What if the Supreme Court Strikes Down the Insurance Mandate?

The key provision in the health care reform law that requires all citizens to buy insurance is unconstitutional, according to a federal district court judge. Judge Henry E. Hudson, of Virginia, ruled that the insurance mandate violated the Commerce Clause because it tries to regulate the opposite of commerce -- the refusal to purchase health care insurance.

Before I start to make a big deal about this story, let's remember why it's silly to make a big deal about this story. First, two judges have already ruled that the insurance mandate is constitutional. Second, it could be another two years before the Supreme Court picks up the case against the insurance mandate. Third, the bulk of the health care overhaul doesn't come online until 2014 anyway, which means we're debating the legality of provisions that won't become reality for another two election cycles.

But in the slim chance that the Supreme Court does strike down the insurance mandate, what would be the options of an Obama administration, or Democratic Party? To get a handle on that question, I spoke with Paul Van de Water at the Center on Budget and Policy Priorities. Here were the four ideas we discussed:

1) Hope and Pray
Let the other provisions of the law continue as they were and see how well it works. Sure, the law was written to resemble a three-legged stool, where the subsidies support the insurance mandate, which keeps prices low after the insurance regulations. It's likely that prices could spike if the law lets you buy insurance only after you get sick. But we don't know exactly how bad those problems would be.

"I'm not saying this is anybody's first choice," Van de Water said. "The system will work a heck of a lot better with the mandate. The question is whether it would be completely unviable without the mandate."

2) If We Lose the Stick, Add More Carrots
Without the mandate, you could increase the subsidies to make it more attractive for people to get insurance. We've lost the stick, but if we increase the carrots, millions of Americans might find it more practical to take the subsidy and buy insurance than to risk the chance that they get sick and can't get coverage in time.

3) Try Limited Enrollment Periods
If we limit the time that people can enroll for health insurance, and combine that with penalties for folks who buy insurance late, that might induce Americans to buy insurance when they're healthy, knowing that if they get sick later it could be expensive or impossible to get insured. But this has challenges. "If a person develops a serious disease and needs care it's hard to think we're so hard-hearted that we'd just let them get nothing," Van de Water said.

4) Turn the Mandate Into a Tax and Rebate
One idea I've seen floating around goes like this: If we can't force people to buy insurance, we can tax everybody a flat amount -- say $500 -- and refund the tax when filers show proof of insurance. That way, the tax would only actually impact the uninsured. It would have the same impact as the mandate.