The Supreme Court Scenarios on Health Care; The Odds Are Bad for a Good Result
Nobody can predict how the unpredictable Supreme Court will rule on the constitutional challenges to the Affordable Care Act in a decision expected Thursday.
Recently, Bloomberg polled 21 respected constitutional scholars about the law's controversial mandate that all Americans have health insurance. Nineteen said they believed it to be constitutional according to an impartial interpretation of the law, but only eight thought the justices would uphold the provision. Such is the unpredictability of the court's activist conservative majority.
No matter what the Court decides, its decision will become one of the top issues in 2012’s presidential and congressional elections. Should the GOP win big this fall, it is likely there would be legislative and/or executive branch efforts to derail the reform.
Scenario I: The Entire Law Is Thrown Out
The Supreme Court heard three days of argument on the law, starting with the question of whether it was premature to challenge the ACA because its most contested provisions had not yet taken effect, and progressing to questions whether it is an unconstitutional breach of individual and/or state’s rights.
The ACA is intended to transform private health insurance and public care options for the working poor, middle class and elderly. On the private insurance side, it does that by requiring almost all individuals to have a health plan by January 2014, but also requires that insurers offer many more coverage plans than is now the case. It also bars insurers from not covering people with prior medical problems, and imposes cost controls on the premiums they charge. It requires companies with 50 or more employees to cover workers, and offers tax breaks and subsidies to individuals and businesses to pay for it.
On the public side, the ACA primarily expands Medicaid—the state-run program for poor people—by raising the income ceiling to enroll, and institutes many prevention-oriented programs such as creating clinics in underserved areas. It also adjusts payments under the federal Medicare program for the elderly.
The first scenario is that the Court will decide the entire law should be overturned on constitutional grounds—which would mean accepting the views of 26 red-state attorneys generals and ideological right-wing think tanks. There are two constitutional arguments these Republicans make: the first that Congress overreached its authority to regulate interstate commerce by requiring that all citizens (with few exceptions) have a health plan; and the second that is also overreached by requiring the states significantly expand Medicaid programs.
Legal scholars initially thought both of these constitutional claims were more ideological than realistic, as Congress has been regulating interstate commerce for generations—and healthcare spending accounts for one-sixth of the nation’s economy—and that Congress has similarly imposed requirements when funding innumerable programs to be run by the states.
The last time the U.S. Supreme Court threw out a federal reform on par with the ACA was at the height of the 1930s Depression, when then-President Franklin D. Roosevelt was battling the Court over the New Deal. Though nobody can guess what today’s Supreme Court will do, most scholars don’t believe it will completely overturn the ACA.
Should the Court do that, however, it would provoke an intense political response on par with the Court’s decision in 2000 to stop the presidential recount in Florida and install George W. Bush as president. Moreover, the Court is aware that states and the private sector have spent billions to implement the law. Suspending those efforts would cause economic turmoil.
Scenario II: The Entire Law Is Upheld
The second scenario is the entire law is upheld. That could be because the coverage mandate has not yet taken effect, meaning the law’s opponents have no current basis to sue—because no one has yet been "harmed." The red states’ objections about paying for a fraction of future Medicaid expansion costs are similarly far off, because the feds are paying for the law’s early costs.
The ACA could also be upheld because the Court will find no basis to either of the opponent’s constitutional claims that Congress overreached in regulating health insurance markets. This is not seen as likely because during oral arguments, the conservative justices were openly hostile to the government’s defense of the law.
However, if this is their decision, then blue states (which mostly support the reform) will continue to prepare for it, such as creating state health exchanges where individuals can buy plans. Red states (that sued) will have to act quickly to catch up.
Needless to say, if the law is upheld, the GOP will double down on campaign promises to overturn it legislatively—if elected to Congress or the presidency—after November.
Scenario III: Start Slicing Up the Law, Starting with the Mandate
This is where the guessing and complexities begin. Most of the arguments during the hearings concerned the individual coverage mandate that is slated to take effect in January 2014.
The Court asked both sides to argue three questions: whether they should hear a mandate challenge now; whether the coverage requirement was constitutional, and if the mandate were struck down what should happen to the rest of the law; specifically, should other related sections of the law also be struck down.
The government’s top lawyer told the Court that if they struck down the mandate, they should also get rid of two other key provisions: one requiring insurers to sell policies to people with pre-existing medical conditions, and a related measure that prevented the insurers from charging certain groups a higher price for the same plan (because of pre-existing conditions).
Politically, the law’s opponents took the most draconian view, saying that everything about the ACA violated individuals’ and states’ constitutional rights, and the entire law should be overturned. Because the law did not have a so-called severability clause, which would mean the entire law would stand unless specifically overturned, the opponents did not want to entertain the notion that other aspects of the law could stay in effect.
