California Healthcare Institute (CHI) Issues Statement on Supreme Court Ruling on the Affordable Care Act

LA JOLLA, Calif., June 28, 2012 – CHI-California Healthcare Institute President and Chief Executive Officer David L. Gollaher, Ph.D., issued the following statement regarding today’s Supreme Court ruling on the Affordable Care Act: “The Supreme Court's ruling, finding most provisions of the Affordable Care Act constitutional, surprised almost everyone. Chief Justice John Roberts, writing for the 5-4 majority, said that the Act's individual mandate could stand not, as the Obama Administration argued, under the Constitution's Commerce Clause, but based on congressional authority to impose taxes. As for the Act's enormous expansion of Medicaid, seven justices (all except Justices Ginsburg and Sotomayor) held that it went too far in imposing potential penalties on the states for noncompliance. Medicaid will expand, but how this plays out will take weeks and months to understand.

“Meanwhile, the Court's decision leaves important parts of the Act untouched. These include the medical device excise tax, the authority for FDA to create a pathway for approving biosimilars, and the Independent Payment Advisory Board. “CHI will continue to work with policymakers to ensure implementation of the law enabling the biomedical community in California to continue to develop lifesaving therapies and medical technology while protecting patient access to critical medical innovation. CHI will continue to support implementation of the bipartisan supported biosimilars pathway, including its critical provision providing 12-years of data exclusivity that was enacted under the Affordable Care Act. CHI will also work to support efforts to repeal the Independent Payment Advisory Board, or IPAB, which threatens patient access to important and innovative medical interventions.

“CHI has also strongly opposed the medical device excise tax and will continue to work to support its repeal. Our nation’s medical technology companies employ nearly 519,000 people, with California home to more than 1,200 of these firms — more than any other state in the nation. More than 107,000 medical device jobs in California represent roughly 20 percent of the total U.S. medical technology workforce. For most companies, the device tax would threaten payroll reductions and slash R&D investments. This is especially the case for small companies that make up the bulk of the sector in California. It is difficult to quantify, but recent studies estimate the tax threatens the loss of up to 43,000 jobs nationwide. As home to the largest segment of the nation’s medical technology industry, California would be disproportionately impacted. Given our still uncertain economy, it is especially important that we do everything we can to encourage, investment, entrepreneurship and innovation.

“California was the first state to create a Health Benefit Exchange following the passage of federal healthcare reform. It is charged with creating a new insurance marketplace in which individuals and small businesses will be able to purchase competitively priced health plans using federal tax subsidies and credits beginning in 2014. People would have no obligation to carry insurance; however, insurers would still legally need to accept applicants regardless of pre-existing conditions and limit the amount their oldest and sickest customers are charged.

“The state of California is estimating that 2.5 million in the state are still likely to enroll in subsidized coverage in Medi-Cal and the exchange without the individual mandate. Enrollment could be affected by outreach and enrollment efforts and potential premium increases that would result from not having as many insured raise costs above what has been modeled, anywhere from 3 percent to more than 20 percent.

“Our state and our country still face huge problems with the rising cost of healthcare, which in our estimation will require major changes to Medicare. CHI is dedicated to working with policymakers and our members in California to ensure that the biomedical community here is able to continue to thrive, providing well-paying jobs while ensuring groundbreaking therapies get to the patients who need them. Over the coming weeks, CHI will be distributing more in-depth information on the affect today’s Supreme Court decision will have on our community.”

About CHI

CHI represents more than 275 leading biotechnology, medical device, diagnostics, and pharmaceutical companies, and public and private academic biomedical research organizations. CHI’s mission is to advance responsible public policies that foster medical innovation and promote scientific discovery. CHI’s website is Follow us on Twitter @calhealthcare, Facebook, LinkedIn and YouTube.

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