What happens if the Supreme Court strikes down the individual mandate?

Any ruling by the Supreme Court on the constitutionality of the Affordable Care Act’s controversial individual mandate isn’t likely for at least another several months, but it’s worth thinking about what might happen after the case is decided. The first scenario is easy: If the Court upholds the mandate, the ACA goes forward as planned to the continued objections of many conservative Americans and politicians. The second scenario is less clear: If the Court finds the mandate unconstitutional, do they find it severable from the rest of the law? If not, they’ll strike the whole ACA down. This seems like the least likely outcome. If, on the other hand, they do invoke severability, the ball is back in the White House’s court. The decision at that point would be whether or not health reform can be successful without the individual mandate.

The concern here is the death spiral first described by Nobel Prize-winning economist Joseph Stiglitz. In essence, if we don’t require everyone to buy insurance, then insurance will be disproportionately purchased by the sick, making it more expensive and leading many to discontinue coverage in a continuous cycle that drives the price higher and higher until no one can afford insurance any more and the system collapses. By contrast, getting everyone into the pool is seen as the only way to keep costs down and maintain the insurance system. So the question is: What happens if the Supreme Court strikes down the individual mandate? Does the Obama adminsitration wash its hands of health reform, proclaiming that it can’t be done without the individual mandate because costs will rise too rapidly and the insurance system will collapse, or does it forge onward and see what happens?

Option one is the safe bet if you believe that a bad status quo is better than a potentially worse change, but it’s absolutely terrible politics. It would be admitting defeat on one of the defining aspects of the Obama presidency. Moreover, it would have tremendous negative implications for the future of health reform initiatives generally. Option two looks good politically for all of the opposite reasons, but it could destroy the health insurance market and hurt Americans in the process. That’s bad leadership. While such action might lead to the type of catastrophic collapse necessary to precipitate true change, it would be incredibly painful.

New evidence suggests, however, that the pain might not be as great as many–myself included–fear. John Sheils and Randall Haught of the Lewin Group ran a simulation model to see what might happen to coverage and costs if reform went forward as planned with the exception of the individual mandate. Remember, the concern is that fewer people would be covered and health insurance premiums would increase. What they found is that, yes, compared to estimates under health reform with an individual mandate, health reform without the individual mandate would mean fewer people would be covered and insurance premiums would increase, but things would still be better than if we did nothing at all.

How much better? Well, without reform, they estimate that 51.6 million Americans would be uninsured. With reform, that number drops to 20.7 million. With reform, but without the mandate, their estimate stands at 28.5 million. Not too shabby. As for premiums, the authors estimate that eliminating the individual mandate will mean a 12.6% increase. Not a welcome increase, but not necessarily the kiss of the death spiral.

That said, other estimates by the Congressional Budget Office and MIT health economist Jonathan Gruber have not been as optimistic. The CBO expects that axing the individual mandate will mean 16 million fewer insured persons and a premium increase between 15 and 20%. Gruber puts the figures at 24 million fewer insured and premium increases on the order of 27%. Because of the sheer volume of people involved and the uncertainty of their decision making processes, it’s really hard to know who’s calculations are the most reasonable.

What you can count on is this: If the Court finds the individual mandate unconstitutional, the White House will have more actuaries and health economists crunching numbers than you can imagine. These latest results from Lewin suggest that even if the Court says no to the individual mandate, it shouldn’t necessarily mean the Obama adminsitration should give up on health reform.

Brad Wright is a health policy postdoctoral fellow  who blogs at Wright on Health.

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  • David Hanson

    What we need is for the Supremes to invalidate the mandate AND the entire Obamacare travesty.

  • http://www.facebook.com/brianpcurry Brian Curry

    To be replaced by….. ?

  • Anonymous

    MALPRACTICE REFORM  !!!!!!!!!!!
    Stop the nonsense, get the attorneys hands out of the bucket, and maybe, just maybe, we can start to cut some costs.  I’m sorry, we just can’t keep adding cost to the health care system.

    • http://www.facebook.com/people/Natalie-A-Sera/743004321 Natalie A. Sera

      Get the INSURANCE companies’ hands out of the bucket, and there will be a LOT more money for those who actually do the work!

  • http://www.facebook.com/people/Michael-Rack/100001703895437 Michael Rack

    And what are the estimates if the court also finds the expansion of medicaid  unconstitutional? This is the one area of the upcoming Supreme Court case that few are talking about. I think it would have a similar effect to striking down the individual mandate.

  • Anonymous

    I wonder what the implications are if the SCOTUS does not strike down the individual mandate. Would that give the government power to force everyone to buy other things? Say, cable TV, a GM car, a loan from the government, life insurance, national auto insurance, unemployment insurance, retirement insurance (social security) — oh, wait, the last two they already do. Upholding it or striking it down — both ways have implications.

    Also the Lewin study – I don’t have access to the full findings – but is the increase in premium a “forever” increase, or just in the first year? What happens after that? Spirals start small.

  • Anonymous

    FWIW… I got this in my email today, I don’t know if it’s accurately attributed or not… but it’s pertinent…

    Trump explains “Obama Care” Best Yet!  “Obama Care Explained” Let me get this straight . . . …. We’re going to be “gifted” with a health careplan we are forced to purchase and
    fined if we don’t, Which purportedly covers at least
    ten million more people,without adding a single new doctor,but provides for 16,000 new IRS agents, written by a committee whose chairman says he doesn’t understand it, passed by a Congress that didn’t read it butexempted themselves from it, and signed by a President who smokes, withfunding administered by a treasury chief whodidn’t pay his taxes, for which we’ll be taxed for four years before any
    benefits take effect, by a government which has 
    already bankrupted Social Security and Medicare, all to be overseen by a surgeon general who is obese, and financed by a country that’s broke!!!!! ‘What the hell couldpossibly go wrong?’ 

