It’s March 23rd, and exactly two years ago, the Patient Protection & Affordable Care Act, the health reform bill, was passed. And ironically, in a few days the Supreme Court will hear arguments over a few parts of the bill that some believe are unconstitutional. The biggest issue is the requirement that everyone must have insurance (the individual mandate), and what happens to the rest of the bill if the individual mandate is found to be unconstitutional.
Simplee isn’t taking a side, but we’re keeping an eye on how the Court’s decisions might affect insurance benefits and costs to consumers.
So we’re going to do a little crash course now on what’s really at heart of the debate.
First, remember that the Affordable Care Act (ACA) is already happening.
Several benefits have already gone into effect, while others will start in 2014. So far, the bill has:
- Allowed children to stay on their parent’s health plan until age 27.
- Prohibited insurance companies from denying coverage to children with pre-existing conditions
- Set annual and lifetime limits so health plans can only ask you to pay so much out-of-pocket
- Provided discounts to people with Medicare who hit the donut hole and would have had to pay all prescription drug costs out-of-pocket.
- Made free preventive care available to people with Medicare
And in 2014:
- Plans would be prohibited from denying coverage or charging higher premiums to people with pre-existing conditions
- Health Insurance Exchanges will be set up so people can shop for plans
- Subsidies will be available to help people purchase coverage
This means it could be a big mess to untangle…
If the Court decides the Individual Mandate should be repealed, that raises the next question: Can the Individual Mandate be separated from the rest of the ACA, or does that mean the entire Act should be repealed?
The answer is not simple. Because the parts of the ACA are not just a handful of changes related to health care. They are actually a set of interrelated policies, all intentionally created to work together and balance each other out. Let’s think back to Economics 101: Supply and Demand.
Why the Individual Mandate is actually kind of important
The ACA was intended to increase insurance coverage to as much of the population as possible. Think about all the benefits listed above—these things were all meant to increase the supply of health care. They prevent plans from being selective about who they sell coverage to. But imagine what might happen when everyone who is sick suddenly buys insurance: Costs to health plans would go up, premiums will probably rise, and a lot of insurance companies will struggle to stay afloat.
OK. That’s where the individual mandate comes in. It’s the piece that increases demand for health care. Health plans need people to buy coverage before they get sick. It’s the way to keep costs down for everyone.
Can the rest of the ACA survive alone?
This little balance of supply and demand is what’s making the debate tricky. If we get rid of the Individual Mandate, but keep the other benefits that increase access to insurance and health care, could costs for consumers go up? Would that just defeat the purpose of the Act?
Or will it be worse for consumers to keep the benefits that have already kicked in, and cross their fingers that costs will stay under control?
If the Individual Mandate is found to be constitutional, then none of this matters. But if not, then it could be a rocky road for consumers.
The Supreme Court’s decisions are expected in June or July.