Even Without The Individual Mandate, Health Law Would Still Affect Millions

If the Supreme Court strikes down the requirement that most Americans carry health insurance – along with related provisions that insurers must sell to people with pre-existing conditions and not charge the sick more – what’s left in the law?

Quite a bit, say policy experts – although the changes could make what’s left harder to do.

Unless the court tosses other parts of the law as well, employers with more than 50 workers would still be responsible for offering affordable coverage or paying a fine, starting in 2014.

Parents could keep their children on their plans until age 26. Insurers would be required to spend at least 80 percent of their revenue on medical expenses and quality improvements, while states or the federal government would review premium hikes of 10 percent or more to see if they are reasonable.

Efforts to slow the rising cost of Medicare by encouraging doctors, hospitals and others to act more like team players would continue, as would a program to evaluate medical treatments to see which are most effective.

New online marketplaces called exchanges set to open in 2014 would still be possible, but the individuals attempting to buy coverage there – with or without federal subsidies provided by the law — could be rejected by insurers if they have medical conditions.

Consultant Robert Laszewski, a former insurance industry executive, notes that the most unpopular part of the law is the requirement that most Americans carry coverage, but, conversely, that the public really likes the parts that bar insurers from rejecting the sick or charging them more than the healthy, according to polls. Unless they are struck, those provisions would be in effect in 2014.

“Ironically, the most popular and most unpopular parts of the law could go,” says Laszewski.

From an insurers’ perspective, he sees the logic: Without requiring most people to buy, insurers would likely raise premiums because consumers would wait until they fell ill to purchase coverage. Both the industry and the Obama administration have made that case in their legal briefs, arguing that if the justices decide the individual mandate is unconstitutional, they should also toss out the other two requirements.

The justices have options, including tossing all three of the requirements, striking the entire law or deferring action to Congress. They also might decide to simply sever the individual mandate and still require insurers to cover all applicants, no matter their medical history.

Most policy experts agree that could raise premiums because many of the newly covered would have medical problems. They also predict fewer healthy people would sign up. There is debate, however, over how much that scenario might raise premiums. RAND Corp., for example, issued a study saying that scenario would lead to premium increases of 2.4 percent for those who buy individual coverage, meaning individuals who don’t get insurance through their jobs.

But a different study by the Lewin Group estimated that the loss of the individual mandate could increase premiums by 12.6 percent for those individuals.

No matter what, there would be strong pressure on Congress from the insurance industry to restore its ability to reject applicants with medical conditions – or otherwise soften the blow – if the mandate was struck but the other provisions were not.

If all three provisions were struck, subsidies might be affected as well, says David Merritt, a senior advisor at the consulting firm Leavitt Partners. That’s because the law offers federal subsidies to help low- and moderate-income people purchase coverage, with the amounts tied to the cost of a benchmark-level plan.

But, without a requirement that insurers generally charge the sick and the well the same amounts, insurers would vary premium costs by individual, making the subsidy calculation far more difficult.

“It would be an absolute nightmare,” says Merritt. “They’d have to at the very least go back and figure out some new formula, which at the very least could impact the time frame for when the subsidies would be offered.”

Still, whether and what Congress could agree to in response to a Supreme Court ruling is uncertain.

Congress could, for example, try to expand special high-risk pools for people who are uninsurable because they are ill. But money would be needed to pay for such pools, which might mean a new tax or assessments on insurers or employers — unlikely in the current political environment, given that Republicans want to repeal the whole law.

Another approach might be to create financial incentives to encourage people to enroll in coverage. Insurers could be exempted from paying for pre-existing conditions for several years through a re-insurance program backed by the government. Again, funding would be required.

“Congress isn’t going to do anything between now and the election,” says Timothy Jost, a professor at Washington and Lee University School of Law.