I’ve long argued that the nightmare scenario for the insurance companies is that the mandate gets struck down, but the rest of the law stands. After all, if we force guaranteed issue and community ratings, but remove the mandate, then we stand the risk of adverse selection and gaming and, well, read this. But it appears that’s not going to happen:
The Justice Department argues that without the mandate, there is no way to keep the law’s requirements that insurance companies accept all applicants regardless of their medical history and cannot charge more to sicker and older patients. That’s because without the mandate, there won’t be enough healthy people paying health insurance premiums to cover the costs of the sick people. And insurers could raise everyone’s premiums sky-high to pay for those costs.
It’s a legal high-wire act that could have substantial consequences for the White House in an election year: If they lose the mandate, they’ll most likely lose one of the law’s greatest selling points, too.
The article makes the point that this might be the administration’s way of trying to make it harder for the Supreme Court to strike down the mandate. Perhaps they feel like the justices might not want to remove the popular parts of the law, so therefore they might be more willing to let the unpopular parts stand. I just don’t know. I doubt many Supreme Court justices are so easily swayed.
Personally, I think that this may be more the work of the very powerful insurance lobby that convinced the administration (correctly) that if there is guaranteed issue, community ratings, and political pressure to keep rates down, the private insurance industry will get crushed.
Either way, the Obama administration is going all in on this hand. Should be an exciting next few months!
[Cross-posted at The Incidental Economist]