    • http://www.facebook.com/kevin.knauss1 Kevin Knauss

      Everyone in America is covered, its called the emergency room and tax payers foot the bill. For such a wealthy man, Trump is fairly stupid. Of course, when has he ever had to worry about whether he had health insurance? Has he ever had to look someone in the eye and tell them they can’t get health insurance because of a pre-existing condition? Has he ever had to worry about paying his ever increasing health insurance premiums and having to decide; health insurance or heat this month?

      Trump is severly out of touch with a large group of Americans. I would rather see America struggle to pay for health insurance than to pay for those stupid wars that have done nothing but drive up the cost health care in America.

      • Anonymous

        Who knows if it was “really” Trump who said those things.

        In railing against Trump, you seemed to have missed the point of what was being said, namely, that the Affordable (so-called) Care Act was crafted, passed, and implemented by hypocrites and incompetents. I’m not necessarily endorsing this particular point of view (as I don’t know if it’s all true, but some of it surely is), I’m only relaying it to point out that the likelihood if the ACA actually solving the problems you raise is pretty slim. It would be different if Social Security, Medicare, and the welfare systems were effective and affordable, but they’re not. And, whether or not it will efficiently and affordably solve all those problems has nothing to do with whether the Constitution permits the government to force people to buy a commercial product.

        Also, I wish I were selling a product that the government is forcing everyone to buy, like you. I would also want America to struggle if necessary to buy it, and rather them buy it than pay for national defense (or heat or rent for that matter).

        I wouldn’t say that to the people forced to buy it, though.

  • Anonymous

    If mandatory health insurance is judged unconstitutional, what incentive is there then for patients to carry health insurance?

    Since government debt and several other debts have been made exempt from bankruptcy discharge, why not exempt health-related debts incurred by persons that are not covered by a “qualified” health insurance plan?

    This technically does not mandate everyone having health insurance, but one would have to be mighty stupid not to have it with this law in effect.

    The health care providers would then be free to pursue collection for the cost of their services.

    • http://www.facebook.com/people/Natalie-A-Sera/743004321 Natalie A. Sera

      Providers being free to pursue collection for the cost of their services sounds very nice, but to go after a large percentage of people would be spending a lot of money trying to squeeze blood out of a turnip. Plus there is something distasteful about a physician squeezing money out of people to maintain his very comfortable lifestyle by leaving them homeless or near to it. We need a healthcare system that takes care of provider needs, but ALSO takes care of the needs of working people who currently don’t have insurance or only minimal coverage.

      • Anonymous

        You’ve never used a collection service?

  • Anonymous

    How long can we as a country go on with such a hodgepodge of health care - insurance companies, an abundance of specialists, Big Pharma, getting very rich with support from our elected officials.  Many un or under insured, threat of banruptcy if you get a rare cancer, end -of – life horror stories when someone wants to die.  Our unhealthy diet – all the so called preventive medicine is not going to change that – we will continue to pay Big Ag and all the other Bigs.  .  On and on.  NO other courtry is like this even though we all share some problems with the aged, unhealthy diets and other issues related to healthcare.  Call other countries systems whatever but 1) they have a system 2) none would exchange their system for our hodgepodge. 

    It is possble to maintain capitalism, universal healthcare and a strong public education all together.  Yeah! we can’t have priviate insurance companies for basic care – unnecessary, we can’t have so many specialists – unneeded if we are healthier and we need to reverse our perverse eating culture than makes us such a sick country first by stoping  subsidies and tax the addictive substances in food (sugar, fat and salt) as was done with tobacco.  

    Indeed, we are now being outpaced in social mobility by other rich countries who (overall) put the healthcare of their people and education of their children first.  They know they would not be able to maintain a productive society without such investment.  Such investment does not mean welfare nor so called “socialized medicine” – we have the money to create an “outside the box” model that could put us back on track.   The bickering in Congress is shameful and at the expense of  what being an American is all about.    

  • http://www.facebook.com/people/Jeff-Frater/619980887 Jeff Frater

    I think the thing that galls me the most about the challenge to the individual mandate is that it comes from the right under the rubic of our individual rights – but the principle of the individual mandate is at the heart of conservatism, each contributing their share. 
    In other words the only reason it is being challenged on this point is because it comes from the left, not because it is wrong or right.  Two of the four leading Republican candiates have supported it in the past.  It was just when they were in a position that required they be practical rather than political. 

    • http://www.facebook.com/healthservicesresearch Brad Wright

      This is precisely right. The individual mandate was proposed by several members of the GOP in the mid-90s in response to Clinton’s reform proposal. They liked it then, they hate it now. What has changed? Certainly not the problems facing our health care system, which have only grown worse. This is politics pure and simple.

  • Anonymous

    Can someone give me one other example of the federal government requiring everyone to purchase a product from a third party  vendor??

    Let’s face until, the Trial Lawyers get their sticky paws out of healthcare and find some REAL criminals to worry about, our system will not change.  In addition, we must get rid of the notion that every single person is entitled to not only relief of pain and suffering (few arguments there) but also to every medical miracle that exists…regardless of their age, co-morbidities, and health lifestyles. I would love to see expensive treatments alloted by objective criteria, like UNOS does for transplants.

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