May 10 2012
It's horserace season, and all gamblers are excited for potential wins at the derby. But now Americans are facing a different kind of wager: The future of the health care law.
What are the odds? Kaiser Health News has a report on various analyses:
Bernstein Research stock analyst Ana Gupte laid 50 percent odds recently on chances that the court will strike down the Affordable Care Act’s individual mandate along with strict coverage requirements. Over at Intrade, a “prediction market” for current events, the betting Tuesday morning gave chances of about 58 percent that the court will disallow the mandate, which requires people to obtain health coverage or pay a fine.
On the FantasySCOTUS Web site, 54 percent of an audience composed largely of law students and clerks predicted the mandate will be thrown out.
So if you're interested, at Intrade, you can actually make a bet on the outcome of the Court's ruling!
But in all seriousness, certain players have a lot to lose if they misread the direction of the Court.
First: Insurance Companies
Insurance companies have a lot to lose if the Court offers them an unfriendly ruling. Of course, their worst nightmare is that the individual mandate (the source of new revenue for them) is struck down while the rest of the law stands (the rest of the law being the micromanagement of their business and the costly requirement to offer guaranteed-issue insurance even to some people at below-market rates).
So insurers must be prepared for every outcome. Their best hope is to lobby Congress to repeal the rest of the law should the Court choose to strike only the mandate (unlikely, but possible).
The Affordable Care Act (ObamaCare) asks a lot of states. Maybe "ask" is the wrong word. They "shall" erect a statewide exchange, an entity for consumers to purchase health insurance when it is not provided through their employer and when they do not qualify for Medicaid. To prepare to do this, states must pass legislation defining how the exchange will operate (to an extent... they only have so much flexibility), and they must work with insurers, doctors, and hospitals to determine what qualified plans will look like and how citizens will purchase them, etc.
This process can cost billions of dollars.
But what if ObamaCare is struck down? This uncertainty is keeping many states from acting. If the whole of ObamaCare is struck down, and states have already sunk costs into building and preparing an ObamaCare-compliant statewide exchange, their money will be wasted. We may find that the states who've refused to implement the exchanges - or at least the states who've delayed this task - were the wise ones.
Third: Employers of more than 50 workers
Employers who have 51 or more workers shouldn't bank on the employer mandate getting thrown out. That's certainly a possibility, but if you're an employer who's not prepared to offer qualified health insurance to your workers, you may want to think about how to do that, or how to rearrange your company to avoid getting hit with a penalty of $2,000 or $3,000 per worker. We can expect that many employers will begin work now to figure out how to reorganize or fracture their work into entities of 50 or fewer people in order to avoid the employer mandate. Many companies are avoiding hiring for this very reason - that they are unsure about the future of health insurance costs and/or the federal penalty that they might pay instead.
It seems that neither side can count on the Court either way. When the odds are set at 50 percent... clearly it's anybody's game. But in a sense, we are all losers when we consider the lost time, wasted energy, and stalled productivity that's come out of efforts to understand and mitigate the effects of a complex, perhaps unconstitutional law.