A Supreme Court decision to rule against the individual mandate that requires Americans to buy insurance coverage would sour the health care industry on President Obama’s health care reforms. But the extent of the damage such a ruling would create has a lot to do with whether the sickest Americans will still be able to enter the insurance market.
If the justices uphold the part of the Affordable Care Act requiring insurers to cover patients with pre-existing conditions, insurance companies would suffer a blow, but doctors, hospitals and drugmakers would find themselves with more insured, high-need patients.
But if the court strikes down the insurance reforms, the situation changes.
Insurers would no longer have to cover the most costly Americans, but health care providers could lose out on a lucrative pool of patients they had been counting on under the original deal.
No one knows who the final winners and losers will be when the nine justices release their decision — which could come as early as this week — but stakeholders are preparing for the possibility that the court could strip away some of the “carrots” that enticed them to support Mr. Obama’s overhaul to begin with.
Insurers and providers were expecting that the law with its mandate would push 27 million uninsured Americans to obtain coverage. Minus the mandate, about 15 million uninsured are expected to enroll largely owing to a major Medicaid expansion and the availability of new federal insurance subsidies.
Given that health care stakeholders consented to a slew of new taxes and regulations with dramatic enrollment increases in mind, they may not be as eager to deliver on their part of the deal without the mandate, analysts say.
“They’ve all agreed to pay these small taxes to fund reform, with the idea they’re going to have something close to universal coverage, and now they’re going to have a lot less of it,” said John Holahan, director of the Urban Institute’s health policy center.
Pharmaceutical companies agreed to contribute $80 billion over a decade toward the cost of health care by footing half the cost of drugs in the Medicare Part D “doughnut hole” coverage gap and paying a health care reform fee and higher Medicaid rebates.
Hospitals accepted new Medicare penalties for high readmission rates and reimbursement cuts for hospitals treating a disproportionate share of the medically indigent, while medical device makers face a 2.3 percent tax on their sales.
And besides paying a new tax on premiums, insurers face dozens of new regulations, from restrictions on how much they can spend on administrative costs to mandates that they cover benefits deemed “essential” by the government and fully cover preventative services without charging out-of-pocket fees.
All of that will stay in place if the court throws out the mandate but leaves the rest of the law alone. But some analysts say that even in that scenario, the industry will still end up with a good deal from the extra enrollment owing to the Medicaid expansion and insurance subsidies.
“Without the mandate, certainly there’s less inducement to get coverage, but just the increased access to affordable options is very useful for a lot of people,” said Carter Price, a mathematician at the Rand Corp. who published a study on enrollment projections earlier this year.
And Robert Laszewski, a consultant in the insurance industry, downplayed the effect of the mandate on insurance enrollment.
“I think whatever the Supreme Court does, the subsidies are going to be there, and we’re still going to pick up a lot of new customers,” Mr. Laszewski said. “The hospital industry’s going to see a lot more people come in with insurance cards.”
No one knows how many of the currently uninsured will enroll if the court drops both the mandate and the pre-existing condition reforms. While the sickest Americans could find it impossible to buy coverage, premiums would drop and perhaps attract younger, healthier Americans.
But even if that kept enrollment numbers about the same as if the court struck down just the mandate, the fact remains that not nearly as many Americans will buy insurance if the government doesn’t require them to, analysts say.
“A lot of that coverage you’re getting is because of the premium subsidies,” Mr. Holahan said. “You’re still only getting 40 [percent] to 50 percent as many people covered.”