There has been much anticipation and speculation that has followed the oral arguments before the Supreme Court on the constitutional issues facing the federal health care law, the Affordable Care Act (Department of Health and Human Services, et. al. v. Florida, et. al.). While it remains unclear how the court will rule, the reflection and discussions stirred by this landmark decision leave Americans with much to ponder. In anticipation of the decision that could come any day now, we’ve taken a look at some of the questions that have arisen surrounding this landmark case.
What are the implications if the individual mandate is found to be unconstitutional but the Court decides to sever this provision from the rest of the law?
The general consensus is that the insurance market reforms left in place without the mandate or other universal coverage provisions will lead to higher health insurance costs. There are examples of states which have attempted insurance market reforms without universal coverage and experienced higher costs.
Jessica Banthin from the Congressional Budget Office predicts premiums in non-group markets will be 15-20 percent higher without the individual mandate. Congress would need to respond to sharply rising insurance costs. Republicans would likely offer proposals to allow for the sale of insurance across state lines with the creation of Association Health Plans. Democrats would likely favor policies ensuring universal coverage whether it is reworking an individual mandate in light of the Court’s decision or other policies.
What will Congress do if the Court finds the individual mandate to be unconstitutional and severs most or all of the insurance reforms from the law with the mandate?
The insurance market reforms in the Affordable Care Act are popular. It is possible under this scenario Congress would act to put back in place these popular reforms. The announcement from many of the large health insurance companies and their trade association that the popular reforms will remain in place at least until the end of the year if the Court strikes the reforms from the law may give Congress some time before action is necessary. Republicans may want to reinstate these reforms, however, with some changes to how they were done in the Affordable Care Act.
What will Congress do if the Court strikes down the entire law if they find part of it to be unconstitutional?
The Court decision will make the case for why the Affordable Care Act is or is not constitutional. However, it will not address the issues that will arise from the consequences of their decision such as what to do with provisions of the law that have already been implemented. As a result, there will likely be immediate issues for Congress to address, as well as longer-term issues in terms of “replacing” the Affordable Care Act.
What are the budgetary implications of the Court’s decision?
Jennifer Banthin also speculated that the loss of the individual mandate would decrease the budget deficit by $282 billion over the next ten years largely from the lower spending on exchange subsidies and Medicaid. If the entire law is invalidated by the Court, there is much more significant fiscal impact given the loss of the savings put in place by Affordable Care Act. The exact amounts are subject to some debate given the limitations of budget baseline projections. The baseline projections indicate a significant increase in our budget deficits under this scenario while conservative critics have estimated little actual impact on the budget deficits.
The only issue that appears to have some level of consensus at this time is the timing of the Court’s decision, which is expected to be handed down toward the end of the month and not sooner.
Rich Meade is the Chair of the Health Practice and a Managing Director at Prime Policy Group. Cary Gibson is a member of the Health Care Practice and a Director.