Saturday, September 03, 2011

What happens if the SCOTUS overturns only the mandate and nothing else?

It seems as though we are always having an 'all or nothing' debate on the health care law. Democrats seem compelled to follow the position of the administration that the whole Affordable Care Act should be defended, while Republicans are just as adamant that it should be repealed-- every jot and tittle.

It is true that because of the political realities in Washington during late 2009 when the bill was put together, it was a carefully crafted piece of legislation designed to appease both patient groups, medical providers and the insurance industry.

In particular, a key piece of the bill was the individual mandate-- the requirement that starting in 2014 all Americans must purchase health insurance or face tax penalties. Candidate Obama in 2008 had only supported the mandate for children (on the theory that children were unable to make their own decisions as to whether to purchase insurance or not and their parents should not have the right to put their childrens health and lives at risk by not purchasing insurance.) However, he had specifically opposed the mandate for adults (which helped distinguish him from Hillary Clinton in the primaries, as she supported it.) However, as the bill was warped to fit through the hoop of what was possible in the Senate (and key parts such as the public option were jettisoned) the mandate made its way back into the bill.

The reason why it did was the perfectly logical contention by the insurance industry that other provisions in the bill, which curbed their worst practices (like recission, the act of canceling someone's policy when they got sick; pre-existing condtion exclusions which effectively meant for example that cancer survivors could never buy health insurance; and lifetime caps on treatment) would drive up their costs as they were forced to cover the sickest patients and pay for their care. While it certainly can (and should) be argued that the purpose of health care is to take care of the sick, insurers did have a point about the cost. So, the mandate meant that they would in return vastly expand their market, by virtue of more people paying premiums. While they would now be required to cover sick people who previously could not get insurance, they would balance this with premiums paid by mostly young, healthy people who right now don't have insurance (and gamble that they won't suffer an accident or unexpected illness.)

There are some good reasons why one could argue for the mandate of course. Some people who could afford insurance choose not to get it now (you know who I'm talking about because you've met him too-- the young, indestructible stud who spends all his money on a hot car he can barely afford to put gas in.) Then, when they are in an accident from hot dogging it down the freeway they are unable to pay the hospital bill, and we all end up paying for it when they pass it on via exaggerated charges to us, the insured (which then the insurance company jacks up our premiums to get their loss back.) This kind of thing has been going on for years and it's why a lot of hospital administrators lose their hair early. But-- the mandate remains unpopular (after all, nobody wants to be told they HAVE to buy something) and it has been a point of attack by opponents of the law.

Adding the mandate to the bill helped nail down the votes of two key Senators with strong ties to the insurance industry, Independent Democrat Joe Lieberman of Connecticut (for a long time Hartford, the capital of Connecticut practically defined the insurance industry and is still the home of many major insurance companies) and Ben Nelson, D-Nebraska (whose state is the most Republican one in the nation to elect a Democrat to the Senate, and also the home of Mutual of Omaha, still a major player in the insurance industry.)

Almost from the moment the ACA was passed on March 21, 2010, Republican candidates at all levels have pledged to repeal it. And recognizing how politically balanced it was, they have pledged to repeal the whole law, but in arguing that it should be repealed have focused their rhetoric like a laser beam primarily on one particular provision-- the mandate. However, promises to repeal are essentially political posturing. Doing so would be a mammoth undertaking, and it is a fact that no matter how successful the GOP is at the ballot box it is virtually certain that there will still be at least 41 Democrats who voted for the law in the first place left in the Senate-- enough to mount a filibuster and prevent a repeal effort from going anywhere even if there is a GOP President, pen in hand, ready to sign it. And it's hard to see how promising to go back to the broken health care system we've had for the past couple of decades is going to be seen as a panacea if they repeal it (I know they said 'repeal and replace' but repealing it and then passing a different reform law is even more hard to visualize than just doing the first half of that and going back to start.)

