The future of US health reform lies in the hands of one man

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Guest blog by Gavin Yamey, lead, Evidence to Policy Initiative, Global Health Group, University of California San Francisco

It has become increasingly clear over the last few months that the future of the Affordable Care Act (ACA), which aims to extend health insurance to an extra 32 million Americans, lies in the hands of one man.  That man is not Barack Obama.

That man is Justice Anthony Kennedy, of the US Supreme Court.

To understand why Kennedy will be “the decider,” here’s a quick review of how the ACA works.

Over 46 million Americans are uninsured, and the US is the only major industrialized nation that does not guarantee universal health coverage.  The ACA is a huge step in the right direction, because it insures 32 million of these uninsured people.  It also puts an end to some of the worst practices of the health insurance industry (such as denying coverage to patients with “pre-existing medical conditions,” dropping patients’ coverage when they get sick, or capping the amount that is paid out in the event of sickness).

From 2014, nearly all US citizens and permanent residents are mandated to have health insurance—or else they pay a fine.  The central innovation of the ACA is that individuals and employers will be able to go to an online “shopping center,” a bit like Amazon, known as the insurance exchange, where they can compare the costs, benefits, and consumer-rated quality of each plan.  If you are on low or middle income, you’ll get a generous subsidy to buy insurance.  Small businesses will get tax credits if they buy insurance for their employees on the exchange.  Insurance coverage will also get extended by widening the eligibility for Medicaid, the federal program for the poorest Americans.  The ACA adds a number of new benefits to Medicare, the federal program for seniors—including, for example, free colorectal cancer screening and mammograms

As I wrote in an editorial in the BMJ when the bill first passed (we posted the editorial on the E2Pi website, so it is freely available here):

“The biggest winners will be the working poor, who currently fall through the cracks of the welfare system. They have jobs, but their employers don’t offer insurance.  They earn a little too much to qualify for Medicaid and are too young for Medicare.  Their wages are too low for them to afford the exorbitant costs of health insurance in the individual marketplace. The bill gives them subsidized access to insurance for the first time.”

Despite all the press hype about the ACA being unpopular, in fact the specific provisions of the act are enormously popular, as I’ve written before on this blog.  In particular, as shown in a recent public poll, the tax credits to small businesses, the subsidies to low and middle income people to buy insurance, and the ban on insurance companies denying coverage based on pre-existing illnesses are all very popular.

The part of the bill that is unpopular is the mandate to buy insurance.  And Republicans, who have publicly vowed to do everything possible to bring Obama down (see here, for example), have seized on the mandate’s unpopularity to try and repeal the ACA.  Congressional Republicans now regularly take to the airwaves to decry the mandate as a loss of personal liberty, an affront to dignity and freedom, a step towards socialism (as Republican Senator, Orrin Hatch, said: “Congress has never crossed the line between regulating what people choose to do and ordering them to do it. The difference between regulating and requiring is liberty”).

Republicans have tried two tactics to repeal the ACA.

First, they tried to repeal the ACA through Congress. In the November 2010 mid-term elections, the Republicans took control of the House (the “lower chamber”), but not the Senate (the “upper chamber”).  And so, while a bill to repeal the ACA was able to pass in the House, yesterday the repeal bill was defeated in the Senate.  So—Congress won’t be repealing the ACA any time soon.

A second tactic that Republicans are trying is to get the courts to rule that the mandate is “unconstitutional.” They are trying to get the ACA thrown out on the basis that the government should not be allowed to force an individual to purchase insurance. Republican attorney generals across the country have filed a number of lawsuits, and there have now been four rulings in the lower courts.

In the latest (and most newsworthy) ruling, on 31 January 2011, a Florida district court judge, Roger Vinson, who was appointed by Republican president Ronald Reagan, ruled that the entirety of the ACA (not just the individual mandate) is unconstitutional.  I’ll return to Vinson’s ruling in a moment.  In December 2010, Henry Hudson, a Virginia district court judge, appointed by Republican president George W Bush, also ruled that the mandate was unconstitutional, but he said that the rest of the ACA could stand. In contrast, two other federal judges, both appointed by Democratic President Bill Clinton, have upheld the law.

