Plan B: If The Mandate Is Overturned

Roger Collier

First posted 9/12/11 on Health Care Reform Update

Kaiser Health News has an interesting piece in which it quotes the answers of six health care system “experts” to what happens if the Affordable Care Act’s individual mandate is found unconstitutional. (The GAO posed a similar question to a wider group earlier this year, and published its much more extensive findings in a February 25 letter to a Senate Appropriations subcommittee.)

It’s important to emphasize that KHN’s question was not what kind of coverage incentives should have been in the ACA, something that a number of the interviewees apparently didn’t understand, but what happens if the individual mandate is overturned.

In fact, if the mandate is thrown out, a couple of things are certain. First, many of those who would otherwise have acquired coverage will not do so as penalties for non-compliance are eliminated. Second, there will be an immediate jump in individual and small group premium rates, since the effects of the ACA provisions proscribing medical underwriting and pre-existing condition limitations will no longer be offset by an influx of new healthy insureds.

What happens next? The political finger-pointing is likely to be nicely balanced. Republicans will blame the ACA for the increase in rates. Democrats will blame Republicans for fighting the one provision of the ACA most likely to hold down premiums.

While proposals like restoring pre-existing condition exclusions or imposing penalties on late enrollees or extending the time between open enrollment periods could help mitigate the problem, neither party will hurry to push for solutions. Democrats will be unwilling to renege on their promises to eliminate all forms of medical underwriting, while Republicans will be just as unwilling to do anything that might make the ACA effective. And with the two chambers of Congress in opposing hands, an impasse seems more likely than not.

Is there room for a compromise? Given politicians’ propensity for buck passing, perhaps giving states authority to change open enrollment periods or to allow pre-existing condition exclusions after 2014 might find bipartisan support. State governors and insurance commissioners might welcome the opportunity to leave their mark on federal legislation, or at least to take credit for limiting premium increases.

One thing seems sure: overturning the mandate while leaving all other ACA provisions unchanged would provide a huge accelerant for the individual and small group insurance death spiral.

Roger Collier used to be CEO of a large health care consulting practice. Now he track the status of the reform bill, writing at Reform Update.

7 thoughts on “Plan B: If The Mandate Is Overturned

  1. That is why the answer is not just to repeal Obamacare in it’s entirety, but to replace it with patient centered solutions that include individual responsibility. States can take this over and induce competition both internally and externally among other states.
    Govt only messes up the market when it gets involved. Keep it out of the transaction.

    1. “Doctor”sh, please identify 1 – just 1 – market worthy of the name on this planet, not merely in the US, where one cannot find a shred of evidence of “government involvement”.

      Let me save you some time. Neither you, nor I, nor anyone can do it. For the entire concept, the very meme, is only a sophomoric crypto-Randian wet dream.

      oh, and it’s its, not “it’s”. You’re welcome.

    2. The government is involved in every healthcare transaction in the nation – be it state mandates which average 42 per state or federal laws like ERISA, HIPAA etc, ;et alone the 50% of the market paid for by government like Medicare/Medicaid.
      letting the states run things can bring us the joys of the miracle of TX with the largest uninsured percentage in the nation.
      20% of states do not even try and review insurer rates and many more have no ability legally to do more that review them. That is real responsibility and consumer focus.

  2. The general consensus within the industry experts is that it just will not matter; that is, if the mandate is found to be unconstitutional. The mandate, in its current form is just too weak. It is a fraction of actual premium costs. The current cash pay uninsured will not necessarily help the system if they suddenly comply by becoming insured. The uninsured currently have no compunction to receive uncompensated care. I do not feel they will sudden feel threaten to pay a penalty that the government has no authority to collect

  3. Inchoate

    Thank you for your “less than overtly arrogant” grammar lesson.

    What you either fail to see, or rather choose to ignore, is that the more government involves itself in healthcare, the more expensive it gets. Bureaucracy just adds multiple costly layers to healthcare, and intrudes on what should be a private doctor patient relationship. If you prefer a one size fits all top down government run healthcare system, there are many around the world to choose from. Those countries may also be looking for grammar teachers, so it would be a win win or you!

    1. Your description of PPACA is absolutely wrong. I am tired of these types of Fox News PHD talking points that are outright lies.

      There is no one size fits all and no interference in the Dr. patient relationship. It is also not “top down government run” since the US insurance industry – with all its inefficiencies, medical review panels, exorbitant exec salaries and high over all expenses are involved in every private purchase.

      46 million people today have “no size fits all” with no insurance and another 20 million+ are underinsured with poor plans and exclusions.

      Medicare is not changed and neither will be employer sponsored plans, esp. self insured ones.

      Insurance will be bought in the exchanges with 4 major optional plans and some subsidies or directly like they do now from the insurers in their state, or self insure as
      most large employers do now.

      There will be no one being turned down or rated for any reason and no one going broke for annual or lifetime maximums.

      You can dislike the plan all you want but misrepresenting and lying about it is wasting all of our time.

  4. @reformed rep

    More liberal talking points about how the govt can fix everything.
    Try looking at it from different glasses.
    Maybe the problem is that the govt is involved in almost half the healthcare transactions. Healthcare costs rose dramatically once health insurers and the government started fixing costs and acting as a third party in the transaction between doctor and patient. Giving govt and insurers more power and control over the healthcare system will just cause more of the same, with ever higher costs to all involved.
    I have worked in primary care for twenty years, as well as watching my father’s practice before HMO’s and other managed care organizations took control. Third party control of healthcare costs and thus decision making is doubling down on the broken parts of the system.
    If the govt wants to be involved, let them be a silent third party, hidden from the transaction. Let them provide HSA money along with a catastrophic policy and make them means tested to help the lower income more.
    Have any of you Obamacare supporters ever heard of competition bringing down costs and increasing innovation. Or should we let the govt pick the winners in healthcare like they pick it in every other industry.
    Let me think of some govt winners.
    Post office, Fannie Mae and Freddie Mac, social security, Solyndra, Medicare is in wonderful shape.
    We all know there is also no waste in govt spending. That’s why they can’t find anywhere to cut the budget.
    Is this the crew that you really want running healthcare into the ground?

    Instead of coming back with grammar lessons or insults, tell me how the govt will do it right this time, when they failed so miserably in other large ventures?

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