‘Healthcare Armageddon’ If Supreme Court Strikes Down Individual Mandate

You are aware the Supreme Court has agreed to review the Affordable Care Act this spring. But chances are most of you are unsure how you will be affected if the Supreme Court strikes down the most controversial element of the law: the individual mandate. 

In the case of the mandate, which requires that most individuals possess health insurance by 2014 or face financial penalties, two key scenarios could take place. It could be struck down, but for the most part, the rest of the law could still stand. Or the entire law, including the mandate, could be thrown out.

If the mandate is laid to rest but the remainder of the law stands as passed by Congress, the consequences for the healthcare industry would be disastrous, David Merritt, independent consultant and former CEO of the Center for Health Transformation, told Physicians Practice in an e-mail.“It will be the worst of all worlds,” he says. “We will see healthcare Armageddon.”

That’s because the healthcare law contains significant changes to the health insurance industry, such as requiring insurers to guarantee coverage regardless of medical history, he says, and the individual mandate is “deliberately” coupled with these regulations.

More simply, the thinking behind the law is that if all individuals are required to purchase health insurance, insurers could reasonably be expected to offer coverage to both the healthy and the very sick.

As Bradley Herring of Johns Hopkins University wrote in the New England Journal of Medicine, “The quid pro quo for the healthcare industry’s acceptance of these provisions appeared to be the increase in sales volume that it could expect from the expansion of coverage.”

But if the mandate is struck down and the health insurance regulations stand, individuals will know they are guaranteed affordable insurance at the time they get sick. “What incentive will they have to buy insurance when they are healthy? Insurance costs will absolutely soar for everyone,” Merritt says, noting that this scenario is often referred to as the “death spiral.”

For physicians, the effects of these increased premiums would be linked to patient treatment and reimbursements. Patients would wait to buy insurance until they are sick and therefore, need insurance, Merritt says. That could lead to delayed care and therefore less prevention and wellness of your patient populations and increased healthcare costs.

In addition, “When insurance costs inevitably soar, the government will look for savings elsewhere,” he says. “And provider reimbursement is always the first and often the only target.”
To avoid such a “death spiral,” the entire healthcare law would need to be invalidated if the individual mandate is struck down, Merritt says.

According to U.S. News and World Report, most experts say it’s a very real possibility that at least some of the regulations written into the law would fall by the wayside if the mandate is laid to rest. The law's provisions wouldn’t simply “unravel,” the article states, but major elements of the law would change.

In fact, a 2010 White House fact sheet says that if the individual mandate is struck down, the insurance mandates designed to enable all individuals to retain insurance at reasonable prices regardless of previous history or medical condition would need to be reneged as well.

It states: “Provisions preventing health insurance companies from discriminating against people with pre-existing conditions would also be invalidated by the court because the two are inseparably linked.”

Not surprisingly, nearly nine of 10 leaders in healthcare and healthcare policy said it is important for federal and state policymakers to continue moving forward in implementing the Affordable Care Act, according to a recent survey put forth by the Commonwealth Fund and Modern Healthcare.

When asked about specific coverage provisions in the reform law, 84 percent said it was important to move forward with the individual mandate.