Obamacare in the supreme ct

[FinanceGeek]

Well, its been at least 24 hrs since it was announced the supremes will hear the constitutionality of obamacare. I'm surprised to still have the opportunity to start the first thread to discuss the potential outcomes from that ruling.

What's everyone think? Another 5-4 decision following the ideological grounding of the various judges - like most of the recent high profile cases? But which way 5-4? As of today, Intrade's market forecasts only a 38% chance of the individual mandate being ruled unconstitutional.

The timing of the expected decision is certainly convenient in one sense. The decision is due in June. If the law stands intact, it seems that those with pre-existing conditions looking to ER could decide to do so on or after July 1 and get coverage under COBRA for 18 months. This would provide guaranteed issue coverage until 1/1/2014 at which time pre-existing exclusions are no longer permitted. Think we'll see the labor force participation rate take a spike downwards if the law and particularly the mandate is upheld?

But perhaps it won't be that simple. Perhaps the purchase mandate is thrown out, but the rest of the law stays in place. Longer term - adverse selection is likely to render the system unworkable, but short term will it proceed ahead? Possibly with a revised system that somehow penalizes those who sign up only when the need for care strikes??

Thoughts? Strategies?

 

[obgyn65]

I have given up discussing Obamacare here. This subject is too polarizing and divisive.

Thoughts? Strategies?

 

[REattempt]

Ohio...

We may never know, but SCOTUS is known to look at state issues (public sentiment) related to cases on their docket.

Ohio basically rejected Obamacare with the defeat of Issue 3 (though it was more of a referendum than anything enforceable).

That should have some influence on the court. How much is anyone's guess.

 

[MichaelB]

The US Supreme Court has decided to hear the challenges to the Patient Protection and Affordable Health Care Act. (http://www.supremecourt.gov/orders/courtorders/111411zor.pdf) The exact date is not yet announced but most media are assuming March 2012. The Supreme Court will actually hear multiple cases, each addressing a different aspect of the law.

From Politico

The justices combined petitions filed by the 26 states, NFIB and the Justice Department. They will hear two hours of argument on whether the law’s requirement to buy insurance is constitutional.

They’ll spend another 90 minutes arguing which pieces of the law should be struck if the mandate falls. The states and NFIB want the whole law knocked down, but the federal government argues that only two insurance reforms would have to go.

And they’ll devote an hour to the Anti-Injunction Act * which could put off the whole issue until after the individual mandate goes into effect. The law says consumers cannot challenge a tax law until they have to pay it. If the court says the mandate's penalty is a tax, the court could throw all the pending lawsuits out until consumers pay the penalty on their 2015 tax returns.

The court will also review for an hour the law’s Medicaid expansion, which the states claim is an unlawful coercion by the federal government since they must expand the program or drop out completely.

Kaiser Family Foundation has a good media page with summaries and links to multiple reports. High Court To Hear Health Care Case As 2012 Campaign Heats Up - Kaiser Health News

Not much has happened since the last time we discussed this http://www.early-retirement.org/for...year-does-obamacare-go-into-effect-57562.html Given the approach the US Supreme Court is taking it will will be very difficult to predict the outcome.

 

[SecondCor521]

There is also a potential for some of the Justices to recuse themselves (or at least there is some popular radio talk about such), so it could end up 4-4, 4-3, 3-4, 5-3, 3-5. Can they also issue split decisions where they have combined cases like this? Say they vote 3-5 and part of it fails and then 5-3 and part of it is upheld?

It could get quite complicated. I will say that I am impressed that these folks' brains can figure out the tricky legal stuff with only a few hours of argument. I'm glad I'm not arguing this in front of them on behalf of any of the appellants.

2Cor521

 

[easysurfer]

I have given up discussing Obamacare here. This subject is too polarizing and divisive.

+1

 

[plex]

They can uphold in part, and find unconstitutional in part. It is highly unlikely they will find the whole thing unconstitutional, so it will be particularly hard to predict what would happen to the act with one of its most important portions cut out.

Personally, I agree with the prediction of 38%, if the circuit courts were more split or were striking it down, it would be a lot more likely to happen.

 

[scrabbler1]

There is also a potential for some of the Justices to recuse themselves (or at least there is some popular radio talk about such), so it could end up 4-4, 4-3, 3-4, 5-3, 3-5. Can they also issue split decisions where they have combined cases like this? Say they vote 3-5 and part of it fails and then 5-3 and part of it is upheld?

It could get quite complicated. I will say that I am impressed that these folks' brains can figure out the tricky legal stuff with only a few hours of argument. I'm glad I'm not arguing this in front of them on behalf of any of the appellants.

2Cor521

I recall reading in the 1979 book, "The Brethren," about how the justices did just that on a few big cases. One, IIRC, was a series of death penalty cases in the mid-1970s. Another mght have been about some school busing (integration) cases filed in several states. It was very confusing to follow in the book, as I had to keep referring back to the pages which described the facts of the separate cases.

 

[Texas Proud]

There is also a potential for some of the Justices to recuse themselves (or at least there is some popular radio talk about such), so it could end up 4-4, 4-3, 3-4, 5-3, 3-5. Can they also issue split decisions where they have combined cases like this? Say they vote 3-5 and part of it fails and then 5-3 and part of it is upheld?

