The Right Prescription

Judgment Day Draws Nigh for Obamacare

If the mandate goes, two other crucial provisions may go down as well.

By 6.15.12

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The Supreme Court will hand down its Obamacare ruling during the week of June 25, and Nostradamus himself would hesitate to make a prediction about the particulars of what will inevitably be a controversial decision. Nonetheless, it's difficult to imagine that the Court will leave what Justice Scalia called "the heart" of the law standing. That the individual mandate is in genuine peril was made abundantly clear during last March's oral arguments, when Justice Kennedy asked the Solicitor General, "Do you not have a heavy burden of justification to show authorization under the Constitution?" Coming from Kennedy, widely considered the Court's sole remaining swing vote, that query completely unmanned the law's advocates.

Faced with such skepticism from Kennedy, the most obtuse of Obamacare's cheerleaders were forced to accept reality. Even Ezra Klein got it: "The quick read is that today went very badly for supporters of the individual mandate." What many of the law's boosters still don't get, however, is that they had a "bad day" not merely because the hapless Donald Verilli spectacularly failed to "carry the heavy burden of justification" for the mandate, but because that failure also portended the demise of two additional Obamacare provisions without which the law will be effectively eviscerated. If the justices strike down the individual mandate, they will very likely strike down the law's guaranteed issue and community rating provisions as well.

Why would they do that? Well, the DOJ recommended that very course of action. The third day of March's hearings was largely devoted to the dilemma created when the Democrats failed to include a severability clause in the law. The absence of such language, in theory, means the entire statute must fall if the mandate is struck down. This is, of course, the position the plaintiffs have taken all along. The DOJ disagrees, but does concede that the mandate is not severable from these other two provisions. As Deputy Solicitor General Edwin Kneedler told the justices, "If you take out minimum coverage, but leave in the guaranteed issue and community rating, you will make matters worse… we think those things rise or fall in a package."

Presumably, the DOJ took this position in the hope that the justices would leave the mandate unmolested because striking it down would doom two more crucial provisions of the law. We don't yet know if that strategy had the desired effect on the justices, but it's blindingly obvious that its implications were lost on many of Obamacare's cheerleaders. This is particularly true of those who make their living in the "news" media. A recent Politico piece, for example, contains the following passage: "Many SCOTUS watchers think one of the most likely scenarios is that the court will toss out the individual mandate and keep the rest of the law. That would leave a lot of the popular pieces alone, like covering pre-existing conditions…"

Jonathan Cohn echoes this nonsense in The New Republic: "One very real possibility is that the Supreme Court invalidates the law's most controversial element, the individual mandate, but nothing else." He then proceeds to paint a preposterous picture of Obamacare, sans the mandate, advising his readers that "the new regulations on the private insurance market, including those prohibiting insurers from denying coverage or charging higher rates based on medical risk, could function without the mandate." Cohn certainly heard every syllable of March's arguments, yet writes as if Kneedler never brought up the "package." Perhaps this is what he meant when he wrote, "I have trouble wrapping my mind around what I saw in the courtroom."

While it is possible that the Court will strike down the mandate and leave the rest of Obamacare standing, it's absurd to suggest that the law could still function effectively. Such a ruling would result in a health insurance "death spiral" in which healthy people stop buying coverage and the insurance companies are left with the most expensive patients. This is what Kneedler was trying to tell the justices about the consequences of striking down mandate but leaving guaranteed issue and community rating in place. As he rather inelegantly phrased it, "[P]eople would wait to get insurance, and therefore -- and cause all the adverse selection problems that arise … Rates will go up, and people will be less -- fewer people covered in the individual market."

In the end, though, the only justice Kneedler really had to convince was Anthony Kennedy. Justices Kagan, Ginsburg, Breyer, and Sotomayor are no doubt for upholding the entire law, including the mandate. Justices Roberts, Scalia, Thomas, and Alito will be for striking down the mandate at the very least. Thus Kennedy, the last of the swingers, will make the call. This is bad news for Obamacare's advocates. Not only did he show skepticism about the constitutionality of the mandate during oral arguments, he is thought to be sensitive to public opinion. If that is true, he will know about and consider a recent New York Times/CBS poll showing that 68 percent of Americans want the Court to overturn all or part of the health care law.

All of which suggests that the mandate is a goner. In fact, the White House is apparently expecting bad news on that front. In late May, it was reported that the President is "confiding to Democratic donors that he may have to revisit the health-care issue in a second term." Will the Court also follow the Deputy Solicitor General's recommendation to strike down the law's guaranteed issue and community rating provisions? Well, Nostradamus is dead and I'm not feeling very prescient myself. But hope springs eternal in the human breast.

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About the Author

David Catron is a health care revenue cycle expert who has spent more than twenty years working for and consulting with hospitals and medical practices. He has an MBA from the University of Georgia and blogs at Health Care BS.