More significantly, various Republican groups (most notably a coalition of Republican state Attorneys General) have filed suit in courts all over the country attempting to overturn the law.

So far, at the level of the federal appeals courts, the results have been decidedly mixed. Six rulings have so far been issued. Three of them have upheld the law, and the other three have ruled against it. This is likely to end up in the Supreme Court next year and everyone is basing their thinking on the assumption that the court will either rule for the entire law or against the entire law.

BUT-- ONLY ONE of the three rulings against it overturned the whole law. The other two overturned the individual mandate only and upheld everything else of significance (including the reforms mentioned above preventing insurers from denying coverage and insurance exchanges where people who couldn't afford it otherwise could buy private insurance with premiums that are partly paid by the federal government.)

Well, it took a former Senate Republican-- and a formerly very influential one at that, former Majority Leader Bill Frist to ask the obvious question:

WHAT HAPPENS IF THE SUPREME COURT OVERTURNS ONLY THE MANDATE and leaves the rest of the law intact?

After all, the Supreme Court has a long history of ignoring whatever the legislative dealmaking was in getting laws passed and overturning certain provisions while leaving others alone.

The first thing that will happen in that case is that the insurance industry executives will need their own services after having a heart attack. Suddenly faced with not getting the increased revenue they have been counting on but still on the hook for universal coverage, they will try to make this up in one (or more probably both) of two ways:

1. Significantly increase premiums. This would increase costs both to people who pay them, and also to the government. As passed, the OMB found that because of a number of taxes included in the bill the ACA actually reduces the projected deficit by $143 billion (another irony in Republican calls to trim the deficit, when this is something that actually more than pays for itself.) But if the mandate is repealed all bets are off the table because the necessary government subsidies on insurance would spike upward sharply and begin to play into the deficit.

2. Begin an intensive lobbying campaign to be relieved of the burden they now have (and as part of the overall package were willing to accept for a few years) of caring for the sickest without revoking their insurance, turning them away or limiting the total cost of their care.) While it is conceivable they could convince Congress and some future administration to repeal the rest of the law, I believe this is unlikely because many of the provisions are not only popular, but are well ingrained by now. Passing a bill that explicity gave insurance companies the right to screw people (even if it's how they used to screw them) would be very unpopular and no politician will want to touch it. So instead of that they might have more success if there was some other way in which these very sick patients who were no longer profitable to treat could be taken off their ledgers. But that would require that they be given to someone else to pay for. And clearly no insurance company will want to only get people who have been rejected as too costly or too risky by other insurance companies. So that leaves-- that's right, the government. So, in that case it's entirely plausible that the insurance industry itself would end up pushing for a public option (albeit one only open to people the insurance companies don't want.)

Nevertheless this is a good thing. If the Supreme Court throws away the mandate we could end up in a society in which you may not be compelled to buy insurance but insurers are compelled to sell it to you and on top of that we get a public option after all.

1 comment:

Zach said...

This is an interesting question. I think the reality of it is, though, that if the mandate is reversed, the whole thing will wind up repealed or rewritten.

Lobbyists from insurance will lobby legislators to not make insurance companies pay the difference. The Dems will not want to make the old and sick pay. And center-Dems and Republicans will point out that nobody is going to buy insurance when it is more expensive that wouldn't buy it now.

The budget burdens passed on to the government to make up the difference will cause a big ruckus, and probably require further Congressional approval. If both houses are Republican-majority, as is the White House, the whole thing will be repealed. If both houses and the White House are blue, the extra money will be allocated. Or, if, as is most likely the case, we still have a split government, there will be bills to push back the start date and postpone its implementation indefinitely.

Ideally, if the Republicans have non-filibuster-proof majorities in both houses, Obamacare will be repealed, but Democrats will threaten filibusters until an effective alternative can be proposed. The alternative will have to make the situation better than what it is now, but not include any of the super-expensive requirements that Obamacare does, and not include a mandate.

Perhaps allowing shopping across state lines? This will be interesting to watch either way. -Z

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