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If the Supreme Court Strikes Down the Mandate–What’s Next?

Ezekiel Emanuel says he has been betting on how the Supreme Court will decide the case challenging the constitutionality of the Patient Protection and Affordable Care Act (PPACA).

Speaking at the annual meeting of the Jewish Social Policy Action Network in Philadelphia not long ago, Emanuel, who served as Special Advisor on Health Policy to the Obama administration when the bill was being drafted, confided that he has placed five wagers expressing his optimism that “the mandate will survive” along with the rest of the legislation.

“I think the vote will be 6:3 in favor with Kennedy and Roberts voting for.” There is “No doubt it is constitutional,” he declared. “Legally, this is an open and shut case.”

Emanuel, now chair of the Department of Medical Ethics and Vice Provost for Global Initiatives at the University of Pennsylvania, also revealed that he recently had dinner with Supreme Court Justice Antonin Scalia. Emanuel says Scalia will not vote for the reform bill. (No surprise there.)

For reasons I have explained in earlier posts here and here, I tend to share Emanuel’s optimism. Nevertheless, I could easily be wrong.

As Emanuel observes, there remains the danger that the Justices will overturn the mandate. In that case, the vote “will be 5:4 against. If that happens, the country will have bigger problems because then it will be a partisan ruling along party lines,” he noted, referring to polls showing that the American public is losing confidence in the integrity of the Supreme Court as an institution that stands above the political fray.

Fat carrots and skinny sticks

If the Justices do declare the mandate unconstitutional, what happens next? Will this spell the end of reform? Absolutely not.

The goal of the mandate is to draw more healthy people into the insurance pool, so that the cost of care when we become sick can be spread over a larger group. But the mandate is only one of many provisions in the PPACA that makes health insurance more attractive and more affordable.

Here are some of the “carrots” that should draw people into the pool:

  • Under the law, middle-income and low-income families purchasing their own insurance will receive tax credits to help them pay premiums. The subsidies will be calculated on a sliding scale for households with income up to four times the poverty level ($92,200 for a family of four and $44,680 for a single person).
  • The PPACA limits how much insurers can ask patients to pay out-of-pocket.
  • Insurers selling policies to individuals and small groups will have to cover all “essential benefits.” No more “Swiss cheese” policies filled with holes.
  • Insurers won’t be able to hike your premiums because you’re sick.
  • They also won’t be able to charge you 30 percent more simply because you are a woman.
  • When covering a large group, insurers must pay out 85 percent of the premiums they collect for medical care. When insuring a small group, administrative costs are higher, so they can keep 20 percent. If they don’t spend the required percentage of premiums on care, customers will receive refunds.
  • There will be no co-pays for preventive care, and the deductible will not apply.

These provisions should encourage many young, healthy Americans to purchase insurance. Research shows that younger people don’t buy insurance – not because they think they’re invincible, but because they can’t afford it. Subsidies will help many of them.

Making the hard sell

But the majority of Americans are totally unaware of the ways that reform makes insurance more affordable and more attractive. This is why Washington & Lee Law Professor Timothy Jost suggests that if the mandate is overturned, reformers should launch “an aggressive, televised marketing campaign.” As Jost explained to me in a recent phone interview, “if you really look at who is subject to the mandate, a lot would have every reason in the world to get insurance, and no reason not to even if there is no mandate.”

Would the carrots be as effective as the financial penalties in persuading healthy people to buy insurance? Probably not. Many observers argue that without the penalties, people just won’t sign up – no matter how many carrots you dangle under their noses.

I’m not convinced. It’s impossible to predict human behavior, especially over a period of years. It remains to be seen how younger Americans will respond to the tax credits, and the rules that require insurers to offer more comprehensive protection, including maternity benefits and preventive care without co-pays.

Moreover, if you read the PPACA, the mandate was a pretty skinny stick. Those who oppose the mandate object that it “forces” Americans to buy insurance. But the truth is that in 2014, someone who decides to opt out would pay a fine of just $95 or 1 percent of taxable income – whichever is higher – up to $285 per household.