It could get quite complicated. I will say that I am impressed that these folks' brains can figure out the tricky legal stuff with only a few hours of argument. I'm glad I'm not arguing this in front of them on behalf of any of the appellants.

2Cor521

There are a LOT of papers filed prior to the oral arguments... IMO, the oral arguments are not even needed... the real arguments have been made on paper and the justices have probably made up their mind...

And then they have to go back and forth on what is written in their decision... from an interview I saw, one Justice writes a first draft... it goes to the other who give thier opinions on different parts of it... it gets rewritten, rinse and repeat until a final decision is made... after that they can write their own dissent or agreement with some other reason...

But I could be wrong...

 

[Texas Proud]

They can uphold in part, and find unconstitutional in part. It is highly unlikely they will find the whole thing unconstitutional, so it will be particularly hard to predict what would happen to the act with one of its most important portions cut out.

Personally, I agree with the prediction of 38%, if the circuit courts were more split or were striking it down, it would be a lot more likely to happen.

Or they can punt, like with the 'penalty' part...


From what I remember reading when this bill was written, they left out an important part that said if one part is not valid, then it can be stripped out and the rest remain.... but since none of the lower courts have thrown out the whole thing I would think this was reported wrong... However, it the language is not in the law then I think if they find one part wrong then they would throw out the whole thing...


From what I have read, and the last decision by the appeals court, it looks like this might get through.... IOW, most of the people who I have seen on TV say the 4 liberal judges will vote to keep it and there are two or three conservative judges that might vote to keep it since it would follow some of their previous decisions on other cases... IOW, it might not be 5-4...

 

[ziggy29]

As is often the case, I suspect that as goes Justice Kennedy goes the decision.

 

[chinaco]

Too close to call!


Interesting that it will be playing out just a few months before the election.

 

[dgoldenz]

Will be interesting to say the least. If it is upheld, it's going to hit the fan when 2014 rolls around and people find out how much guaranteed-issue health insurance actually costs.

 

[Mulligan]

Will be interesting to say the least. If it is upheld, it's going to hit the fan when 2014 rolls around and people find out how much guaranteed-issue health insurance actually costs.

Am I correct in my understanding that since Im in an individual plan that was bought prior to the Health Care Act, and is already not subject to the current changes already, that my premium would be shielded from this guaranteed issue that will cause premiums to rise?

 

[dgoldenz]

Am I correct in my understanding that since Im in an individual plan that was bought prior to the Health Care Act, and is already not subject to the current changes already, that my premium would be shielded from this guaranteed issue that will cause premiums to rise?

Sort of. If nothing changes, you will be on a 5+ year old block of business at that point which will be falling into the "insurance death spiral" and likely have large rate increases every year since there are no new healthy people joining the pool of insureds. Insurance companies will probably design all-new plans to comply with the exchange requirements and separate those out from older non-exchange plans.

 

[Mulligan]

Sort of. If nothing changes, you will be on a 5+ year old block of business at that point which will be falling into the "insurance death spiral" and likely have large rate increases every year since there are no new healthy people joining the pool of insureds. Insurance companies will probably design all-new plans to comply with the exchange requirements and separate those out from older non-exchange plans.

Thanks, DGoldenz. Though I would have prefered you to write something to the effect of how fortunate I will be and how much cheaper my premium
would be

 

[dgoldenz]

Thanks, DGoldenz. Though I would have prefered you to write something to the effect of how fortunate I will be and how much cheaper my premium
would be

Difficult to answer that question. Much of that depends on how old you are, what state you're in, and whether you will qualify for any subsidies or not. I can't wait for the 2014 NY Times article on ER.org members with $2M in assets getting 90% health insurance subsidies on their $2k/month policies.

 

[haha]

Sort of. If nothing changes, you will be on a 5+ year old block of business at that point which will be falling into the "insurance death spiral" and likely have large rate increases every year since there are no new healthy people joining the pool of insureds. Insurance companies will probably design all-new plans to comply with the exchange requirements and separate those out from older non-exchange plans.

I guess that if the Obama Plan is upheld, in this situation that you describe the members of that pre-change pool could stay there as long as it is to their advantage, then do a no underwriting application to a new post-change plan.

Ha

 

[dgoldenz]

I guess that if the Obama Plan is upheld, in this situation that you describe the members of that pre-change pool could stay there as long as it is to their advantage, then do a no underwriting application to a new post-change plan.

Ha

Correct.

 

[fisherman]

I guess the following will certainly make those opposed to the new law mad but it is a question I have had. I live in a state that requires you to carry car insurance. I know the states have the right to require you to purchase a product and that the federal governments right to require you to purchase this product is in question but that is not what my comment is about. Once this law went into effect my insurance rates went down as I was no longer paying as high a un-insured motorist premium. why would we not see the same thing with health care as most would now be covered with insurance than are not now?

