Healthcare Decision: Winners and Losers

Econintersect:  The Supreme Court of the United States has upheld the Affordable Care Act of 2010 (aka Obamacare) by a 5-4 decision.  Chief Justice John Roberts cast the deciding vote.   The majority decision was based on the constitutionality of the mandate as a tax.  The majority was divided on whether the mandate was constitutional under the Commerce Clause of the constitution, with four justices writing opinions that it was and Roberts saying it was not.  The dissent, by Justices Kennedy, Scalia, Thomas and Alito, said they believed the law was unconstitutional in its entirety.

The ruling on expansion of Medicaid was supportive because of the following conditions in the law:

• The mandate in and by itself would be unconstitutional (5-4 vote) but the option of paying a tax instead of buying insurance makes the implementation of the law constitutional (5-4 vote).
  

• States are free to refuse expanded Medicaid funding from the federal government.

• The Federal government is allowed to stipulate requirements on states accepting Medicaid funding.

• The Federal government may not restrict previously authorized Medicaid funding for states that decline to accept the expanded funding.

Winners and Losers under today’s ruling as listed below.

Winners:

• Young adults 20-25:  Starting in September 2010, just six months after the ACA  was enacted, this group has been required to be retained on parents insurance policies if the policy holder so elected.

• People who make even inadvertent errors or omissions on their application:  Before ACA some insurance companies were happy to collect insurance premiums for as long as it took the insured to get sick and then to decline coverage for any excuse they could find, no matter how trivial.

• Southerners and many in the Midwest:  These regions have the fewest state laws in place to protect against arbitrary decisions by insurance companies.

• Family planning:  The ACA has been implemented in a way that will provide free birth control to all insured women, overcoming an objection from the Catholic Church that they, as an employer, could not in good conscience pay for such coverage.

• About 30 million people:  This is the number who it has been estimated will be receiving coverage under the mandate and the extended Medicaid coverage.

• Those who get sick:  The practice of imposing lifetime maximum coverage left many who encountered expensive medical problems or chronic diseases without coverage as they exceeded policy lifetime limits.  Lifetime limits have been prohibited by ACA.

• Insurance companies:  They have a broader base of clientele and every insured is a profit center.   Declaring unconstitutional the individual mandate but leaving in place the ban on refusing pre-existing condition would have made the insurance companies big losers.  They would have been forced to insure the already sick without the broader base of premiums that the mandate creates.

• Those with health insurance:  The only choice for the insurance companies had the mandate not been sustained would have been to raise premiums to compensate for adverse selection.  Adverse selection refers to the propensity of the healthy to avoid insurance and the sick to try to obtain it.

Losers:

• States’ rights advocates, libertarians and anti-statists who lost another opportunity to get a ruling that would move the U.S. away from a centralized government to a confederation of states.
• Right to life advocates who oppose birth control.
• Those who may have been looking for the opportunity to impose the expanded Medicare funding and requirements on reticent states by threatening to defund prior Medicare provisions if the new ones were not accepted.
  

John Lounsbury

Source:

• http://www.supremecourt.gov/

Other References:

Outline of the provisions and timeline for the ACA:  What exactly is Obamacare and what did it Change? (Reddit)

Hat tip to #Monetary Sovereignty – Mitchell.