The Wall Street Journal
By: Janet Adamy, Jess Bravin and Anna Wilde Mathews
March 28, 2012
After three days of historic Supreme Court debate, the political world and health-care companies confronted the prospect of President Barack Obama's health law being wiped away, a decision that would upend years of planning by businesses and roil the November elections.
Among those set to implement the law, insurers would have to ditch changes to their businesses designed to bring in millions of new customers. Provisions that have already gone into effect, including letting children stay on their parents' insurance plans until they turn 26, would no longer be required.
Companies facing the law's requirements would be reprieved, including health firms set to pay new taxes and businesses that would have been required to insure their employees or pay a fee.
It is impossible to predict how the court will rule, but skepticism from key justices heightened the possibility the 2010 health overhaul could be overturned in June, when the court is set to announce its opinion.
During the marathon arguments, the government's attorney was grilled by the conservative majority over the constitutionality of the law's central plank, the mandate to buy insurance. On Wednesday, the final day, the court's conservatives appeared inclined to wipe away the entire law if it found the mandate in error.
The same justices even questioned the basis for the law's expansion of the Medicaid insurance program for the poor, giving credence to an argument that even some of the challengers had declared a long shot.
Few disputed that untangling the law would be tricky if it is overturned. It would leave "a mess," said Jon Kingsdale, a managing director with Wakely Consulting Group and a former official of Massachusetts' near-universal insurance system. "It just ripples throughout Medicare and Medicaid and the private markets."
Neil Trautwein, a vice president at the National Retail Federation, a Washington trade group that represents stores, said: "If the clock went back and health-care reform was gone, we could live with that." He said it would be "a little trickier" if the court decided to only strike down parts of the law.
Under any outcome, the decision will wedge itself into the 2012 presidential election.
White House officials said they remained confident the law would be upheld, and that it was impossible to predict the outcome. Ultimately, one official argued, the election is likely to turn on the economy, not health care, no matter what the ruling. Mr. Obama, who returned late Tuesday from South Korea, was briefed by staff on the court deliberations.
Still, if all or part of the law is struck down, it would be a blow to Mr. Obama and Democrats, and create a liability months before the election. Republicans would hold up the victory as evidence the Obama administration overreached in trying to expand the scope of federal power. "To strike it down would send a chilling message to the administration's agenda," said Rep. Tim Scott (R., S.C.).
Congressional leadership aides from both parties say a health law left with holes would have no chance of getting patched until at least after the election. What happens next would be largely driven by the election result. Republicans want to repeal the law, and Democrats have little incentive to restart work on a legislative fix, given how the law has thus far been a political loser.
Lawyers for the Obama administration pressed the court on Wednesday for its preferred outcome, which would be to scrap certain popular insurance rules tied to the mandate, if the court was inclined to rule out the mandate.
Justice Antonin Scalia called it "totally unrealistic" to expect a court to "go through this enormous bill item by item and decide each one." Justice Anthony Kennedy, a key swing vote, suggested the justices may "lack the competence" to pick and choose what parts should stay.
Chief Justice John Roberts, whose vote is also somewhat unclear, asked several questions that appeared to further the case of the challenger's attorney, Paul Clement, who argued the whole law be struck down.
The court could decide to strike down parts of the law. If it nixed only the insurance mandate, insurers say premiums would skyrocket because there would be nothing to stop people from waiting to buy coverage until they got sick.
Health-industry officials on Wednesday began grappling with a range of problematic outcomes and said there was little they could do to prepare for them.
Molina Healthcare, which manages care for 1.7 million low-income Medicaid members in 10 states, saw in the health law a growth opportunity. Steven T. O'Dell, the senior vice president overseeing Molina's growth strategy, said it was preparing for an influx that could as much as double its membership as states boost Medicaid rolls to comply with the law.
If the law fails in the court, Mr. O'Dell said, the company would turn instead to a state-by-state strategy, seeking to expand in states that overhaul their own health systems or expand Medicaid. That is a decision each state will make based on "politics and budget," he said.
If the entire law fell, many parts of the law already in place would cease to exist, including checks for seniors to fill a gap in their Medicare prescription-drug program and insurance pools covering nearly 50,000 Americans who otherwise can't get health insurance.
Planning for the main pieces of the law that are set to begin in 2014--including new marketplaces where consumers can shop for policies and subsidies designed to expand coverage to millions of lower earners--would halt. Experts said it could be years before the U.S. again tackled the issue of covering the tens of millions of Americans who lack insurance.
If only the mandate falls, insurers have scratched out backup plans that could potentially be done with support from state officials. These include offering narrow annual windows in which people could buy policies, or allowing plans with narrower benefits and lower premiums, which might entice younger and healthier people to sign up. They plan to press Congress to get rid of the requirements most closely linked to the mandate, should the court not strike those down, too. But with little political will among Republicans to fix a law they dislike, there is little chance a federal replacement to the mandate could get passed.
In states such as New Jersey, which in the 1990s guaranteed policies to all applicants but didn't require all residents to carry coverage, premiums rose about 30% over the first few years of the policy, said Robert Laszewski, president of Health Policy and Strategy Associates, a consulting firm, and a former insurance-industry executive.
Mr. Laszewski said insurers could decide to voluntarily keep in place the requirement that children can stay on parents' plans, which the Obama administration says has covered 2.5 million young adults. That change is already priced into coming policies and isn't expensive, he said.