Health-care reform law will survive even if mandate doesn't, experts say

When the US Supreme Court rules on President Obama’s Affordable Care Act, there’s a distinct possibility that the federal mandate requiring most people to buy health insurance – a pillar of the law – will be declared unconstitutional.

So if just the mandate goes, does the rest of the law fall apart?

In a word, no. Health-care experts, gaming out scenarios for how the court might rule, say the end of the mandate indeed means that some people wouldn’t buy insurance – but if the court lets stand other provisions of the law, the ranks of the insured will still go up.

If the law is not upheld in its entirety, health-insurance coverage “and how that influences the cost of health care, and whether everyone gets a fair shot at getting coverage – those will be challenges. But I don’t think it will be chaotic,” Dr. Jeremy Lazarus, incoming president of the American Medical Association, recently told The Associated Press.

Even without the mandate, the law’s expansion of Medicaid eligibility would cover some 16 million people, about half the total number of people who would gain insurance if the whole law is upheld, according to the Congressional Budget Office (CBO).

In addition, federal subsidies and tax credits for low- and middle-income people to buy insurance in the new marketplaces, or “exchanges” – think Travelocity for health care – will make coverage more affordable.

The real disconnect comes if the Supreme Court strikes down the individual mandate but lets stand the guarantees of coverage for people with preexisting conditions and the “community rating” provision that bars plans from charging more on the basis of gender or health status.

“If just the mandate goes, there’s no question that there are implications in that for how well the law works,” says Larry Levitt, a senior vice president at the Kaiser Family Foundation in Menlo Park, Calif. “There’s a consensus that premiums will go up, though by no means a consensus around how much they’ll go up.”

The CBO has estimated that the Affordable Care Act, minus the mandate, would result in premiums that are 15 to 20 percent higher than if the whole law had gone into effect.

“It’s far from ideal, but it doesn’t mean that the law is a failure or unworkable,” says Mr. Levitt. “People would still be getting benefits; there would still be lots of consumer protections going into effect. I don’t think it cuts out the heart of the law. But it would be a challenge.”

“I don’t think it would create chaos in the insurance system,” he concludes.

Still, all the talk of chaos is for a reason. Some is based on fear of what insurance experts call a “death spiral.” If there's no mandate, but if there are guarantees of coverage, sick people come into the system while many healthy people stay out. Premiums go up; and the more they do, the more people drop out. The result is a system skewed toward people with serious health issues, which is unworkable.

At the state level, there’s some experience with this scenario. New York has guaranteed access to insurance without a mandate, and insurance there is some of the most expensive in the country.

The key difference with Mr. Obama’s health reform is the subsidies. “They make insurance a very good deal for low- and middle-income people, even if they’re healthy,” says Levitt.

Ultimately, the Obama administration plans to “move ahead with major parts of the president’s health-care law” even if the mandate is thrown out, according to the AP in a story published June 18.

The story cites two unnamed Democratic sources “closely involved with the legislation” who spoke on condition of anonymity. The Obama administration has not publicly discussed contingency plans in the event some or all of the law is struck down, instead expressing confidence that it will be upheld.

At closed-door fundraisers, though, Obama has told donors that he may have to revisit health care in a second term, depending on what the court does.

But even if the entire law is struck down, the president can take heart in recent announcements by major insurance companies that they plan to keep some of the popular provisions of the law regardless of how the Supreme Court rules.

UnitedHealthcare, Aetna, and Humana have all promised to allow children up to age 26 to stay on their parents’ health plan. They have also promised not to reinstate lifetime limits on coverage and would continue to provide some preventive care without copays. Insurers in the Massachusetts Association of Health Plans made a similar announcement on Monday.

The Supreme Court could rule on health-care reform as early as Thursday.