Will SCOTUS Whack POTUS? Details at 10…maybe

June 25th, 2012 at 9:28 am

The Supremes might sing at 10am re their view of the constitutionality of key parts of the Affordable Care Act. 

If you want to get into the weeds on various permutations of the outcome, Jon Cohn and Wonkblog dive deeply therein.

One Cohn point I found interesting: economists like me walk around thinking that if the mandate goes, the whole law crumbles as adverse selection kicks in (without a broad range of people in the risk pool, insurance becomes increasingly costly).  Jon suggests that if the mandate falls but the penalty for being uninsured stands, and with the subsidies for buying insurance on the exchanges still in place, you might well get enough of a mix of healthy and not-so-healthy people with coverage such that the plan could still work.

More to come…

Update: Nothing today on the health care law–must be coming on Thurs–until which, we’ll remain on shpilkes.

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2 comments in reply to "Will SCOTUS Whack POTUS? Details at 10…maybe"

  1. davesnyd says:

    Um, I thought the “penalty for being uninsured” was “the mandate”?

    I’ve read the article and still don’t get it– his analogy about littering seems appropriate but incomplete.

    The mandate is what makes a penalty required. Or the penalty is there because the mandate has not been met.

    It seems like a verbal tap dance. Or a recognition that “mandate” was, perhaps, an ill choice of words.


  2. Michael Chase says:

    I really did miss your analysis on why the mandate leaving would cause the law to fall. And I don’t see the connection clearly to your Washington state example. Insurers had a choice in Washington; they could stay in a market without enough healthy participants to balance the books or leave. It seems far-fetched that all (or even a majority of the 10 largest) insurance firms would abandon the U.S. health insurance market entirely. In fact, the better firms would seek to capitalize on a new marketplace featuring less competition.

    If some number of firms stay in the U.S. market sans a mandate, they will have to shift from their premium margin model to a volume-based model. They will have to compete for healthy individuals, and that competition will put immense downward pressure on market prices, while driving needed service level improvements. Also, wouldn’t providers (and their allied agents in pharma and med-device) have a more strident motive for price improvement at that point? It is the existence of insurance that has enabled the slow expansion of profits in this sector…the pending demise of a private insurance industry would force changes in provider costs.

    Anyway…that is my view from the cheap-seats…


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