This hardly constitutes “force.” Even in 2016, when the penalty peaks, it amounts to only $695 or 2.5 percent of taxable income, up to $2,086 per household – much less than the cost of insurance.

No question, if the mandate is eliminated, fewer people will be insured. But if reformers do a good job of communicating the benefits of reform, they could draw millions into the pool.

Losing the mandate may not be nearly as great a blow to reform as some suggest.

Note to readers: I welcome reader comments and questions, and will try my best to reply in a timely manner. I ask only that you do your part to keep our discussion both reasoned and polite.

Maggie Mahar is an author and financial journalist who has written extensively about the American health care system. Her book, Money-Driven Medicine: The Real Reason Health Care Costs So Much, was the inspiration for the documentary, Money Driven Medicine. She is a prolific blogger, writing most recently for TIME’s Moneyland. Previously she wrote and edited the Health Beat blog for the progressive think tank, The Century Foundation. Previous work for the Health Insurance Resource Center includes Can states thwart Affordable Care Act by refusing to build state health insurance exchanges? She also provides background on Congressional health care legislation for HealthReformVotes.org, a special project of the Health Insurance Resource Center.

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bob hertzFran Stevens, MDBobbyGRUcertainBobbyG Recent comment authors
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bob hertz
Guest

This has been an excellent dialogue so far, and it is great that Maggie steps in with comments. Based on my limited actuarial background (I have been in the insurance industry for many years), I think that Maggie “over-rates” the impact of getting young healthy persons to buy insurance. Let me state it another way. The impact of guaranteed issue is so large that getting young people into the pool will not lower costs at all. There was a piece in Health Affairs, I do not remember the date, which said that the current participants in the Minnesota High Risk… Read more »

Maggie Mahar
Guest

Determined—

I haven ‘t read your last 4 comments– just noted that they are there.

You might note that no one responds to you.

DeterminedMD
Guest
DeterminedMD

Ignorance is bliss. Besides, are you the only one who reads and comments here? Nice try in attempting to censor me recently.

DeterminedMD
Guest
DeterminedMD

I know, but this is the last one for the weekend, scout’s honor:

http://m.washingtontimes.com/news/2012/jun/22/health-care-is-the-next-bubble/

Get a sense this site is wary of wash times’ links.

By the way, read at the moderate voice site someone hypothesize the ruling may not come Monday. Yeesh almighty!

DeterminedMD
Guest
DeterminedMD

Sorry to keep commenting, but reading at http://www.wbal.com/shows/c4-show who equally is NOT supportive of PPACA, and found another link to warm the cockles of supporters:

http://m.washingtontimes.com/news/2012/jun/21/after-obamacare-997809127/

Note who the author is at the bottom; yes, I know the Wash Times is a conservative rag, but does any mainstream publication provide both sides to the debate? NO!

DeterminedMD
Guest
DeterminedMD

And yet another reason to take Ms Mahar’s word as gospel:

http://online.wsj.com/article/SB10001424052702304765304577480871706139792.html?mod=hp_opinion#printMode

Still wish there was a sarcastic font!

DeterminedMD
Guest
DeterminedMD

Maybe Ms Mahar can give an opinion of she is interested in reading this link why we should all be paying for health care of interventions as described in his piece about prolonging his demented mother’s life. http://nymag.com/news/features/parent-health-care-2012-5/ I read an abbreviated part in this week’s The Week magazine, and just thought immediately what PPACA would do with situations like this. Ms Mahar won’t admit it in her travels here, but it will come down to one of two things: her generation and that above hers are getting the younger generations to pay their bills, or, people will be basically… Read more »

Maggie Mahar
Guest

RU Certain & Fran First, I agree that you can focus on only 3 or 4 things at a time. But you are just one individual. Health care reform is calling on hospitals, doctors, community clinics, nurse practioners, and policy makers across the nation to reform the system– millions of people, working at different levels of the systm, will be involved. It will be a process, not an event. Any one hospital will probably focus on 3 or 4 problems at a time: they’re already addressing readmissions; many are working hard to reduce infection rates, more and more are using… Read more »

Fran Stevens, MD
Guest
Fran Stevens, MD

The reliance of PPACA on HIT to help pay for the increased costs associated with the law is a weak link. Additionally, the violations in patient privacy associated with EHR devices and the adverse consequences caused by them have been ignored by the hyper enthusiasts.

