What If the Individual Mandate is Overturned?

If the individual mandate is overturned, what will happen next will largely depend on the outcome of the 2012 elections. At the moment, it is hard to imagine that the Congress could compromise on any legislation related to health care reform.  But that could change. 

The biggest problem will be the issue of adverse selection in the individual market with the result that premiums will skyrocket.  Even with federal subsidies, the premiums in the individual exchange may not be affordable. Congress might consider delaying the insurance market reforms to see if competition and transparency in the exchanges impacts affordability.  Or Congress could consider allowing insurers to return to the practice of waiting periods. 

Congress might also consider enacting tax policies that would be more effective than penalties in the ACA to encourage healthy individuals to buy insurance, e.g. allowing full tax credit when individuals purchase qualifying policies or imposing higher taxes on everyone that will go away when purchasing qualifying policies. Or the Congress could do nothing and allow states to consider enacting an individual mandate. And of course insurers will undertake marketing campaigns to remind individuals of limited open enrollment periods and the consequences of failure to buy coverage or lobby for smaller essential benefit policies. 

Without an individual mandate, incremental reform will still continue with the addition of 16 million new Medicaid beneficiaries.  States will operate exchanges for small groups that will offer more affordable choices for employers and employees. In the meantime states that are moving forward with implementing the individual exchange like Maryland will continue to proceed without regard to the fate of the individual mandate. The federal government will continue to urge states on, fill in the gaps where states need help, and proceed to develop the federal fallback plan for states that are opposed to health care reform or who run out of time while they wait on the fence for the Supreme Court decision.