So the score is even, at 2-2, falling along “party lines” (judges appointed by Republicans ruled against the mandate, while judges appointed by a Democrat upheld the law). The legal arguments won’t be fully settled until the debate on the law’s constitutionality has reached the Supreme Court.

And this is where Anthony Kennedy comes in.  His views on the constitutionality of the ACA are unknown, and he is considered a “swing voter” (his vote could go either way).  Of the nine US Supreme Court judges, the four reliably conservative judges are likely to come out against the ACA, and the four reliably liberal judges are likely to come out in support of the ACA.  This will leave Kennedy very much in the hot seat.  “Health care may be high-court nail biter,” said a headline in the Politico on 1st February (Politico is one of the must-read US political news websites).

OK, back to Vinson.  Vinson ruled that the mandate is “not severable” from the rest of the act, and so the whole lot must be over-turned (“Because the individual mandate is unconstitutional and not severable,” he wrote, “the entire Act must be declared void”). His ruling, says the policy blogger Ezra Klein, was therefore “much more extreme and sweeping than previous rulings.”

Three thoughts on all of this.

First, Vinson’s very extreme ruling now makes Hudson’s ruling seem rather mild in comparison.  Indeed, the Supreme Court may end adopting a similar position to Hudson’s, on a 5-4 ruling (with Kennedy as the 5th vote): the ACA can stand, but the mandate must be removed.

Would this kill the ACA?  Not necessarily.

As I’ve written previously, there does need to be some kind of incentive to bring everyone into the insurance pool:

Everyone must be insured in order to keep premiums low—without a mandate, healthy people might decline to buy insurance, leaving only sicker people in the “insurance pool,” which in turn jacks up premiums (the so-called “insurance death spiral”).”

If the Supreme Court throws out the mandate, there would still be other ways to encourage people to sign up for insurance on the exchange.  For example, you could charge higher premiums for those who delay their enrolment.  Indeed, Democrats are currently debating alternatives to the mandate.

So the ACA might survive, in a slightly different form.

Second, it seems inconsistent at best, and hypocritical at worst, for conservatives to now be outraged by the idea of the individual mandate.  The individual mandate was a conservative idea in the first place.

It was first proposed by the economist Mark Pauly in a paper in the journal Health Affairs aimed at persuading Republican President George HW Bush to adopt universal care (“The purpose of it [the mandate] was to round up the stragglers who wouldn’t be brought in by subsidies,” said Pauly in a recent interview in The Washington Post).  It was championed by the Heritage Foundation, a very conservative think tank. It was famously adopted by Republican governor Mitt Romney as a central plank in Massachusetts’ universal health care plan (this video shows him explaining why the mandate is a supremely conservative idea).  And a whole bunch of Congressional Republicans have sponsored health bills containing an individual mandate (indeed, Senator Chuck Grassley sponsored two such bills, and yet he is now saying that the ACA is unconstitutional because of the mandate).

So, there’s an awful lot of political posturing going on.

Third, there are plenty of other mandates in the US, so a mandate to be insured would not be unusual—think, for example, of mandates to buy car insurance, or to wear seat belts, or for children to go to school.

If the Republicans get their way, and the ACA is repealed, we know what the consequences will be: the non-partisan Congressional Budget Office reports that 32 million people will lose their insurance, the federal deficit will be increased by $230 billion, and health insurance premiums will go up.  The working poor will be left out in the cold again, and insurance companies will once again be able to call the shots.

Lacking health insurance can be deadly.  One recent study estimated that about 45, 000 deaths per year in the US are associated with lack of insurance.  Remind me again why repeal is such a great idea?

Competing interests: GY volunteered for, and donated to, Barack Obama’s 2008 presidential campaign, and donated to the congressional campaigns of several Democrats. He is a member of Organizing for America, a community organizing project of the Democratic National Committee. He receives employer-based health insurance from the University of California San Francisco.

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