Reeve Conover, March 31, 2012

A most interesting week in our countries history just unfolded. With 63% of Americans reportedly not in favor of Health Care Reform, and only 17% saying the court should uphold the mandate, it appears (emphasis on the maybe) that the Supreme Court may have taken a dim view of the mandate.  Observers reported that much of the time was spent discussing how much of the law would have to be thrown out, when the mandate was declared unconstitional.  Bear in mind that this is a close race;  it appears that the swing of one conservative judge could be all the difference, and the results are expected in June.

The more interesting facts are the ones most people are not talking about.  How do you “undo” years of changes made in the system to comply with the regulations?  Do we even want to go backwards?  After spending billions of dollars to comply, will the insurance industry even try to go backwards?  It appears to me that the answer is generally that what is done, is done.  Some of the good aspects of the law will stay, and some may never come to fruition. 

Will the much-hailed (by some) Affordable Exchanges actually come to be?  Also an interesting question.  The exchanges, part of Health Care Reform, are supposed to be available on January 1, 2014.  Yet, this date is only 20 months away, and the states are not even close to being ready.  Only 15 states have enected specific legislation.  Another 15 have done essentially nothing to get ready.  The remainder are somewhere in the middle.

Consider the pieces that have to be put in place:  Certifying “qualified health plans,” Setting up a comparison website for consumers, operating a tollfree consumer support hotline, providing education to consumers, determining who is eligible to participate, enrolling consumers, and managing the plans.    Before they can do that, the States have to choose between 3 sructures, pass legislation, and set up the agency.

SHOP-  Another option in the Exchanges is supposed to be SHOP, or Small Business Health Options Program.  This would allow small businesses of between 1-50 employees to offer multiple programs, let the employees choose their plan, but get one bill.  This is exactly like the old Hillary Clinton Health Care Alliances – indeed, several of these are functional in different parts of the country, although hamstrung by to-few carrier options.  Starting in 2016, empoyers up to 100 employees can participate.  Tax breaks may be available for small business under 25 emplpoyees.

The question with the exchanges is directly tied to the mandate as well – If all the young healthy adults don’t”have” to purchase insurance, the revenue won’t be there to make the numbers in the exchange work.  A bigger questions for me is – even if the mandate remains intact, where will the revenue come from.  The penalty for failure to purchase health insurance is minimal, so you are telling a 25 year old, “you have to spend $50000 on health insurance, and if you don’t you will be fined $95 on your tax return.”  In 2018 that fine grows to $700 – and at either level I don’t see the penalty as much of a motivational “stick.”

More in June!