Mandate predictions and options

I don’t make a lot of predictions without data. So, it may surprise you that I’m going to predict whether the Supreme Court will or will not strike down the mandate. Unless you’ve been reading the blog regularly and closely, you may not know that I have data (of a sort) on this, which makes prediction easy. I am also already on record with a prediction, so I might as well repeat it:

[T]he chances of a majority opinion against constitutionality seems unlikely. Not impossible, of course, but against the odds.

I draw this conclusion from the sentiments of proponents of repeal, even those involved in bringing the suits. Several of the participating attorneys spoke at an AEI event about the case (part of a good podcast series, by the way). They admitted that they could not easily find five justices that were likely to rule for unconstitutionality of the individual mandate.

Thus, I predict the mandate will not be struck down.

However, if it is, I think Kevin Drum has about the right take on what may happen legislatively at the national level. He runs through different scenarios, which you can read yourself at the link, and then winds up where all wise observers of politics do. If Congress doesn’t act then

insurance companies go ballistic. If they’re required to insure all comers at the same price but healthy people aren’t required to buy insurance, then prices spiral as sick people sign up for coverage and healthy people drop out. Eventually this death spiral will lead — as the name implies — to death for insurance companies, and at that point it becomes a staredown. Something has to be done, and either Democrats or Republicans will blink first. […]

Congress might end up reinstating the mandate in some form or another.

But suppose Kevin is wrong (I know, hard to imagine, but stick with me). Then what? Well, it’s not as if individual states are impotent here. Let’s go to a post by me and Kevin Outterson from the archives:

States can also do their part to bring the remaining free riders into the system. Massachusetts has an individual state mandate in place, which appears to be working.  Some “blue states” can follow Massachusetts’s lead and pass a state-level individual mandate. Others, like Vermont, are exploring single-payer reforms.

Also, there are options that an administration favorable to the law can explore even if Congress doesn’t act. Again, from the archives:

One idea is to follow the examples set by Medicare Part B, which covers outpatient physician services, and Medicare Part D, the prescription drug program. CMS could permit “qualified health plans” in the exchanges to impose Part B and D-style premium surcharges on customers who delay obtaining coverage. The mechanism would be through an exception to the anti-discrimination rules, and the law gives the secretary of Health and Human Services some flexibility to issue regulations to limit adverse selection.

Another possible regulatory adjustment is the definition of “qualified individual” in the law. The definition currently excludes undocumented aliens, and CMS also could try to exclude free riders unless they pay a surcharge to rejoin the system. While there is little direct textual support for this rule itself, the ACA grants significant rule-making authority to implement the law.

A complementary approach would be to amend the definition of a “qualified individual” under state law. The NAIC’s American Health Benefit Exchange Model Act defines “qualified individual.” The suggestion would be to exclude free riders from this definition, with the state law approved by CMS. Exceptions might be necessary for individuals who lacked the financial capacity to have previously purchased insurance, but as seen above, these people aren’t really free riders in the classic sense.

Naturally it is a bit more exciting to imagine that the Supreme Court will have the final word on the viability of the ACA. Everyone loves a big, consequential showdown. But, the fact of the matter is a lot more rides on the 2012 election. If Obama retains the White House and/or Democrats retain the Senate, one way or another the law is likely to survive relatively intact. If the GOP sweeps, much of the law is at risk (even without 60 votes in the Senate).

Of course the Court’s decision will likely come down next summer, right in the midst of the campaign and may, therefore, influence it. My final prediction is that I will either be on vacation when that happens or wish that I were.

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