Judge Rules Health Reform Mandate Unconstitutional

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This has naturally attracted a lot of electrons, and ink, but it's not a surprise--his earlier comments on the mandate, when he ruled against the government's motion to dismiss, seemed to indicate that this was coming.  This is going all the way to the Supreme Court, and ultimately, it will depend on whether our swing justice wants to make history by affirming the law, or by overturning it.


But it's worth noting for at least one reason:  a year ago, proponents of the law were dismissing legal charges as crackpottery with no chance of succeeding.  Now, while it doesn't look precisely likely that the law will be overturned in the courts, there does seem to be at least a small chance it will happen.  As it should be in my opinion, even though I'm aware that this could have a disastrous impact on the insurance markets.  If the law stands, what does that mean for American liberty?  Or to put it another way:  what do supporters of the law think the government can't force you to buy, and how do you reconcile the answer to that question with the rights the government is now asserting?

But I'm actually pretty sure that if the mandate is struck down, it will not be disastrous for American insurance markets--or at least not in the way people have been saying on the teevee. The idea behind that panic is that if you repeal the mandate, while letting provisions requiring insurers to issue policies to all comers, at the same rate regardless of health status, what you will get is a death spiral in the insurance markets, as the healthy people wait to buy insurance until they get sick, and the cost of insurance spikes to the point where no one can afford it.

I agree that this is, in fact, the likely outcome of repealing just the mandate--it certainly seems to be what has happened in New York, where they have the guaranteed issue and "community rating" rules without a mandate.  (Though, of course, costs are also rising pretty briskly in Massachusetts, where they have all of the above plus a mandate, so use some caution in making predictions).  But I don't think that the Supreme Court will ultimately strike down the mandate while leaving the rest intact.  If the mandate goes, the Supreme Court will probably also invalidate the provisions that couldn't possibly have been enacted without a mandate.  Such as, oh, community rating and guaranteed issue.

The real question is whether the exchanges still come into being, and what happens to the subsidies.  We might be left with basically a Medicaid expansion--something the Democrats could probably have gotten with a minimum of political fuss, and at a much lower cost.  That has its own problems, to be sure.  I might be prepared to predict the demise of Medicaid, as state and federal budgets are strained, and doctors refuse to take on more Medicaid patients without higher reimbursements.  But provided that the guaranteed issue and community rating provisions are struck down at the same time as the mandate, I imagine the insurance markets will be able to muddle through.

I do think this illustrates one of the core problems with the law, however.  Democrats were determined to have a law that did everything, or close to it.  They didn't want some moldy old Medicaid expansion that would just open them up to charges that they only cared about spending more money on poor people.  They wanted to fundamentally remake the "broken" American health care system.  Unfortunately, their idea of doing so was to build a vast, Rube Goldberg machine full of insanely complicated moving parts, itself very likely to break.  If any of those parts doesn't work exactly as forecast, the whole machine may not only fail to work, it may take out some of the parts of the existing health care infrastructure that were actually working decently well, as we've seen with low-wage workers losing insurance coverage for their children.

A lot of the bits of the machine aren't working as predicted; the legal problems are only one issue.  Proponents naturally think these are just growing pains, while opponents like me are inclined to be more pessimistic.  Only time will tell who's right, though I must offer one telling point for the prosecution:  I've yet to see a major story showing how health care reform is working better than expected.  So far, everything from the claims that Democrats would get a bounce in the polls after passage, to the promises that you could keep your insurance if you liked it, to the legal issues, turn out to have been overoptimistic at best.
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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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