The question of whether the mandate and related parts of the law are "severable" is one that the Court will have to address. If the Court decides that the law is indeed severable then it will have to specify what provisions it wants to delete—which can be messy.
Health analysts say that if the coverage mandate goes but the other pre-existing conditions parts remain, the health insurance industry will lead a lobbying stampede back to the Congress to strike that aspect of the law or come up with an alternative approach to getting younger, healthier people into the insurance pool. The outcome there is anybody’s guess.
More likely, the Court will follow the government’s request and strike the mandate and the pre-existing condition provisions. If those all go, then millions of people who now lack insurance will be in a quandary, as almost everyone above age 50 has a pre-existing condition and currently is denied coverage.
Health policy experts say that insurers will likely develop other plans to capture some of that business. It’s hard to predict how fast that will unfold and how many of America’s 50 million uninsured individuals will take advantage of whatever options are offered, as the decisive factor will be price. The insurance industry wanted the mandate because it spread the cost of paying for care among people who were healthy and sick.
In any event, the sky will not fall if either the mandate—or the mandate and the related pre-existing condition provisions—fall. In short, there will be tremendous pressure on the industry and Democrats to find ways to entice the uninsured to get coverage. The GOP, of course, would seek to dismantle the remaining reforms, as none of their 2012 candidates have voiced any other agenda.
But the ACA has two halves, so to speak—the market driven-side and the government-driven side. The coverage mandate does not have much to do with the ACA’s expansion of government-run health programs for the poor, working poor and elderly, other than lowering some of the most expensive care because more Americans would be prodded into seeking preventative services and treatment earlier and more often.
Indeed, the other big question before the Court is whether the rest of the law concerning the expansion of public sector healthcare will stand.
Scenario IV: Curtail More Government Care for the Poor and Elderly?
On the final day of arguments, the Court looked at whether Congress could force states to expand Medicaid or face the federal government withholding all federal Medicaid subsidies. Several conservative justices seemed intrigued that the mandate could stay but the state expansion of public sector care could be curtailed—because the feds were offering the states too many dollars, making it a form of “coercion.” (The federal government pays for almost all of the cost of Medicaid expansion for the law’s first half-dozen years.)
Few analysts followed that thread, but those who did—including one journalist who has covered the Court longer than anyone else—suggested that this part of the law might also be on the chopping block. Republican-led states facing budget shortfalls argued for that outcome, saying that Congress did not have the authority to order them to spend money, even though Congress was picking up the tab. Ironically, these GOP-led states have vast numbers of low-income residents who would benefit from expanding Medicaid.
It is hard to imagine that the Supreme Court would find that Congress does not have the constitutional power to order the states to expand Medicaid and other long-established nationwide programs, although that is exactly what the red-state attorneys general argued.
But just as the prospect that a fallen mandate would undermine the ability to pay for coverage for all, it is possible that the Court’s conservatives could somehow side with these red states—and target specific funding provisions, such as the state-federal matching funds formula, or decree that states could opt out of following the law.
Any shrinking of the ACA’s public sector health initiatives could be very troubling, as these target the most financially vulnerable Americans and those who do not get health care until they face medical emergencies.
Assessing Outcomes and What’s Not On The Table
Regardless of what the Court decides, the medical profession, insurance industry and many state governments have been planning for the law to take effect—and reshaping how healthcare services are to be delivered. That work will not disappear, and it seems very unlikely that the insurance industry will completely revert to its pre-ACA days. It might still offer new plans to individuals, mandate or not. And many of the ACA’s best public features, such as creating dozens of clinics in underserved areas, will likely endure.
But the best-informed court watchers say the ACA decision will be momentous because the legal issues that are raised go to the heart of the Constitution’s design—how power and authority are parsed between Congress and the states. Moreover, the political fights involve very emotional stakes, as the ACA’s proponents see the law as a technocratic economic management solution whereas its opponents see a loss of personal liberty. Undoubtedly, these schisms will become a major part of the 2012 elections.
Progressives were never very enamored of the ACA’s market-driven approach. They wanted to see government-delivered health services offered to individuals—the so-called Medicare-for-all approach. Should the coverage mandate fall, the likely impact will be that the cost of private insurance will stay as high as it now is, and it will remain to be seen if individuals can buy insurance policies that are now denied to them.
But the worst outcome for progressives would be to see the Supreme Court curtail key government healthcare programs, because the slow but steady expansion of Medicaid and Medicare preserves the possibility that in the future a public option could be offered.
The Supreme Court is expected to release its ACA ruling on Thursday, with each of the nine justices reading statements from the bench.