Potential Scenarios on the SCOTUS ruling of the PPACA

The United States Supreme Court will rule within days on the constitutionality of president Obama’s Patient Protection and Affordable Care Act (PPACA). We’ve taken a look at what we feel are the three most likely outcome scenarios and attempted to unravel them.

But before we do that, let’s break down the four main issues that were argued before the Court:

1) Whether or not the federal Anti-Injunction Act is applicable to this case – This rarely-invoked Act is from the 19th century and basically states that a tax cannot be challenged in court until it has actually been assessed. Since the individual mandate’s penalties wouldn’t go into effect until 2014, the Supreme Court could not hear challenges to it until taxes are collected in 2015. Virtually all legal scholars and analysts agree it is very unlikely the court will find the Act applicable.

2) Whether the individual mandate is a tax – The individual mandate, also known as the “minimal coverage provision,” is the core of the PPACA. It requires that all individuals purchase health insurance regardless of their health, economic situation, or wishes. The question whether this mandate exceeds the constitutional limits of the “Commerce Clause”, which allows Congress’ regulate commerce between and among the states. While the federal government has routinely regulated terms of commerce, it has never before required it in order that it could regulate it.

3) Severability – If the Supreme Court rules some provisions of the PPACA unconstitutional, will the remaining portions stand, or must the whole Act be scrapped? The individual mandate is what funds the Act’s major provisions. Without out the Act becomes fiscally ruinous. Rather than the Supreme Court creating health care policy themselves, many argue that if they find the mandate unconstitutional they should allow congress to start over. The PPACA does not contain a severability clause, which some see as a simple oversight and others see as a fatal flaw.

4) PPACA’s Medicaid expansion constitutionality – As of now, the PPACA requires states to expand their Medicaid programs to cover more people, or risk losing all federal dollars for Medicaid. While federal dollars routinely come with restrictions, the states’ argument is that a threat of cutting off Medicaid dollars is too forceful, or “coercive” deeming it unconstitutional.

Potential Outcome #1: Court upholds the entire law

The Court concludes the individual mandate is not unconstitutional and the bill stands as written. The timeline for implementing exchanges and other provisions of the law continue as scheduled, pressing states that have not been complying with the law until after the Supreme Court ruling to scramble to get up to speed to meet the deadlines or risk the federal government entering into their states to enforce the law. States will need to comply with all of the law or risk losing all of their Medicaid funding, and ultimately this forces the states to take over the care of all those individuals that qualify. Furthermore, the precedent will be set giving the federal government the authority to order people into enter into a contract and/or purchase a product, and therefore fundamentally changing our system of government.

Potential Outcome #2: Court overturns a portion of the law

This is a very broad grouping of all the possibilities that could occur, but let’s point out the major portions that are most likely being focused on and their implications.

The Court invalidates the individual mandate, but decides to let the remainder of the bill stand. The question then turns to what portions of the bill are considered essential to the mandate. Community rating and guaranteed issued insurance reforms would most likely be removed. Insurers simply could not provide them without the funds the mandate would genererate. Without forcing consumers to buy insurance, the young and the healthy will continue to opt out. Without the removal of the community rating and guaranteed issue reforms, it will mostly likely result in the bankruptcy of many insurance providers, and ultimate death, of the health care industry.

Another portion of the law that could be struck down is the forced expansion of Medicaid. This would have serious impacts on the exchanges, as most of the insurance subsidies provided through them will likely be to newly Medicaid-eligible participants. The question of coercion has never been decided by the Court.

If only the individual mandate and/or the forced expansion of Medicaid are overturned, there are still many provisions remaining, such as the forced state exchanges and the employer mandate, to name just a few. The fate of these provisions will likely be decided by congress and the Executive in 2013.

Potential Outcome #3: Court overturns the entire law

Due to lack of a severability clause, if the Court invalidates the individual mandate, it could strike down the entire bill. It would deem that if indeed the individual mandate were struck down, the remaining provisions would no longer function “in a manner consistent with the intent of Congress”.

Yes, some people will be back where they were before the ACA for a short time, left without insurance, but this opens the floodgates for new, free-market based ideas to be presented to not only create actual permanent change and affordability for Americans, but to change the mindset and practices of insurance providers, as well.

 

For more resources on free-market based health care reform, please see the footnotes attached as well as the following:

• Arduin, Laffer, & Moore Econometrics. (2009). The prognosis for national health insurance: a Montana perspective. Montana Policy Institute. <http://bit.ly/LgEdjh>

• Issue Brief: Pitfalls of the Patient Protection and Affordable Care Act for Montanans. Montana Policy Institute.

• Montana Policy Institute – Free-Market Health Care Resource Page http://www.montanapolicy.org/main/page.php?page_id=37

• Patient Centered Reform Online <http://www.patientcenteredreform.com>

 

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