 

[dgoldenz]

I guess the following will certainly make those opposed to the new law mad but it is a question I have had. I live in a state that requires you to carry car insurance. I know the states have the right to require you to purchase a product and that the federal governments right to require you to purchase this product is in question but that is not what my comment is about. Once this law went into effect my insurance rates went down as I was no longer paying as high a un-insured motorist premium. why would we not see the same thing with health care as most would now be covered with insurance than are not now?

If all car insurance was guaranteed-issue regardless of your driving record, prices would rise for everyone. Your car insurance policy is still underwritten and someone with a DUI is still paying 5x the price for half the coverage. When underwriting is eliminated, those with good driving records would be forced to pay more to cover those with bad driving records. Same thing applies with health insurance - those that are healthy and can qualify for lower-priced insurance on the individual market will no longer have that advantage. Older, unhealthy people will come out ahead while young healthy people will be screwed. Most people under 30 that don't want to get pregnant (to "use" their health insurance) won't buy health insurance for $100/month, let alone $300-400/month. This will contribute to an insurance premium death spiral.

 

[ziggy29]

If all car insurance was guaranteed-issue regardless of your driving record, prices would rise for everyone. Your car insurance policy is still underwritten and someone with a DUI is still paying 5x the price for half the coverage. When underwriting is eliminated, those with good driving records would be forced to pay more to cover those with bad driving records. Same thing applies with health insurance - those that are healthy and can qualify for lower-priced insurance on the individual market will no longer have that advantage.

Does anyone ever expect that there would be "no underwriting" car insurance? I surely don't.

There are ways to deal with the idea that some lifestyles are "less healthy" than others. For example, if the taxes on alcohol, tobacco, Big Macs and the like were used to fund the health insurance subsidies, then the users of those products are indeed (indirectly) paying a "surcharge" for their lifestyle choices. If the public health costs of alcohol abuse is (for example) 52 cents per drink, then add a 52 cent health care tax per drink and heavier drinkers are no longer being subsidized overall. You could do the same with a pack of cigarettes. (Am I saying this is the system I want to see? Not necessarily, but I am saying there are easy ways around the "subsidizing bad lifestyle choices" argument in the form of targeted taxes on certain products that increase health care costs.)

Also, any analysis of the "public cost" of unhealthy lifestyles should include some offset for the fact that these folks will be receiving Medicare and Social Security for several years less on average. So if someone can charge a "bad health risk" more because of health care costs to the public, why don't they get a "discount" on Social Security (lower tax rates or higher payouts) since they'll probably collect, say, 5-7 years less than a "healthy" individual and won't cost these entitlement programs as much as a "healthy" person?

 

[dgoldenz]

Does anyone ever expect that there would be "no underwriting" car insurance? I surely don't.

There are ways to deal with the idea that some lifestyles are "less healthy" than others. For example, if the taxes on alcohol, tobacco, Big Macs and the like were used to fund the health insurance subsidies, then the users of those products are indeed (indirectly) paying a "surcharge" for their lifestyle choices. If the public health costs of alcohol abuse is (for example) 52 cents per drink, then add a 52 cent health care tax per drink and heavier drinkers are no longer being subsidized overall. You could do the same with a pack of cigarettes.

Also, any analysis of the "public cost" of unhealthy lifestyles should include some offset for the fact that these folks will be receiving Medicare and Social Security for several years less on average. So if someone can charge a "bad health risk" more because of health care costs to the public, why don't they get a "discount" on Social Security since they'll probably collect, say, 5-7 years less than a "healthy" individual and won't cost these entitlement programs as much as a "healthy" person?

Do we expect car insurance to be guaranteed-issue? No, but I am just making the point as to how it would change prices in the market if that's how it worked.

 

[ziggy29]

Do we expect car insurance to be guaranteed-issue? No, but I am just making the point as to how it would change prices in the market if that's how it worked.

Maybe so. But something involving public funds can more easily find other ways to surcharge these bad choices than only through underwriting and direct premiums.

I guess what I'm saying is that as long as these "subsidies" for unhealthy choices come from pools of public money, it's not that hard to work around it through levying taxes on the use and consumption of these "unhealthy" products at the point of sale. Private insurers can't levy taxes this way, so their only way to "price risk" is through underwriting. To the extent public subsidies are involved, these subsidies could be paid out with money raised through taxes on booze, cigarettes, fast food or whatever else. Again, this isn't something I'm specifically advocating but "no underwriting" with public subsidies doesn't have to mean people making less healthy choices won't pay one way or another.

 

[fisherman]

Under the new law they are allowed to charge more as you age so that younger people pay less than older people? This is not full medical underwriting but it does balance the premiums some.

Another point is at least after 2014 those that are un-insured now will be paying something which will offset some costs as we are paying for their care now.

I certainly see your point since that is what happens today in the individual market as those that were in good health lose it which we all will. they can no longer move groups and thus see their rate spiral out of control.

I will share my opinion as I respect your also. I think the new law is somewhat better than what we have now for the following reason. I think that we only have two choices, the new law, or go back to the old system. The actions of the parties say they will not offer improvements as they have not yet in meaningful way. If they were serious the repeal bill would have detailed the replacement options and would have quite possibly garnered enough votes to pass.