Health Insurance Companies May Regret Mandate Deal.

 

   The Health Insurance industry thought that it got more than it gave up while it was doing deals with the White House before Health Insurance bills were submitted to Congress.  Most famously, Health Insurance Companies:

• Agreed not to contest Preexisting Conditions in most cases once the Federal Patient Protection and Affordable Care Act took effect.
• Agreed not to charge higher Premiums to certain Policyholders and Employees who had Coverage with Employer-based Health Insurance.
• Agreed to a potentially more difficult procedure in order to obtain Rescission than they now enjoy in many States.

 

   In exchange, the Health Insurance Companies got more than they probably ever thought that it was possible for them to get:  Mandatory Policyholders, i.e., a mandate in the new Federal Law which would effectively require people to have Health Insurance and therefore require them to pay a Premium to a Health Insurance Company.

   That is the mandate which is headed to the U.S. Supreme Court for a supposedly final say on whether a mandate to obtain Health Insurance Coverage is valid and enforceable.  See, e.g., Timothy Jost, post of November 14, 2011 on HealthAffairs Blog; "Framing the Supreme Court Case," HealthLawProf Blog post on November 15, 2011; and Mark Hall, "The Importance of the Individual Mandate ...," and related posts and Comments, itself posted on November 4, 2011 on HealthAffairs Blog.

   Many observers, me included, predict that the current five-person majority on the High Court will strike down the mandate, for whatever reason.  The question then becomes:  Is the mandate provision severable from the rest of the PPACA?  If it is severable, then that would leave intact all the things that America's Health Insurance Companies were giving up, only so that they could get a mandate with a huge pool of new Policyholders who would collectively pay enormous amounts of money in Premiums for Health Coverage.  Thus, if there is no mandate in the future, that would mean that Health Insurance Companies got nothing in exchange for things like those which I have just listed, among others:

• Coverage for Preexisting Conditions.
• Waiver of Premium Increases for Coverage for various claims.
• Obedience to Rescission laws which are less favorable than existing Rescission laws in many States, and in almost all Health Insurance Policies and Plans.

   The possibility that they gave up much, and will get nothing in exchange, is now sinking in to the consciousness of many of America's Health Insurance Companies.  See Julian Pacquet, "Insurers 'Terrified' of Supreme Court Ruling on Healthcare Reform Law" (The Hill / Healthwatch Blog, posted Tuesday, November 22, 2011).

 

The author is Co-Chair of the American Bar Association's Health, Life and Disability Insurance Subcommittee.

 

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Comments

[hgstern]

David Williams hosts this week's excellent round-up of risk-related posts, and your post is in it:

http://www.healthbusinessblog.com/2011/11/cavalcade-of-risk-145-insurance-fest-edition/

Please tell your readers.

And a friendly reminder to newbies and regulars alike that, while it's not mandatory to give a link back, it’s the way that carnivals work best. If your submitted post has been included in the Cav, please remember to post about it on your blog because it helps us all.

Thanks!

Hank Stern