Whew! Justice Roberts' Decision Means Focus Can Now Turn to Real Health Care Dilemma

Whew! Now that’s over, maybe we can get back to the real work at hand. Will the Affordable Care Act be successful? It’s a grand experiment. And reporting on the mandate and exchanges that go into effect after 2014 is going to be the story in health care in the U.S. for years to come.

While in my post yesterday  I summarized where health care in America will go, if as the betting assumed the mandate was struck down, all attention now can turn to speculation about how the mandate will actually work.  Based on reporting by my staff at Bloomberg News when I was running the health team there last year,  and similar stories elsewhere, the economic argument for the mandate is solid.

To summarize, the mandate requires everyone who isn’t covered by an employer’s health plan, or by a government plan, to buy health insurance or pay a fee (the Court says it’s a tax!). Each state will be required to set up a web-based site where insurance buyers can compare and shop for plans. Insurers will have to take all comers, no matter if they have pre-existing medical conditions. The economic argument, which as readers know was initially a conservative and Republican idea going back to the early 1990s, is that insurers can afford the cost of care for the sick, such as those who already have a health condition, with the premiums paid for young and healthy people who are unlikely to require much, if any, care.

The evidence that coupling the requirement to buy insurance with a so-called “guaranteed issue,’’ the phrase that means insurance must by sold to those even with a previously existing medical condition, is already emerging from Massachusetts. Studies show most the population is now covered by some private or public plan. Most important, insurance rates to consumers who buy insurance on their own have held steady, suggesting that insurers are able to spread the risk as the mandate’s original creators back in the 90s expected. Health costs to the Massachusetts government have jumped, mostly due to subsidies to help pay for premiums offered to those with lower incomes. That surely will happen as a result of the national mandate, too.

What will be important to watch is whether private insurance companies will actually sell coverage via the exchanges and whether the new business they gain will be a boon to their bottom line. Most important, and critical to Obamacare’s success, is whether Aetna, Cigna, UnitedHealth, the blue cross plans and others, take advantage of all the new customers by creating plans that, as I noted in yesterday’s post, actually give doctors, hospitals and patients an incentive to make cost-effective decisions. By having so much of the population covered either by private insurers, or by Medicaid, as a result of the law’s expansion of coverage – also upheld by the Court – there is a real opportunity for the first time ever to coordinate and manage care. That’s where the Obamacare experiment will really matter.

The constitutional issue of the mandate all along seemed like an almost two year distraction. Attention now must turn to rule making out of the Department of Health and Human Services, the willingness of private insurers to offer interesting coverage plans at attractive rates to consumers not covered by employers or government plans, and how the state run web-based exchanges are set up.

In the end, the court ruled 5-4, as many expected. The shocker for court watchers was that Justice Roberts joined the majority. He did so by dismissing the so-called commerce clause as the point of contention and instead bought the Solicitor General’s argument that the mandate is constitutional because it involves the federal government’s power to tax. Opt out of buying insurance, the ruling states, and one simply can pay a tax. Interestingly, the law never calls the opt-out payment a tax, but rather a fee or assessment.

As others are noting more eloquently than me, the ruling is likely to stand as one of the most influential in Supreme Court history. The political fallout will be worth watching, too, as Governor Romney can campaign on repealing the law and President Obama can tout passage of the law the as the kind of LBJ or Roosevelt accomplishment that makes history. Senator Majority Leader Mitch McConnell, Republican of Kentucky, already is setting up the battle lines with this, as quoted today, on CBS News:

“Today’s decision makes one thing clear: Congress must act to repeal this misguided law. Obamacare has not only limited choices and increased health care costs for American families, it has made it harder for American businesses to hire.’’

By the way, if you are looking for a great blow-by-blow as to how the law came about, and especially how the mandate came to be despite President Obama’s initial antagonism to it, I suggest you read Fighting for Your Health: the Epic Battle to Make Health Care a Right in the United States by Richard Kirsch.