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Published June 28, 2012, 11:30 PM

In North Dakota, businesses scramble to make sense of health reform ruling

FARGO - Bernie Dardis, who heads Indigo Signworks, was surprised by Thursday’s U.S. Supreme Court decision to uphold the core of the sweeping health reform law. “The business community did not believe this was going to be upheld,” he said.

By: Patrick Springer, INFORUM

FARGO - Bernie Dardis, who heads Indigo Signworks, was surprised by Thursday’s U.S. Supreme Court decision to uphold the core of the sweeping health reform law.

“The business community did not believe this was going to be upheld,” he said.

Now, as the executive responsible for providing health coverage for 120 employees, Dardis must figure out how to deal with the law, with many big provisions slated to take effect in 2014.

The law mandates that individuals buy health insurance or pay a penalty. Similarly, it requires businesses to offer coverage for employees, with subsidies available to small employers, or pay a penalty.

Will Indigo continue to provide health insurance for its employees – or will it opt to allow its workers to get coverage through a health insurance exchange marketplace, and pay penalties to help offset that cost?

Dardis – whose own $200,000-plus open-heart surgery earlier this year attests to the need for health coverage – can’t answer that question yet.

“We will always do what we can to support the families of the employees who work for Indigo Signworks,” he said. But, he added, families, businesses and government can only afford to pay so much for skyrocketing health costs.

By upholding the Affordable Care Act, the Supreme Court ensured the six major medical centers in North Dakota, including Sanford and Essentia in Fargo, will get $65 million a year in extra Medicare funding for 10 years under the so-called

Frontier Amendment.

But the ruling also means that North Dakota, by opting to allow the federal government to create the state’s health insurance exchange, must accept a one-size-fits all solution from Washington, assuming the law is not repealed.

Business owners, health insurers, providers and state officials were grappling Thursday to understand the full ramifications of the law.

Paul von Ebers, president of Blue Cross Blue Shield of North Dakota, the state’s largest private health insurer, said a tax on insurers under the law will cost members an additional $65 per year for individuals and $200 for a family if it goes forward.

“We’d like to see that part of the law stripped and replaced with another funding mechanism,” he said.

Independent of health reform, and in tandem with the reform law, insurers and health providers are forging collaborations to restrain costs by shifting to payments that reward better patient outcomes.

Under the exchange, Blue Cross Blue Shield likely will face more competition from out-of-state insurance companies, who will have lower marketing costs to enter the state’s insurance market, von Ebers said.

“I can’t really predict how many companies will come here,” he said. The North Dakota Blues insure 381,078 in a state with a population of 683,932.

Executives of Essentia Health and Sanford Health generally welcomed the decision to uphold the law.

The hospital industry agreed to accept reduced Medicare payments over time in exchange for the health reform law’s expansion of coverage to reduce the number of people without health insurance.

By decreasing the number of uninsured – estimated at 83,000 in North Dakota, or 13 percent of the population in 2010 – hospitals’ uncompensated care expenses should decrease.

“It wasn’t without some trepidation,” Kevin Pitzer, the chief administrative officer for Essentia’s Fargo region, said of the tradeoff.

But the court’s decision to allow states greater flexibility in deciding whether to expand Medicaid coverage complicates the equation, Pitzer said.

“I think we’re all still trying to understand it,” he added.

The health reform law eases Medicaid eligibility by raising the income limit from 100 percent of the federal poverty line to between 133 percent and 138 percent.

As written, the law would allow the federal government to penalize states for not going along with the expansion by withholding the entire federal match for Medicaid, a shared federal-state health insurance program for the low-income, elderly and disabled.

But the Supreme Court struck down the withholding penalty as too severe, allowing states greater flexibility to tailor a Medicaid program.

As of May, 66,730 people were eligible for Medicaid in North Dakota, a program budgeted for $588.4 million in the 2011-2013 biennium.

“Any expansion would have to have the approval of the state Legislature,” said Maggie Anderson, director of medical services for the North Dakota Department of Human Services. “That’s kind of up in the air right now.”

In a special session last November, North Dakota lawmakers opted to let the federal government incur the costs and responsibility of establishing a health insurance exchange, which will allow individuals and small employers to compare health plan coverage and costs.

Lawmakers were leery at the time of spending money for a system that could have been struck down by the Supreme Court or be repealed if Republicans capture the White House and a majority of both chambers in Congress in the November election.

“Now, with today’s decision, it’s likely that that analysis might begin again in the days and weeks to follow,” Insurance Commissioner Adam Hamm said. “But the reality is, you still have a lot of political uncertainty floating around.”

Rep. George Keiser, R-Bismarck, who is chairman of the North Dakota Legislature’s Interim Health Committee, said federal health and human services officials might grant states a waiver or extension to allow them to create state health insurance exchanges.

Cindy Morrison, Sanford Health’s vice president of health policy, said a state-designed health exchange would be preferable to one by officials in Washington.

“We would much rather be talking to people we know and have a working relationship with,” she said. “It’s very common for target dates to slip,” which theoretically could make it possible for North Dakota to create a health exchange, if flexibility were granted.

Now that the Supreme Court has acted, it will take time for regulations to add clarity to the sweeping law. Still, many noted, elections in November could once again alter the landscape.

“The law is the law of the land for now,” Morrison said, referring to Thursday’s 5-4 ruling by the Supreme Court, the split decision itself a reflection of a nation divided over the issue.

Meanwhile, Dardis and others are scrambling for a more complete understanding of the Supreme Court’s decision and its ramifications.

“We’re going to have to reach out and very quickly get our arms around and understand what this means,” he said.

Readers can reach Forum reporter Patrick Springer at (701) 241-5522