Posted by Joel Wittman
After three days of hearing oral arguments on the legality of all, or parts, of the Patient Protection and Affordable Care Act (ACA), the Supreme Court is hopeful of rendering its decision in June. Based on what we’ve heard so far, it doesn’t bode well for the ACA. The primary issue of contention is the inclusion of an “insurance mandate” whereby citizens are required to purchase health insurance or pay a penalty. The mandate seems to be the linchpin of the reform act; without this requirement will insurance premiums skyrocket and will access to health insurance be limited? This also raises the question of severability. If the mandate is struck down, will the entire ACA also be invalidated or can parts of it survive? Will the law’s popular “guarantee issue” and “community rating” provisions survive without the mandate that virtually all Americans must have health insurance? Guarantee issue prevents insurers from discriminating against people with pre-existing conditions and community rating standardizes insurance premiums for those living in the same area. The states that have attempted to enact guarantee issue and community rating systems without instituting mandates saw their health reforms fail – insurance premiums skyrocketed, consumers had fewer choices and the number of uninsured went up.
So, what is the insurance industry to do? Insurers must prepare for a worst-case scenario – a ruling that the individual mandate is unconstitutional, but insurers still must provide policies for all people. In that situation, insurers say premiums will rise sharply because of people with chronic illnesses and pre-existing conditions, for example, would buy health coverage, but healthy people would not. Short of persuading Congress to write a new law, the insurers are considering certain contingencies including:
- Penalizing those who enroll outside of short annual windows
- Denying treatment for specific conditions, especially right after a policy is purchased
- Rewarding certain insurance buyers, such as offering much lower premiums for younger and healthier people
- Expanding employers’ role in automatically enrolling employees for health insurance
- Urging credit- rating firms to use health insurance status as a factor in determining individuals’ credit ratings.
There remains, however, a divided opinion about the exclusion or inclusion of the individual mandate in the health reform act. Some believe that its exclusion will cripple the ACA and all of its proposed benefits, while others contend that the penalty associated with the mandate is not onerous enough to deter individuals from not purchasing health insurance.
Things are never as simple as they seem to be. The good intention of the current administration to increase access to health insurance coverage for all individuals at affordable pricing may not be good enough to preserve the goals of the ACA. Do you throw out the baby with the bath water if the entire plan is deemed unconstitutional? Do you preserve part of plan and try to make the best of the remaining regulations? Or, do you leave the ACA as is and have the first meaningful health care reform since the Great Society? Only SCOTUS can let us know.
* Supreme Court of the United States
Joel Wittman is an Adjunct Associate Professor at the Wagner School of Public service of New York University. He is the proprietor of both Health Care Mergers and Acquisitions and The Wittman Group, two organizations that provide management advisory services to companies in the post-acute health care industry. He can be reached at email@example.com.