The fate of the Obama administration's health care reform law may finally be settled next week, when the U.S. Supreme Court is widely expected to finally announce whether the politically charged law will live or die.
Lawmakers and health insurance companies are already preparing for the possibility that the law, which recent polls suggest is opposed by about half of the country, will be overturned. And if the entirety of the Patient Protection and Affordable Care Act, as it is formally known, manages to survive, House Republicans have said they will vote to repeal it, piece by piece, until it is dismantled.
Four Issues That Will Be Decided By The Court
-- First off, whether the court should even consider the case in the first place. While experts say it is unlikely, there is a possibility the justices will rule the constitutionality of the law cannot be challenged until individuals are actually subjected to the individual mandate in 2014.
-- Whether the law's individual mandate, which requires most adults to either buy insurance or pay a fee that would reach $695 by 2016, is constitutional.
-- Similarly, whether a directive requiring states to expand Medicaid coverage, at risk of losing federal grants, is constitutional.
-- Finally, if the court eliminates the individual mandate, the justices must decide if it can be separated from the law or if the entirely of the legislation goes down with it.
With No Individual Mandate, Insurance Costs Could Rise
When President Obama pushed for an overhaul of the nation's health insurance system, health insurance companies were coaxed into going along with a central premise of the reform law: They would agree to cover all applicants, regardless of their state of health or preexisting conditions, if a new mandate was created to push younger and healthier Americans into purchasing insurance as well.
The reason? An influx of new beneficiaries would help subsidize the cost of coverage for the millions of Americans who could not otherwise afford insurance, lowering premiums across the board and ultimately allowing companies to charge everyone roughly the same rate. But without the mandate, younger and healthier Americans -- who are far less likely to buy insurance -- will likely stay out of the market and purchase coverage only when they absolutely need it.
The Obama administration has argued that if justices strike down the mandate, they should also eliminate related provisions requiring insurers to enroll applicants with preexisting conditions and charge them essentially the same rates as healthy people. It would be financially catastrophic for insurers to offer those rates to everyone without the influx of new customers to offset those costs. As a result, many companies would likely raise premiums in anticipation that more sick people, who are more expensive to insure, will sign up for coverage.
The change would also hit millions of Americans directly where it hurts -- their wallets. One mid-range estimate from the Congressional Budget Office predicts insurance premiums for families without coverage from employer-sponsored plans could see their premiums jump by 15 percent.
The Fate Of Provisions Already In Effect
Some of the consumer-popular provisions already in place will likely stay in place in some form, even if the entire law is struck down, according to Michael Blass, a partner at law firm Arent Fox, who works closely with health care companies.
No matter which way the decision comes down, most major health care providers have already made massive investments to comply with provisions of the Affordable Care Act that have taken effect, Blass said. So while the court's ruling may be a game-changer, it won't turn back the clock entirely.
Last week, UnitedHealthcare, Aetna and Humana all committed to upholding several of the most popular provisions of the law in effect, such as allowing adult children to stay on their parent's health care plans until age 26 and not charging co-payments for some preventive health services, such as cancer screenings. However, they have not promised to cover individuals, including children, with preexisting conditions.
The problem is that coverage does not apply to employer-provided plans that only use those companies to manage their health plans. Most Americans are insured by such group policies, and, in those cases, it would be up to the employer to abide by the health care provisions.
If the Supreme Court only strikes down the individual mandate, those employer-based plans would have less incentive to uphold those provisions. A prime example is the rule extending coverage to young adults. While the Obama administration estimates as many as 2.5 million young adults have been able to obtain health coverage because of the rule, it may not be economically viable -- or profitable -- for insurers to offer that extended coverage without the mandate to balance the extra costs.
Twenty-three states and the District of Columbia have already enacted laws that incorporate at least one of the early provisions of the federal law, according to a study by the Georgetown University Health Policy Institute. But Sabrina Corlette, one of the authors of the study, told Kaiser Health News that some of those states have an escape clause allowing the rules to expire if the Supreme Court rejects the law.
Medicare And The Cost To Seniors
Millions of seniors who fall into Medicare's prescription drug coverage gap -- that is, when they do not have insurance to help cover the cost of their medications -- would lose hundreds of dollars per year if the health care law is invalidated.
Last year, 3.6 million Medicare beneficiaries saved more than $2.1 billion on prescription drugs, an average of $604 per person, as a result of a section of the law requiring drug companies to provide a 50 percent discount on brand-name drugs for seniors who fall into that coverage gap. The result could be devastating for low-income seniors.
In a 2003 national survey of more than 17,000 Medicare beneficiaries by researchers at Tufts-New England Medical Center, Henry J. Kaiser Family Foundation and Commonwealth Fund, 40 percent of respondents said they did not all take all the drugs prescribed to them, often because the medications were too expensive. Nearly one-third also said they were spending at least $100 per month out of pocket on drugs.
In addition, seniors would lose access to the law's requirement that Medicare cover preventive services, with no out-of-pocket charges, an option that 32.4 million beneficiaries reportedly took advantage of in 2011.
Budget concerns could also lead states to drop millions of people from their Medicaid rolls if the law is overturned. The legislation currently prevents states from tightening their eligibility rules for Medicaid, which operates on federal and state funding, before 2014 when the program will be expanded to cover all legal residents at 133 percent of the federal poverty level (about $14,404 for a single adult or $29,327 for a family of four.)
In their legal challenge, 26 state's claim the expansion would be an unfair burden on their budgets, even though the Congressional Budget Office estimates the federal government will actually be covering about 93 percent of the cost over the first nine years.
The Severability Problem
As of now, it is still unclear as to whether the court will be able to uphold the remainder of the health care law if the individual mandate, the most contentious part of the legislation, is overturned.
During oral arguments in March, Paul Clement, the lawyer representing the 26 states challenging the law, argued that if the mandate is found to be unconstitutional, the remainder of the law should be thrown out as well since Congress would not have passed the initial bill without it.
While the court's four liberal judges were skeptical of the argument, its conservative judges -- namely Justice Antonin Scalia -- appeared to lean toward invalidating the entire law. Although he initially pontificated that it just couldn't be right for the law's many provisions to be struck down with the mandate itself, he later declared that because the mandate is the core of the legislation, its abolition would mean the entire law has to go.
My approach would be to say that if you take the heart out of this statute, the statute's gone, Scalia said.