceutical companies, doctors, hospitals, the people they employ, and even insurers," said Joseph White, Luxenberg Family Professor of Public Policy and chair of the Department of Political Science at Case Western Reserve University.
Job growth will likely be strongest in the primary care and home care fields, said Joanne Spetz, a professor at the Institute for Health Policy Studies at the University of California, San Francisco. The demand for health-care workers like dietitians, social workers and hospital administrators will also increase.
Another clear winner is the health-care technology sector, including those that help digitize, manage and secure health-care systems and medical records repositories, said John Birkmeyer, a University of Michigan professor of surgery and director of the university's center for health-care outcomes and policy.
IT services companies that can take health-care information and turn it into actionable data will benefit, Birkmeyer added. Expect to see a boom in job creation and greater competition in these sectors if the law is upheld, said Joe Flower, an independent health-care analyst and author of "Healthcare Beyond Reform: Doing it Right for Half the Cost." Support areas for primary care will also be hot.
Less clear is what happens to jobs at medical device manufacturers and pharmaceutical companies, which have been adding and purging talent over the last three years as market dynamics change.
While it is true that the PPACA will bring in millions of new customers, a number of provisions will likely hurt the medical device manufacturing industry. The law will enforce a 2.3% medical device tax that will cut into manufacturers' profit margins.
Scheduled to go into effect in January 2013, the tax could cost the medical device industry more than $28 billion and an undetermined number of jobs, according to Republican Senator Orrin Hatch (R-Utah) and Representative Erik Paulsen (R-Minn.), who recently penned an op-ed piece for Fox News.
Fewer Medical Device Jobs
"This is a real-money loser for manufacturers," said Gerard Anderson, a professor of health policy and management at the Johns Hopkins University Bloomberg School of Public Health. "Medical device companies will hire fewer people."
In addition, the health-care law will help usher in a different reimbursement model, where providers may get paid on a per-member, per-year basis, rather than the traditional fee-for-service model, said Birkmeyer. That may cause surgeons—who formerly had no reason to care about implanting a $5,000 hip from a U.S. manufacturer— to choose less expensive models from an overseas manufacturer, Birkmeyer said, resulting in a potential loss of jobs.
The ramifications of an upheld ruling are less clear for drug companies. As part of the health-care reform law, pharmaceutical companies are obliged to help fill the "doughnut hole"—a gap in Medicare Part D prescription-drug coverage that enrollees formerly paid out-of-pocket.
The "doughnut hole" measure may cost pharmaceutical companies as much as $70 billion over a 10-year period, Anderson said.
Cost pressures on drug companies as well as medical device firms could depress innovation and ultimately force job cuts, argued Holly Strom, former president of the California State Board of Pharmacy and chief operating officer at Strom & Associates, LLC, which handles regulatory/legislative affairs, education, and expert witness services in the pharmaceutical industry. "Only large players would be the ones capable of doing big business," she said.
The long-term end result could be industrywide layoffs, particularly at smaller drug companies with more modest economic backing, she said.
But perhaps the biggest impact could fall on the insurance industry. As part of the law, 80% of insurance premiums must be allocated to covering medical care, leaving only 20% for the insurance company to cover payroll and administrative functions.
"Approximately $1.1 billion will have to be paid back this year by insurance companies," Anderson said. "Most of which will come from employee salaries."
"They will go from a percentage of growing pie to one-time fee," Flower said. "They will need to change their business model."
Write to Beecher Tuttle at email@example.com