DeterminedMD
Guest
DeterminedMD

“hyper enthusiasts”, I like that as a substitute for extremist.

My opinion, most of the hyper enthusiasts are not active health care providers. I would even go further and say over 90% who crafted PPACA do not provide patient care nor have any real idea of what the process involves in any form.

Otherwise, how would this legislation be submitted to be passed as was done? Thanks for your comments here.

from fellow provider of patient care for 20+ years now.

DeterminedMD
Guest
DeterminedMD

Just keep spouting those numbers all weekend long, if that soothes your nerves. The damage is done, a one sided legislative assault that does not solve health care problems effectively but just redirects the hassles obtusely is not solutions. We as moderate Americans deserve better than this bilateral assault by extremist factions that only care about their legion, Again, extremist democraps and repugnocants, find your field and just bludgeon yourselves to death, and we in the middle will try to bury you with what respect we can afford. We witness the destruction of the military thanks to Bush and his… Read more »

BobbyG
Guest

My nerves, bay all accounts, appear to routinely be in far better shape than yours.

xoxoxo

BobbyG
Guest

6-3 puts it to bed. 5-4 to Uphold says “this is all we’re giving you and your Frankenstein law.” Campaign on it. We punt.

5-4 to strike says “enjoy your lengthy retirement, one-termer. We’re not afraid of you.”

DeterminedMD
Guest
DeterminedMD

“Expect a big turn-out on both sides.” The first thing you have written that is mostly right. You seem to ignore the third party interests here. Not convenient to you and your cause, eh? Your boss is not doing well of late. Here’s a tip for others to ponder: when the boss is not being appropriate or attentive to his legion, people will be pissed when they realize they are being ignored or sold out. Next week will be telling to the Democrat cause. He loses the Supremes’ vote and gets major egg on the face for recklessly using Executive… Read more »

Maggie Mahar
Guest

Rucertain– I wonder if you have read a good 5-page summary of the heatlh care legislation? If you had, you would realize that it regulates health insurance to a point that most knowledgable observers agree that the for-profit insurance industry will be dead in a matter of years. As the CEO of Aetna recently pointed out “Our business model wil no longer work” Under the ACA they won’t be able to make the profits Wall Street expects because: They will no longer be able to “cherry pick” healthy patients. They won’t be abe to charge sick paitents more. They will… Read more »

RUcertain
Guest
RUcertain

I guess my point is that the Federal legislation is doomed by its own complexity. Like treating a patient with 15 items on their problem list. You can’t be successful with all of it and must prioritize to a few or the results will be doomed. Here’s another recent example of the law having “a skinny stick” as you say. $1 billion dollars returned out the health insurance cofers sounds like a lot. Is it? I spent $18,000 for bare bones insurance for my wife and I last year and my premiums went up 9.9% in the spring. (Once the… Read more »

BobbyG
Guest

6-3 to Uphold. Maybe only 5-4 though, truthfully. Which would keep it in play as a 2012 Presidential campaign issue.

DeterminedMD
Guest
DeterminedMD

No one of integrity or respect of others’ boundaries enforces mandates. You apply consequences if people stray beyond reasonable and fair boundaries, but, democracies do NOT mandate action.

It is why the Democrats are as big a failure to this society as their equally insensitive Republican counterparts. Why the Court does not release their opinion is yet another example of alleged leadership and higher authority both clueless and compassionless. And, Narcicistic drama kings and queens.

Oh well, see what Monday brings.

RUcertain
Guest
RUcertain

Which is easier to communicate to a patient: the benefits of a healthy diet or the bad effects of smoking? You can list all the positive benefits of the ACA but all you need to point out to most Americans is the part where the Federal gov’t mandates you buy something you may not want, no matter how good it is for you. It’s sad to see how poorly designed the ACA turned out to be. As a physician, I had high hopes for reform of the Health Insurance industry by the Obama Administration but it has just become clearer… Read more »