Individual mandate comes with greater good aspect

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A federal judge dealt a blow to health care reform earlier this month, declaring the legislation’s individual mandate unconstitutional. Many who oppose reform believe the decision sounded a death knell for the law. But they’re wrong, and here’s why:

Judge Henry Hudson left all the insurance reform measures in the bill intact: insurance companies can no longer deny coverage to people with pre-existing conditions; they must insure children who are extremely ill, and the lifetime limits on care are gone. What he did was merely sever the mandate that requires individuals to be insured from the rest of the law.

In other words, the only thing the decision addressed was the requirement that everyone purchase insurance — whether through an employer or through an insurance exchange in their state.

If upheld by the U.S. Supreme Court, that’s going to have serious — and negative — consequences for the insurance industry. It’s also going to affect rates for people who already have insurance.

Insurance companies like to spread the risk, and under the mandates they were going to have roughly 32 million new customers to help spread that risk.

But without the individual mandate, insurance companies will end up covering more sick people rather than everyone who lacks coverage. And that means they’ll end up charging you more because their risk won’t be spread among as many people; it will be spread only among those who are insured. More risk equals higher premium payments.

“It’s no mere economic stimulus,” said Mark Hall, an attorney writing in the New England Journal of Medicine. “Economic logic and past experience suggest that the market for individual insurance would be severely crippled by regulations that, without a mandate, invite widespread adverse election.”

“Adverse election” refers to people who buy insurance only when they become ill.

There’s no doubt the case will go to the Supreme Court. Under long-established precedent, Congress could have enacted a single-payer system easily, using its Constitutional powers to tax and spend “for the general welfare.” Instead, the legislation passed this spring only includes new regulations, subsidies and that individual mandate.

In deciding the case, it could be that the Supreme Court will fall to the clause in the Constitution that gives Congress the authority to “make all laws which shall be necessary and proper for carrying into execution its other powers.” In other words, the court could decide the rest of the law cannot be enacted without the individual mandate.

In numerous similar cases that have been brought to trial this year, two judges have ruled that the mandate was constitutional, while only one so far has ruled that Virginia can exempt its residents from the mandate. A case in Florida involving 20 states, including Colorado, appears to be headed the way of the Virginia case.

Opponents realize the inherent problems with their case, which is why they are pushing judges to overturn the entire law.

Certain provisions of the act have already gone into effect including one known as “guaranteed issue.” If the law is overturned now, people with pre-existing conditions are likely to find themselves summarily dropped by their insurance company.

Also, if the law is overturned, seniors will pay more for their medicines, because the legislation also provided lower costs for them. And parents with sick children will once again have to fight to find insurance for their kids.

So, overturning the entire law is clearly not in anyone’s best interests — insurance companies lose millions of paying customers; people won’t have guarantees they can keep their coverage regardless of their health, and states will labor under the burden of thousands more uninsured as health premiums rise beyond the financial reach of many.

Many legal analysts believe the law will pass the additional legal scrutiny — even if the Supreme Court gets the case.

“There is a consensus that the mandate is inextricably intertwined with the other insurance regulations that are indisputably constitutional,” Hall said. “Even if the mandate is not within Congress’s commerce power, it is necessary to accomplish the overall reform scheme — clearly within congressional power — of creating a market structure in which no one can ever again be turned down for insurance.”

There’s also this: Many insurance companies don’t like the reforms that require them to provide coverage — even to sick people — but they like the individual mandate. Simply put, more people on insurance rolls means more money for insurance companies.

Amy Gillentine can be reached at 719-329-5205 or at amy.gillentine@csbj.com. Friend her on Facebook.