28 Mar Affordable Care Act Oral Arguments Day 3: The Future of Healthcare

Today was the final day of oral arguments in front of the Supreme Court on the Constitutionality of the Affordable Care Act. Again, the audio, transcripts, and scholarly responses can be found here: America Health Lawyers Association Blog. There were essentially two sets of arguments today, in two separate sessions. In the first session, the arguments revolved around whether, if the individual mandate is found to be un-Constitutional, that the rest of the Act can still stand on its own. The second session revolved around the expansion of the state run but Federally funded Medicaid program.

SEVERABILITY

The biggest and most important discussion today revolved around separability. Based on the Justice’s questions, it seemed as though it is a foregone conclusion that the individual mandate, argued in front of the Court yesterday, will be found un-Constitutional. Justice Kennedy, the likely swing vote on the issue, asked many pressing questions this morning based on the assumption that the mandate will be stricken, and if so, how it could be separable from the rest of the Act.

There were two big pieces to these arguments. First, if the mandate is stricken, then, as discussed in my previous blogs, insurance companies will face great financial exposure due to the potential that individuals will game the system. That is, they will withhold buying into the insurance system until they need the insurance, and since the insurance companies cannot refuse coverage due to pre-existing conditions, they will be made to cover the sick without receiving subsidization from the healthy. Since this requirement to the insurance companies is a key part of the Act, it seems, as the States argued, inseverable from the individual mandate. If one part of the Act falls, the other must fall with it.

MEDICAID EXPANSION:

The second set of arguments today related to the expansion of Medicaid, which could be tasked with covering those who can’t afford insurance, and could curb the potential “gaming” of the system discussed above. Unfortunately, it could be possible that states might choose to not participate in the program, leaving a large gap in coverage in those states and creating an even greater exposure to private insurers with respect to the other requirements in the Act. These factors taken together seem to indicate that, if one part of the Act is found un-Constitutional, the whole Act is at risk. The Justices questions today certainly seemed to put a heavy cloud over the act as they challenged the government to explain how the other parts of the Act could stand without the individual mandate.

THE FUTURE

Many of us agree that the current health care system is broken in many respects. Since the Affordable Care Act passed, insurance companies have panicked to some extent, precisely related to this risk of having to cover individuals with pre-existing conditions. Premiums have risen and the level of benefit has dropped, in general. Medicare costs are out of control and many now understand that the system is unsustainable. It seems clear that the system needs to be fixed.

The Affordable Care Act may have been an imperfect attempt at resolving these issues, and it certainly appears that the Act is at great risk of being found un-Constitutional. If this happens, we will be back where we started. Americans pay more per capita for health care (approximately 17% of our GDP and rising) than just about any other country, and the level of care with respect to many measures is not necessarily any better. With a growing percentage of our aging population entering the already faltering Medicare system, it seems that the whole system is on the verge of breaking.

As it stands now, it appears that we might be back at the drawing board come June to find a solution, and the only thing that is certain is that, if we do not find a solution, the system may collapse under the weight of its exorbitant costs. This is scary uncertainty that looms in front of many of us who make our livings in the industry, and even scarier to those of us who rely on the system to sustain the health of our friends, our families, and ourselves.

I look forward to your comments, ideas, and responses. Please feel free to add your comments. I will be posting a few more times between now and June with further reaction to the fait of the Affordable Care Act, from our perspective.

-Jesse Salen, CTO, ONRAD, Inc.