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SCOTUS and Obamacare: Strike the Mandate, Keep the Fine?

Striking down the mandate would be a huge deal legally, because it would signal the Court is prepared to resume its Gilded Age function as a kind of right-wing GOP super-legislature, wantonly tossing out laws that offend laissez-faire orthodoxy. It would be, in addition to a travesty of justice, a tragedy, depriving millions of Americans access to health insurance. I want to be clear about this: If the Court strikes down the mandate, I will lose my shit. But striking the mandate would not end the law, or even most of the law. – How Badly Will SCOTUS Screw Up Healthcare, by Jonathan Chait

WAITING FOR SCOTUS to rule on the Affordability Care Act, aka Obamacare, aka Romneycare, is coming to an end. We could know as soon as Monday.

As someone not in favor of the mandate, I also realize that without it premiums rise. Tax credits in Obamacare make a path for people to buy health insurance. The CBO numbers [PDF] are not lost on me: not having a mandate would increase the number of uninsured by 16 million, bringing the total uninsured to 39 million by 2019.

Kaiser Foundation wrote about the mandate a couple of days ago:

If the individual mandate were overturned by the court with the rest of the ACA untouched, we would be left with an individual insurance market beginning in 2014 where everyone would be guaranteed access to insurance, even if they have pre-existing health conditions requiring expensive medical care. Insurers could not turn people down based on health status, restrict their coverage, or surcharge their premiums. People who are healthy could choose to forego insurance, knowing that they could start buying it if they get sick (although they’d have to wait until the next open enrollment period). …

[...] So, why would invalidating the individual mandate not lead inevitably to a death spiral under the ACA? Two reasons:

First, and most importantly, the ACA includes federal tax credits to make insurance more affordable for people buying on their own in the new health insurance exchanges. This means that for many people, health insurance will be a very good deal, even if they are healthy. The primary reason that people remain uninsured is because they believe they cannot afford to buy insurance, and the subsidies address that directly. Our analysis of Congressional Budget Office (CBO) estimates suggests that over half of people in the individual insurance market beginning in 2014 will be receiving a tax credit towards their premiums.

[...] Second, the ACA allows significant variation in premiums due to age. Young people generally have less need for health care services, and they will pay lower than average premiums as a result. This was not true under insurance reforms in New York and (originally) in New Jersey, where insurers were required to charge “pure” community rates, meaning the same premium to everyone, irrespective of age. Predictably, younger people fled the market and older people remained. This should not generally happen under the ACA. (Note that the ACA does limit the variation in premiums due to age, requiring an insurer to charge its oldest enrollee no more than three times the premium for its youngest enrollee for equivalent coverage. In the current market, age-based premiums can vary by a factor of five to one or more. This could lead to some adverse selection based on age, but the effect should be relatively modest because there will still be significant variation in premiums allowed for age.)

I’ll be surprised if the Supreme Court leaves the Affordability Care Act intact, but shocked if the mandate stays in place.  I don’t think there’s a chance in hell they’ll nuke the entire law.

How much of this quarter of the law the Court decides to cut out is the guessing game. In ascending order, the Court might:

  • Leave it all in place.
  • Technically eliminate the mandate to buy health care while leaving in place the fine for not having health insurance. (Essentially upholding the fine as a tax while technically eliminating the requirement.)
  • Eliminate the mandate, and the fine, but leave in place the regulations that insurance companies not discriminate against people with health risks and the subsidies for buying insurance.
  • Eliminate the mandate, the fine, insurance regulations, and the subsidies.
  • Nuke the entire law.

[via Jonathan Chait]

But let’s just say SCOTUS does throw out Obamacare. I still don’t think it’s the end of the world. Congress will simply have to do their job through incremental steps and laws to address the runaway costs of America’s private insurance boondoggle, otherwise our entire country will go bankrupt, with or without the inevitable “grand bargain” push that’s coming down the pike after the 2012 elections.

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9 Responses to SCOTUS and Obamacare: Strike the Mandate, Keep the Fine?

  1. Art Pronin June 21, 2012 at 2:02 pm #

    Its a horrific situation. SCOTUS is about to jump the breach here. A unelected body ruling by fiat isnt what the founders intended for sure. They gave us Bush etc now maybe this as well with thousands of lives on the line?! Our govt bodies need major reforms, untilt here is our fortunes will keep sinking. Dems should have done medicare 4 all. Or a pub option. Hell not a severability clause was included which is a huge huge issue- pure malpractice.
    Most alarming is how the court rules on expanding Mediciad, bc if it says you cant it coudl throw into jeopardy 300 programs that are fed-local partnerships. 300. A bannana republic we are slipping into- a very dangerous time. This ruling has me on edge

    • guyski June 21, 2012 at 4:02 pm #

      This …unelected body ruling by fiat … stuff is none sense. All federal judges are appointed not elected. So any and all judicial decisions that rule against any law or proposition is wrong. That just does not float.

    • jjamele June 22, 2012 at 8:19 am #

      Was the SCOTUS an “unelected body ruling by fiat” when it struck down Separate But Equal in 1954? The racists sure thought so. Was it “ruling by fiat” when it found the right to an abortion in the Constitution in 1972? The men who wanted to keep women barefoot and pregnant in the kitchen sure thought so.

      The SCOTUS does not become illegitimate when it disagrees with Art Pronin, sorry. I suggest you get off that edge.

  2. Cujo359 June 21, 2012 at 3:22 pm #

    Interesting quote from the Kaiser Foundation. i’ve written similar things, and of course been told I don’t understand economics. Apparently, the Kaiser Foundation doesn’t understand the economics of its business, either.

    On the SCOTUS, I find it hard to believe they’d void the entire law. It’s a huge law, covering a lot of different areas. But, with this SCOTUS, who knows?

    I’m hoping they don’t void the Medicaid expansion, too, but that’s at least within the realm of possibility.

    • Taylor Marsh June 21, 2012 at 5:37 pm #

      heh-heh… Yeah, you ignorant cretin. :roll:

  3. casualobserver June 21, 2012 at 4:45 pm #

    Congress will simply have to do their job through incremental steps and laws to address the runaway costs of America’s private insurance boondoggle

    And perhaps if Obama, Pelosi and Reid had tackled the cost drivers back in early ’09 instead of just granting more coverage, this whole thing would have gone down a whole lot differently. However, I guess when the new administration leads off with a quintessential bipartisan gem like “Elections have consequences,and Eric, I won.” you probably shouldn’t be surprised when you encounter resistance.

    • Taylor Marsh June 21, 2012 at 5:38 pm #

      Absolutely no argument from me on the clusterf*#@! that was the healthcare “debate.”

    • Ga6thDem June 21, 2012 at 8:24 pm #

      Yeah, he was channeling Bush there. I keep saying Bush got away with it so why shouldn’t Obama think he can too?

    • Cujo359 June 21, 2012 at 10:31 pm #

      perhaps if Obama, Pelosi and Reid had tackled the cost drivers back in early ’09 instead of just granting more coverage, this whole thing would have gone down a whole lot differently.

      One of the big cost drivers in medical care is insurance. Just allowing everyone who wanted Medicare to take it at an early age would have saved enough money to cover just about everyone at no additional cost. Medicare for all would have been a cost saver, particularly if Medicare were allowed to negotiate prices the way insurance companies can.

      And when you get right down to it, with no practical means of enforcing the new regulations, there’s not much reason to think that the insurance we’ll be forced to buy will actually cover us when we need it.

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