How Badly Will SCOTUS Screw Up Obamacare?

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Uninsured patients receiving care at a free clinic. Photo: Mario Tama/Getty Images

The Supreme Court is likely to announce soon if it has decided to declare the individual mandate unconstitutional. (Which is to say, it’s announcing whether Anthony Kennedy hates health care reform a lot or only a little, because everybody assumes the other four Republican justices hate it so much they’ll declare it unconstitutional.)

As you can tell, I’m already bitter about this, as the constitutionality of the individual mandate is so obvious that the mere fact that the controversy exists suggests a frightening will to power by the legal arm of the conservative movement. But, as we consider the possible outcomes, it’s worth keeping in mind something that is not likely to come through in the news coverage: The vast majority of the bill is likely to stay in place.

The Affordable Care Act is a huge law that set out to do two basic things: provide health care to the uninsured, and slow down runaway health-care cost inflation. Most of the ideological clash centers on covering the uninsured — that’s the most morally compelling piece for liberals, and that’s the part that conservatives hate the most. But the Obama administration believed that the cost of the U.S. health-care system, which is by far the highest per-person of any health care system in the world despite excluding tens of millions, had to be restrained over time. It invested enormous political capital into overhauling the health care system in ways too numerous and boring to list here.

The gist is a collection of methods, from using information technology to paying hospitals for better outcomes rather than more care to gathering and implementing research about what practices work best. If you want to read some reports assessing these reforms, here’s one from Third Way and another from Brookings. If you’d rather just gaze at a nifty chart, here’s one showing how the Medicare Trustees project dramatically slower long-term growth in Medicare:

Photo: Medicare Trustees

It will take years to know if these projections hold true. But health-care costs have already started to slow, and many experts attribute this in part to the changes forced onto the industry by the new law.

Now, obviously, covering the uninsured matters a lot, too. But keep in mind that half the people who will get health insurance through Obamacare will get it through Medicaid. This is important because, while the Supreme Court could literally do anything it wants, nobody expects the Court to throw out the Medicaid expansion, which simply adds more people to a four decade old program. And nobody expects the Court to touch the myriad cost containment reforms. So if you think of the law as half cost containment and half coverage expansion, and the entire cost containment and half the coverage expansion is almost certainly safe, the part that’s legally up for grabs is the other half of the coverage expansion, or about a quarter of the law.

That quarter of the law is reforms to private insurance: Preventing insurance companies from denying coverage to prospective customers who are sick (or canceling benefits to customers who get sick), plus a mandate for individuals to obtain coverage and tax credits for those who need help affording it. This part of the law is extremely important, but it has taken on an outsized role in the public debate because Republicans have seized on it as a threat to extinguish freedom, and because it’s also the part of the law that basically copies Romneycare.

How much of this quarter of the law the Court decides to cut out is the guessing game. In ascending order, the Court might:

  1. Leave it all in place.
  2. Technically eliminate the mandate to buy health care while leaving in place the fine for not having health insurance. (Essentially upholding the fine as a tax while technically eliminating the requirement.)
  3. Eliminate the mandate, and the fine, but leave in place the regulations that insurance companies not discriminate against people with health risks and the subsidies for buying insurance.
  4. Eliminate the mandate, the fine, insurance regulations, and the subsidies.
  5. Nuke the entire law.

The last option — nuking the entire law, including parts that don’t require the mandate in any way — is the hardest to imagine by far. If the Court decides to toss out the mandate, options two through four will hinge on how it decides to address the hole it blew in the law, and the justices spent a lot of their deliberations seeming to ponder this.

Health-care wonks are already trying to figure out what would happen if the Court struck down the mandate. Everybody agrees the insurance reforms would work much better with a mandate in place. But how bad things would be if the mandate goes but the regulations stay is a matter of dispute. Here’s the dynamic. If you require insurance companies to offer coverage to people regardless of health, they’ll be tempted to go without coverage until they get sick. This can cause the dreaded death spiral: fewer and fewer healthy people are buying insurance, driving up premiums, making more healthy people drop insurance, until it collapses. States that tried to impose insurance regulations without a mandate saw a death spiral. The difference is that Obamacare includes tax credits for moderate income people to buy insurance, which could encourage them to stay in the market even if they’re healthy. For that reason, RAND and the Kaiser Foundation both predict the absence of a mandate would not result in a full-fledged death spiral.

The main point to keep in mind is that the most likely scenarios in which the Court finds the mandate unconstitutional still leave most of the law in place. That is not going to come through in the coverage, should this come to pass, because all sides are going to hype the importance of the decision: Conservatives tend toward triumphalism, liberals tend toward despair, and the news media tends to overplay the importance of whatever thing just happened. Striking down the mandate would be a huge deal legally, because it would signal the Court is prepared to resume its Gilded Age function as a kind of right-wing GOP super-legislature, wantonly tossing out laws that offend laissez-faire orthodoxy. It would be, in addition to a travesty of justice, a tragedy, depriving millions of Americans access to health insurance. I want to be clear about this: If the Court strikes down the mandate, I will lose my shit. But striking the mandate would not end the law, or even most of the law.