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June 27, 2012 / Political Fluency

Everything is at Stake Tomorrow

I was thinking of putting the signature “The Mandatory Supreme Court Deciding Obamacare Post” but this is too important. This is perhaps the most important Supreme Court decision of our lifetime.

The Wall Street Journal had a great breakdown of the four possible scenarios that can be ruled by the court – my handicaps follow each:

Scenario #1: The entire law is upheld. 5%

Scenario #2: The insurance mandate is struck down, but the entire rest of law stays. 30%

Scenario #3: The mandate and two related provisions are struck down but the rest of the law stays. 40%

Scenario #4: The entire law is struck down. 25%

My prediction is a 5 to 4 decision for Scenario #3, shading a little closer to Scenario #2, with Chief Justice John Roberts writing the opinion. I’m rooting for Scenario #4 to have the whole thing struck down so we can have a health care debate with much narrower parameters that lean more toward the free market than the debate in 2009 and 2010 which featured the possibility of a public option with the federal government as the payer.

The individual mandate is almost certainly going to be declared unconstitutional. It is unprecedented for the government to force the purchase of insurance from a private company as a requirement for citizenship as liberal Markos Molitsas has argued on his Daily Kos site back in 2009. And it is a slippery slope for the government to create commerce in order to regulate it as Jay Cost explains in his scathing critique of the provision today.

However, a lot of the law may be upheld because the federal government often dictates policy to the states. Medicaid works that way as they are state-run health programs for the poor and if a state lowers the drinking age below 21 the state would lose federal highway funding. Given that, Congress should be able to regulate insurance companies to cover children up to age 26, force them to accept people with pre-existing conditions, and dictate that states build exchanges for people to purchase health coverage.

It’s this last piece that concerns me the most. As an employee benefits consultant, my career trajectory and certainly that of most of my colleagues will be decided tomorrow. Since most of my colleagues are a shade milder on the Asperger’s spectrum than lawyers, many of them never saw how much Obamacare threatens our industry. The revenue for our company is almost entirely dependent on the employer-based model of health insurance distribution. If employers started dropping medical insurance coverage as a benefit being offered, which is precisely what Obamacare was intended to do in my opinion, then what my colleagues and I do for a living would not be needed on the scale it currently is.

The naiveté of coworkers who were either actuaries, or passing the many very difficult tests on the path to becoming one, was astounding. Most just assumed that employers would continue to offer health insurance to employees. Why? Because employers have always done it.

Meanwhile, pensions – which actuaries also calculate – have been disappearing for decades. Why? Because they cost the employer too much. Why is employer-provided health insurance in jeopardy? Because it costs the employer too much money. These two statements are independent of Obamacare. It’s not if, but when employers jettison both as benefits for their employees.

The arguments with my coworkers have taken a toll on me. I’ve resorted to the equivalent of “bringing Hitler up in an argument” when I’ve said, “Have you seen the look on the CFO’s face when we tell him how to lower his company’s healthcare costs?”

Once again with the Asperger’s meme, my colleagues seem unable to read the emotions of the CFO of our clients when we tell them the way to lower costs is to 1) increase cost-sharing through higher employee contributions and plan design changes (increasing copays, deductibles, and coinsurance) as well as 2) promote wellness programs such as smoking cessation and weight loss competitions. If the CFO was a regent from centuries ago, we would be unceremoniously taken from the meeting and guillotined for the non-solutions.

The state exchanges that are to be built under Obamacare in 2014 gives CFO’s the pretense for canceling their companies’ health insurance coverage under the cover of directing employees to the state exchanges to buy coverage individually. If CFO’s canceled employees’ health insurance right now, many employees would have nowhere to go for remotely affordable coverage in most states. But with the exchanges they presumably would.

Assuming the individual mandate is gone, the fate of the exchanges will be the fate of how disruptive the law will or will not be to our health care system.

It’s going to be fascinating to read the opinions of all the Justices on this issue. And if I were in the majority to declare the law unconstitutional, I would write a one sentence opinion: We have to strike down the law after we found out what’s in it.

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