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How to make U.S. healthcare even worse

If the Supreme Court tosses the individual mandate yet keeps the rule that all consumers must be offered coverage despite their health, both rates and the number of uninsured will rise.

June 22, 2012|David Lazarus
  • Journalists outside the U.S. Supreme Court this week await the ruling on Congress' Affordable Care Act.
Journalists outside the U.S. Supreme Court this week await the ruling on… (Jim Watson, AFP/Getty Images )

What can we expect when the Supreme Court rules on healthcare reform in coming days? The prognosis isn't good.

I've spoken with various healthcare experts, and the consensus is that the conservative wing of the high court will probably strike down the so-called individual mandate that requires most people to buy insurance.

At the same time, though, the justices aren't expected to throw out the entire reform law, leaving a number of provisions intact, including the one requiring insurers to offer coverage to anyone who applies, regardless of medical condition.

While the dual rulings might disappoint both progressives and conservatives who have made healthcare reform the most contentious issue of our times, there's no denying that a split decision would achieve something no one wants to see: an even more dysfunctional insurance system.

Put simply, by eliminating the individual mandate but leaving in place what's known as "guaranteed issue" of coverage, the Supreme Court would be giving Americans a green light to wait until they get sick before seeking health coverage.

Why spend thousands of dollars on insurance when you're young and healthy? Without a mandate but with guaranteed issue, you could just put off paying annual premiums until you actually need medical care. It would be almost foolish to do otherwise.

This would have enormous ramifications for the insurance industry. It would essentially mean that insurers would be covering only sick people, rather than spreading their risk among the entire population, healthy and unhealthy.

If insurers are covering only sick people, they'll have no choice but to jack up their rates to reflect the higher risk they face.

And if rates go significantly higher, fewer people will be able to afford insurance, even with government subsidies.

The upshot: higher insurance costs and millions more people without access to affordable healthcare.

"If things turn out this way, we'll basically be taxing people with poor health and giving people with good health a free ride," said Jerry Kominski, director of the UCLA Center for Health Policy Research. "It completely goes against the principle of risk pooling."

He said average insurance rates could rise as much as 20% if the mandate goes adios but guaranteed issue remains the law of the land.

The Center for American Progress, a left-leaning Washington think tank, estimates rates could soar as much as 40% and the number of uninsured could grow by 24 million. The nonpartisan Congressional Budget Office estimates that rates could rise 15% and the number of uninsured by 16 million.

"The idea that the healthcare system could become even more expensive and disorganized is very frightening," said Joy Melnikow, director of the Center for Healthcare Policy and Research at UC Davis.

Robert Zirkelbach, spokesman for America's Health Insurance Plans, an industry group, declined to comment on how insurers might respond to the high court shooting down the mandate but keeping the rest of the law in place.

"All we know for sure is that eight different states have tried guaranteed issue without a mandate, and they all had disastrous consequences," he said. "Premiums increase and the number of uninsured go up."

Healthcare experts say that if the justices issue a split ruling, insurers would quickly turn to Congress for relief. Their lobbyists would ask first for an end to guaranteed issue, thus placing the healthcare system pretty much back where we started, with about 50 million people uninsured and no viable way of changing that situation.

If Congress balks at ending such a popular provision of the reform law, industry lobbyists would probably seek permission to again charge higher rates to people with preexisting medical conditions — a practice that's prohibited under the reform law.

If that fails, it's likely the industry would request permission to penalize people who put off buying insurance by slapping them with higher rates when they finally get around to applying for coverage. Thus, an older person buying coverage would pay substantially more than a younger person.

Joseph White, a professor of public policy and political science at Case Western Reserve University in Ohio, said that although the Supreme Court's rule will be important, the real future of healthcare reform will be decided by November's presidential and congressional elections.

Republican candidate Mitt Romney has already declared that he'll seek to overturn the law if he's elected president. GOP lawmakers have signaled their intention to cut subsidies for coverage included in the law.

"If the Republicans win the elections, the healthcare law is dead," White said. "If the Democrats don't have a say in government, it's just too tempting for Republicans to cut spending on healthcare."

It's astonishing that something as important as healthcare has become little more than a political and ideological soccer ball to be kicked around by left and right. The lives of millions of Americans are at stake.

The one sentiment I heard repeatedly in my discussions with healthcare experts is that no one can truly know what the Supreme Court will do. But if things play out as many expect, it will be just the first round in a series of decisions on whether Americans have access to equitable and affordable medical care.

And we thought that question was settled already. Silly us.

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5. Send your tips or feedback to david.lazarus@latimes.com.

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