After the mandate states will be on their own

What will happen in the unlikely event the individual mandate is struck down by the Supreme Court?

In a Kaiser Health News piece, experts ponder alternatives:

With Republicans vowing to dismantle the health law and courts wrestling with its constitutionality, some health policy experts are pondering a possible “Plan B” in case the individual mandate – the requirement that everyone get health insurance starting in 2014 – is weakened or struck down.

Ezra Klein wonders,

What’s the end game here? For liberals, it’s opening Medicare up to other age groups. It’s really not impossible to imagine that happening at some point in the future, and if it happens, the estimates are that Medicare will be something like 20 percent cheaper than private insurance and will drive most insurers out of business. But what do conservatives think will happen?

Whatever it turns out to be, it’s not likely to be a national strategy. Short of a unified government, I doubt Congress will be able to patch the law. That means it will become a state problem. I expect many, even most, states will do something to fill the hole left by a declared-unconstitutional mandate because the pressure from the insurance and provider industries will be enormous.

Thus, many, though not all, of the solutions offered in the KHN piece are possible, including a state-level mandate. The conservative position can just conform to reality: states can decide this for themselves. The key questions are:

  • What does the national law permit states to do, either explicitly or via waivers? Or, more accurately, what is impermissible? For example, I would assume that states could not tinker with the fact that insurers must not impose pre-existing condition exclusions, even for those who don’t delay purchasing coverage. It’s precisely this that would motivate insurers to pressure states to act.
  • What will become of the insurance market in states that don’t impose a mandate or something that serves the same purpose? I would expect the individual market to wither due to adverse selection problems, leaving many people uninsured in such states.

If a significant number of states fail to patch the law locally and many people are left uncovered, perhaps then, in time, some Congress would do something. But I don’t think national action would be the first order of business, not that policymakers won’t try (and they should). They just won’t succeed under divided government. Or, to be more precise, the cost of success would be too high, like dismantling of more components of the law.

Not only will it be left to states, that may be the best deal proponents of the law can get. In other words, the conservative position may also be the one that progressives come to view as the most palatable.

States may be on their own.

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