March 30, 2012 — After hearing three days of heated arguments this week regarding key provisions of the Affordable Care Act, the nine justices of the Supreme Court will cast their initial votes today. Their decisions may change before the final ruling expected by the end of June, but in the meantime, the country is now left to wait and wonder about the law’s ultimate fate.
Here, WebMD answers some frequently asked questions about the Supreme Court case, breaking down a number of possible ways in which the court could rule, and the potential effects of those decisions.
Could the whole law be overturned? If so, what happens?
Yes, one possibility is that the Supreme Court justices will decide to toss out the entire law.
“If the entire law is overturned, we go back to the way things were before the law took effect in March 2010,” says Anthony Wright, executive director of Health Access, a California-based health care consumer advocacy coalition.
That means the expansion of both private health insurance and Medicaid would be eliminated, and that the roughly 32 million Americans who were expected to gain health insurance in 2014 would remain uninsured. “It would be a tremendous loss of expansion of the coverage we were expecting,” says Linda Blumberg, senior fellow in the Urban Institute’s Health Policy Center.
As for the millions of people who have already gained health insurance as a result of health reform, they would lose that coverage. That includes the 2.5 million young adults who are now able to remain on their parents’ health plan until age 26, as well as the nearly 50,000 Americans with pre-existing health conditions who gained coverage through the government’s Pre-Existing Condition Insurance Plans (PCIPs).
Other benefits already in effect could be lost as well, including:
- Small business tax credits to companies with 25 or fewer employees that offer health insurance to workers
- The right to appeal an insurer’s decision
- Preventive care with no co-pay
- Drug discounts for people on Medicare
- No more lifetime limits on health insurance spending
- Review of unreasonable insurance rate increases
- The requirement that insurance companies spend at least 80% of the money they collect on medical expenses
In addition, says David Lipschutz, policy attorney for the Center for Medicare Advocacy Inc., already-implemented structural changes to Medicare that are intended to slow rising costs would be lost. That includes new arrangements in which hospitals and doctors team up to better coordinate care, as well as reforms to the way in which health care providers are paid that emphasize quality over the volume of services provided.
How quickly would new benefits gained under the law go away?
Exactly how people would be impacted by the law being overturned would vary across the country, experts say. According to Wright, “Insurance plans have adapted to meet certain consumer protection standards under the health reform law, and would have to abide by the contracts they’re in now.” When the time comes for those plans’ annual renewals, however, most insurers would likely revert to their old ways.
States will have some flexibility, too. “If the whole law is overturned it’s up to [insurance] carriers and state regulators to decide what to keep in place and what not,” says Blumberg. Many states have legislation in place to enforce rules of the Affordable Care Act, which could help to maintain some of the benefits already gained, such as stronger insurance appeals processes or the requirement that insurers spend at least 80% of the premiums they collect on medical care.
Although there are limits to what states can do without federal guidance and funding, Wright adds: “I think there might be some states … that will go forward with some [consumer] protections regardless of what the federal government does.”
What if just the individual mandate is struck down?
If only the mandate is struck down, Americans will no longer be required to buy health insurance, but insurers would still be required to sell a plan to any and all customers, regardless of their health condition.
In this scenario, consumer protections already gained under the law will remain in place. The state-based health insurance exchanges — online marketplaces where people will be able to shop and compare and buy an insurance plan — will continue to be developed and will open for business by 2014.
Companies with more than 50 employees will still required to provide workers with insurance or pay a fine. And the federal government will still provide subsidies to help people who qualify pay for a health plan starting in 2014. The Medicaid program will expand to cover more people with low incomes.
What’s lost in this scenario?
Far fewer people would buy health insurance without the individual mandate. By some estimates, the number of uninsured Americans might only shrink by 8 million as opposed to the projected 32 million with the mandate in place.
In addition, there will be little incentive for healthy people to buy coverage since they can wait until they get sick to purchase insurance. That leaves mostly sick people in the insurance pool, and the cost of health insurance, as a result, is widely expected to rise.
Estimates of just how much costs could rise have varied. The Congressional Budget Office estimated a 10% to 20% rise in prices for plans sold on the state-based insurance exchanges. A recent RAND Corporation analysis found, however, that the cost for any individual could rise by only 2%.
There are also real-world examples, showing concern over high insurance prices without a mandate is more than theoretical. Experts point to states such as New Jersey and New York, where insurers are required to sell all customers a health plan, but no mandate to have insurance is in place. The result has been sky-high insurance costs that very few can afford. According to the Kaiser Family Foundation, in 2010 the monthly cost of an individual insurance policy was 69.3% higher in New Jersey than the nationwide average.
But proponents of the law argue there will be other incentives left in the health reform law to still entice people to buy insurance.
For instance, what these states didn’t put into effect — that federal health reform will starting in 2014 — is financial assistance to help people buy coverage. Federal subsidies will be available to a family of four with an income up to $92,200 annually to buy insurance through the exchanges. “When you have that financial assistance you’re not just bringing in the sick, you’re also bringing in the healthy, and so what that does is help moderate the dramatic effects we saw in New Jersey and New York,” Blumberg says.
If the mandate is overturned, there are also other ways to encourage people to buy insurance that are being considered. One idea is to only allow people to buy insurance during a limited open-enrollment period. There would be late-enrollment penalties for anyone who delays. The thinking here is that people will realize they need to buy insurance when it’s available, because it won’t be as easy — or as inexpensive — to wait and buy insurance only when they get sick or injured.
“The individual mandate is a replaceable provision,” Wright says. “The question is whether there is the political will to do so.”
If the individual mandate goes away, could the requirement that insurers cover everyone go, too?
Yes, the Supreme Court could knock down insurance market reforms along with the mandate, Wright says. That would mean insurance companies could continue to reject applicants who have pre-existing health conditions, as they do now.
However, if the Medicaid expansion and the subsidies are left in place, that would help to make insurance more affordable, and many people now without would likely gain coverage. This would be a boon for insurance companies because they’d be gaining lots of new, healthy customers.
But those with health conditions that don’t qualify for Medicaid or a subsidy would likely face very expensive insurance premiums or no insurance options at all because of the lack of a requirement to accept people with pre-existing conditions.
What if the court decides the law’s plan to expand Medicaid is unconstitutional?
Under the law, 16 million low-income individuals are expected to gain insurance coverage under Medicaid. The law expands the program’s eligibility requirements to allow people making up to 133% of the poverty level (about $14,000 for an individual or $29,000 for a family of four) to gain coverage.
The Supreme Court must decide whether the Medicaid expansion is unduly “coercive” to states, which are required under the law to cover more citizens under their Medicaid programs or risk losing all of their Medicaid funding from the federal government. If the court determines this part of the law is unconstitutional, it would have a significant impact, Blumberg says. “The expansion of the Medicaid program is expected to create a very substantial dent in the number of uninsured. Don’t forget that the vast majority of the uninsured in this country are below 200% of poverty,” she says.
In this scenario, 16 million people expected to gain coverage under the law by 2019 will remain uninsured.