What If Health Reform Had No Mandate? Politicians, Experts Weigh In

In the wake of a second ruling from a federal judge this week who found the insurance mandate in the health reform law to be unconstitutional, there’s a growing amount of chatter in the health policy world about whether lawmakers need to create a backup plan to the mandate.

The discussion — found online in essays and articles, but also raised publicly by a handful of members of Congress publicly — tends to focus on two basic concerns:

• What if a narrowly divided Supreme Court rules 5-4 against the mandate sometime next year or in 2013? Is there a chance that higher courts will agree with U.S. District Court Judge Roger Vinson who concluded this week that the entire law should be invalidated because of the mandate?

• What’s the most viable alternative to a mandate that would still entice enough Americans to buy coverage BEFORE they have a health problem so the insurance pool remains sustainable?

The answers vary considerably among both liberal and conservative voices, with some suggesting that there are other approaches that would work. Others say none of the alternatives is nearly as good as a mandate for expanding coverage. And some conservatives say the mandate is unworkable.

A quick reminder: The mandate in question — as specified in the Patient Protection and Affordable Care Act (often referred to these days as the ACA) — requires citizens and legal residents to obtain insurance by 2014 or pay a rising penalty that could reach nearly $700 a year for an individual or nearly $2,100 for a family by 2016. (The Kaiser Family Foundation has a handy summary here.)

A number of prominent economists and policy analysts argue that Democrats should remain focused on protecting the mandate first and foremost.

“I think the mandate will be upheld and it’s still the best option,” said Neera Tanden, a former health adviser to the Obama admininstration and now at the Center for American Progress.

Health economist Len Nichols, who worked in the Clinton administration, also said that many lawyers believe the mandate will survive court challenges.

“I think the White House and most Democrats remain confident they will win the commerce clause reading (of the Constitution) in the end,” which supporters say gives Congress the authority to impose a mandate, Nichols said. “I mean, Reagan’s former solicitor general, Charles Fried, thinks it’s constitutional.”

But opponents see recent legal victories (two judges have ruled against the mandate, two in favor) and political momentum in November’s election as a sign that the mandate is in jeopardy. And they’re pushing to try to persuade the Supreme Court to take up the case even before the appellate courts weigh in. That’s what Virginia’s Attorney General Ken Cuccinelli asked for yesterday.

While a speedy review by the Supreme Court is considered highly unlikely, opponents believe the mandate’s future is in clear jeopardy. That’s what Thomas Miller, a fellow at the American Enterprise Institute and a former Republican congressional staffer, contended during a discussion on our program this week with Ray Suarez: “The individual mandate is on life support.”

And Randy Barnett, a Georgetown law professor who has been one of the major players in helping to shape some state challenges to the mandate, told the Senate Judiciary Committee on Wednesday he believes it will be struck down by the Supreme Court: “You might want to consider constitutional alternatives to the mandate sooner rather than later,” Barnett said.

Some Democratic senators also are concerned. That includes Sen. Claire McCaskill, D- Mo., one of the president’s staunchest allies, who has defended the mandate in the past but is now facing a tough re-election campaign. McCaskill told reporters earlier this month: “There’s other ways we can get people into the pool — I hope — other than a mandate, and we need to look at that.”

From the beginning, a number of policy wonks on both sides of the aisle have argued the mandate’s penalty is too small to be effective anyway.

“One provision of the individual mandate would exempt people if insurance on the exchange costs more than 8 percent of their income. This would exempt most people in the middle class,” Robert Laszewski, a health policy consultant and former insurance industry executive, recently said. “This mandate is not terribly effective toward its stated goal of maintaining the integrity of the health insurance market.”

But Tanden and others say that while other alternatives may work to some extent, no other option will be as effective at enrolling as many uninsured and holding down costs as a mandate. And some say there’s no point in Democrats weakening their hand unless forced to by the courts or through another election loss.

If Democrats offer a Plan B now, health analyst Paul Ginsburg told Kaiser Health News, “my concern … is that there’s going to be an inclination, whether it’s a mandate or an alternative to a mandate, of not making it strong enough.”

But as Nichols put it in an e-mail to the NewsHour: “Having said all this, lots of people are thinking, mostly quietly but with increasing rigor about what we might do if [Justice Anthony] Kennedy sides with [Justice Antonin] Scalia?

A wide variety of possibilities have been suggested, including:

• Creating an open enrollment period each year for about a month when people could obtain insurance more easily, followed by stiff penalties if people try to opt in later.

• Creating some kind of automatic enrollment policy in which individuals would specifically have to opt out and face tough penalties.

• Tying federal subsidies for Medicaid and tax credits for the insurance exchanges to states passing their own mandates. Len Nichols raised this as one option. By way of metaphor, he wrote: “We do this with highway funds to get states to adopt speed limits that conform with federal policy…It’s messy but workable, with some states essentially opting for a minimalist health system.”

• Some liberals are calling for the revival of a public option or allowing people to buy into Medicare, a point made recently on the blog, Firedoglake. Or possibly a single-payer system.

• Princeton sociologist Paul Starr, who warned of a backlash to the mandate before the bill passed, has suggested letting people opt out without a penalty, but then not letting them opt back into the insurance market for five years.

• And Mark Pauly, a health economist who was an adviser to former President George H.W. Bush and is considered to be the father of the mandate back in the 1990s, says this version of the mandate may not be needed or effective. “I believe you could achieve almost the same reduction of the uninsured with the subsidies and without the mandate,” he told the Washington Post’s Ezra Klein in an interview this week.

For its part, the Obama administration publicly maintains that it’s not ready to consider a back-up plan. Tanden says White House officials will study alternatives for now just in case they lose at the Supreme Court.

And Nichols says he thinks there may be pressure to toughen the penalties of the mandate from a traditionally Republican voice — the insurance industry.

“Insurers argue the penalty is too low,” he says. “So an awful lot of people are going to hear more from traditional Republican lobbyists that there is no great alternative to the mandate if we want the popular insurance reforms.”

Believe it or not, we’re just scraping the surface of the debate here. If you want to read more, Kaiser Health News samples a wide range of views here and the Boston Globe examines how the mandate originally began as a Republican idea once upon a time and how the Democrats have changed it.

Find more coverage on Rx for Reform.