Individual Mandate: Can PPACA Survive Without It?

Ever since the Patient Protection and Affordable Care Act (PPACA) was passed, opponents have looked for ways to overturn it in the court of law and the court of public opinion. They’ve had reasonable success in both arenas, using opposition to the individual mandate to buy health insurance as Exhibit A. Ironically, President Obama wasn’t a big fan of the individual mandate at the outset. In the primary election, Hillary Clinton favored an individual mandate while Obama opposed it.

Ever since the Patient Protection and Affordable Care Act (PPACA) was passed, opponents have looked for ways to overturn it in the court of law and the court of public opinion. They’ve had reasonable success in both arenas, using opposition to the individual mandate to buy health insurance as Exhibit A. Ironically, President Obama wasn’t a big fan of the individual mandate at the outset. In the primary election, Hillary Clinton favored an individual mandate while Obama opposed it. But somehow the mandate –at its core a Republican concept of personal responsibility– has become synonymous with so-called Obamacare.

With the recent court decision, it seems reasonably likely we will end up in a situation where the individual mandate is overturned but the rest of the law is upheld. Observers have some thoughts on what would happen:

• Insurance companies will be unhappy. PPACA puts many restrictions on health plans, e.g., minimum medical loss ratio, no exclusions for pre-existing conditions but the upside is the mandate: lots of new customers, and a reduction in adverse selection, because everyone has to buy insurance and you can’t wait till your sick
• Many fewer people will be enrolled in insurance.  Jonathan Gruber’s objectivity may be suspect, but he persuasively argues that repeal of the mandate would lead to many fewer people in coverage and higher premiums due to adverse selection. And the cost of the law wouldn’t drop by much despite the lower impact
• Some opponents think/hope that eliminating the mandate will cause the whole law to collapse. I really doubt it.

If the mandate is indeed repealed but the rest of PPACA stays on the books, here’s my expectation:

• Fewer and fewer people will have insurance as prices continue to rise inexorably. The health care system –hospitals especially– will be overwhelmed by the cost of caring for the uninsured
• Some states will follow the policy Massachusetts had in place prior to its health care reform: an uncompensated care pool paid out to providers who take care of the uninsured. But few states are as wealthy or universally insured as Massachusetts was even before health reform, so the impact will be partial at best
• The lower middle class will rise up, and rather than sending the Tea Party to Washington, will send representatives demanding more access to health care. The rest of the middle class will go along, as they see their wages being cut to pay for employer-sponsored health insurance or find themselves priced out of the individual market. Corporations will join them, as they seek to do whatever they can to restore US competitiveness in the face of unaffordable premiums partly resulting from cost-shifting of the uninsured onto costs paid by the better off
• Eventually, we really do get a “government takeover” of the health insurance industry at a minimum, and possibly of major parts of the delivery system

Could it be that a Republican president ends up signing national health insurance into law around 2020? I wouldn’t be shocked