The newly insured residents would be covered either under an expansion of the state's Medi-Cal program or would buy insurance themselves with federal subsidies earmarked for families earning about $92,000 or less annually.
Gerald Kominski, director of the UCLA Center for Health Policy Research, said: "It's really a bleak forecast for the future if they overturn the law because you haven't addressed the underlying forces driving the healthcare system toward a cliff. The state returns to a system that's unsustainable."
At the national level, insurers were willing to support guaranteed coverage for all applicants as long as everyone is mandated to join the insurance pool. Insurers have warned policymakers that proceeding with guaranteed coverage alone would make premiums soar because older, sicker customers would join without healthier applicants to balance them out.
George Halvorson, chief executive of Kaiser Permanente, the state's largest nonprofit health plan with 6.6 million customers, said the loss of the mandate and related insurance provisions such as guaranteed coverage would require a "major reboot" at the state level. He said California could try to replicate the mandate enacted in Massachusetts or borrow ideas from European countries with universal coverage.
Taxpayers currently cover only a portion of the costs for the uninsured. Hospitals and doctors make up some of the difference by charging higher rates to insured patients, which leads to bigger premiums for employers and consumers.
"We know we are bearing the cost of the uninsured in our rates," said Ann Boynton, deputy executive officer for benefits at the California Public Employees' Retirement System, which just approved a 9.6% premium increase for its 1.3 million members next year. "We remain hopeful the Supreme Court upholds the individual mandate because we really do see that as important to reducing the cost burden on our members."
As part of the Medicaid expansion, the federal government agreed to raise reimbursements for primary-care doctors who treat those patients. If the federal law goes into effect, that could yield an additional $700 million annually for California physicians and help alleviate the shortage of doctors willing to see the poorest patients.
"There is no place that benefits more than California because we have the lowest rates and the most Medicaid recipients," said Howard Kahn, chief executive of L.A. Care Health Plan, which covers more than 1 million lower-income people.
Meantime, California hospitals are concerned about a split decision that voids the mandate and the prospect of more insured patients but keeps intact about $17 billion in federal cuts over 10 years for the state's 430 hospitals.
"We are feeling extremely vulnerable," said Anne McLeod, a senior vice president at the California Hospital Assn.