If the Supreme Court Strikes Down the Mandate, It Should Keep the Rest of the Affordable Care Act, Including Key Regulations on
Everybody is down on Solicitor General Don Verrilli, who presented the government’s case for the Affordable Care Act at the Supreme Court last week. And everybody is up on attorney former Solicitor General Paul Clement, who argued on behalf of the states challenging the law.
But the attorney who impressed me last week was one that almost nobody seems to have noticed: H. Bartow Farr.
Who is Farr? He is a private attorney who appeared before the Court for 30 minutes on Wednesday, during arguments over “severability.” During that hearing, the Supreme Court considered the critical “what if” question: What if we strike down the mandate, as the challengers are urging? Should we throw out the rest of the law, or just part of it? And, if just part, which part?
The challengers, represented by Clement, want the Court to toss out the entire statute. That would mean, first and foremost, junking the expansion of Medicaid that will reach about 16 million people and all of the payment reforms in Medicare that, by many accounts, are already starting to push the health care system in the direction of more efficiency. It would also mean eliminating better drug coverage for senior citizens, myriad anti-fraud and abuse efforts, rules requiring drug and device makers to disclose gifts to providers, and guarantees of free preventative care, among other things. As Justice Stephen Breyer noted on more than one occasion, even seemingly peripheral features, like investment in the Indian Health Service, would disappear under such a sweeping and radical ruling.
The government wants to spare most of those provisions, particularly the Medicaid expansion, even if the Court decides the mandate itself is unconstitutional. But, as Verrilli made clear, the government agrees with the challengers about the viability of two key regulations. These regulations would prohibit insurers from denying coverage or charging higher premiums to people with pre-existing conditions. These two concepts are known as “guaranteed issue” and “community rating.” And if the mandate goes, the government says, eventually these two provisions should go, as well.
The logic here is that the mandate works in tandem with these provisions: If you’re going to stop insurers from discriminating against the sick, you have to make sure everybody gets health insurance. Otherwise, healthy people won’t buy coverage until they need it, destroying the actuarial balance that allows insurers to operate. The logic is correct. When New Jersey tried reform without a mandate, for example, healthy people fled the individual market, causing premiums to rise and, eventually, causing even more healthy people to flee.
But maybe that’s not the end of the story, as Farr, appointed by the court, explained lucidly in his argument. The Affordable Care Act might weather the removal of those insurance regulations a little better than similar state efforts did, because the law relies on some other mechanisms for stabilizing the insurance pool. Among other things, the law’s subsidies, which are particularly generous for people making less than 250 percent of the poverty line, would attract many people who currently find insurance too expensive.