The 11th Circuit Court of Appeals’ ruling Friday that Obamacare’s individual mandate is unconstitutional is only part of the story. The rest of the story, with maybe the biggest impact, is that the court would let the rest of the law stand without the mandate.
And allowing that to happen could bankrupt the private health insurance industry — and put on the track to full-blown socialized medicine — even faster than an intact Obamacare threatens to do.
Everyone, from the Obama administration to the 26 states, including Georgia, that brought this lawsuit, agrees that the individual mandate is the key to the law because it is the mechanism for making people buy insurance before they become sick. The administration argues this is a reason for keeping the entire law intact; the states argue this is a reason for throwing out the entire law.
Supreme Court precedent confirms that the “ultimate determination of severability will rarely turn on the presence or absence of such a clause.” … Rather, “Congress’ silence is just that — silence — and does not raise a presumption against severability.”
The court did examine two particular reforms to see if they should go out along with the mandate — noting that, without the mandate, the “guaranteed issue” and the ban on denials based on pre-existing conditions could “have significant negative effects on the business costs of insurers.” But it deferred to Congress nevertheless:
Just because the invalidation of the individual mandate may render these provisions less desirable, it does not ineluctably follow that Congress would find the two reforms so undesirable without the mandate as to prefer not enacting them at all. The fact that one provision may have an impact on another provision is not enough to warrant the inference that the provisions are inseverable. (italics original)
That may well be the right judicial decision. But it’s a policy disaster in the making.
At The Atlantic, Megan McArdle puts it this way:
Presumably, the insurance market across the United States [would end] up looking a lot like New York’s market, where during the debate over health care reform it was reported that the cost of the average family policy in the individual market was over $4,000 a month. That’s because New York has the other features of Obamacare — community rating and guaranteed issue — without the mandate. The result was that all the healthy people dropped out of the pool, leaving a few very sick people to buy insurance.
There’s a slight difference though: the government is going to subsidize individuals in the private market. If the subsidies keep pace with the cost, Obamacare’s nominal deficit reduction is going to turn into a gaping hole in the federal budget.
As she goes on to argue, Congress may not have the will to take away the other reforms piecemeal once they’ve come on line, even if they become financial drains.
All of which is why Republicans in Congress should continue pushing to repeal the entire law and replace it with market-oriented reforms, rather than counting on the courts to set things right.
(Note: See my commentary about the rest of the ruling here.)
– By Kyle Wingfield