Obamacare in the Balance: Will the Court Ruling Really Matter?

ObamacareOn Thursday, the Supreme Court will issue its landmark ruling in the case of U.S. Department of Health and Human Services v. Florida, or as it's more colloquially known: Republicans vs. Obamacare.

Until the justices speak, only one thing can be known for certain: The decision will change the lives of tens of millions of Americans.

The Story So Far

It's been more than two years since the Patient Protection and Affordable Care Act -- aka Obamacare -- became law. On the one hand, it runs to thousands of pages of new rules, yet it still falls short of a total solution to the nation's health care problems.

Make no mistake. The law has makes significant changes:
  • There's a ban on "lifetime limits" on the amount of benefits an insured person can collect.
  • Insurers must justify decisions to increase insurance premiums.
  • 50,000 children age 18 and under have been able to obtain coverage despite pre-existing conditions.
  • Millions of women can now receive mammograms and other preventive care with no deductibles and no copays.
  • 2.5 million children are now able to stay on their parents' health insurance policies up through age 25.
  • 5.1 million seniors are receiving discounts on prescription drugs, helping to fill the Medicare Part D "doughnut hole."
Yet a recent poll conducted by Rasmussen Reports shows that two years after it was signed into law, a majority of Americans feel they've haven't benefited at all from Obamacare's passage.

More worrisomely for the law's supporters, the number of voters who say they've been hurt by the law outnumbers those who say they've been helped by a factor of two: 26% of voters polled pointed to higher health insurance premiums, and layoffs from employers unable to afford insurance, as the primary "results" of Obamacare -- versus only 13% who say they've been helped by it.

One reason many people think Obamacare has hurt them, or at least not helped, is that many of the law's biggest benefits haven't taken effect yet. If Obamacare survives the Supreme Court's ax, it will still be another year and a half -- 2014 -- before the major provisions kick in. Benefits such as:
  • A universal prohibition on denying coverage for pre-existing conditions.
  • Prohibition of capping the annual amount that will be paid out on a patient's claims.
  • Requiring insurers to cover the cost of experimental treatments.
  • Tax credits for "low-income" consumers -- as much as $43,000 annual income for an individual, or $88,000 for a family of four.
  • Establishment of "insurance exchanges" -- a competitive market for insurance plans.
  • Health-care tax credits for small businesses.
  • And most importantly, the "individual mandate" -- a requirement that everyone in America either buy a health insurance policy or pay a penalty.

The Road Ahead

It's this last provision that's most questionable. The court must first decide whether health care is part of "interstate commerce." And second, it must decide whether Congress can use the Constitution's Commerce Clause to require Americans to buy insurance -- a novel question of law.

If the court finds in the negative on either point, then the individual mandate goes away -- and we're in a real pickle. The insurance industry will be saddled with a host of expensive benefits it must provide, but not enough money to pay for them. Insurance rates will skyrocket -- perhaps by as much as 40%.

Recognizing this, the court could well decide that Obamacare is unworkable without the mandate, and wipe the whole thing off the map. In this case, all the changes instituted over the past two years could go away.

Or not.

Jeffrey Young, writing for our sister site, Huffington Post Business, points out that health-care providers have already instituted "new consumer protections to health plans, [altered] the way medical providers get paid and [taken steps] to improve health and save money. Experts say the push by President Barack Obama's health care reform has created an unstoppable momentum."

In short, the possibility that the Supreme Court might kill Obamacare outright this week sounds scary, but it may not be as frightening as it sounds.

Motley Fool contributor Rich Smith has no investment-related dog in this fight, neither owning stock nor selling it short in any health care companies.

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The "looney lib" Supreme Court? The majority opinion was written by Judge Roberts.

A couple of quick observations:

I. On the individual mandate, the court got the issue absolutely correct. It would be an incredibly expansion of congressional authority to permit the individual mandate under the commerce clause. SCOTUS decisi ons on the commerce clause already gives Congress the right to regulate anything you buy or sell. Allowing congress to regulate anything you choose NOT to buy or sell would essentially eviserate the FUNDAMENTAL CONSTRUCT of the constitution, namely that its a document that places limits on the power of the federal government.

However, the court was also right that the power to lay taxes gives Congress the right to tax people based on choices they make.

II. WHile this is undoubtedly a "victory" for Obama's signature achievement to date, its an unmitigated disaster to his re-election prospects. Look at it this way:
1. if you are against "Obamacare", you are now even more motivated to get out the vote and elect Romney and a GOP congress, because legislative repeal is the ONLY mechanism left to get rid of the law.
2. if you support "Obamacare", its rejection by the SCOTUS would have allowed you to argue how important it was to re-elect Obama, since the only way to get rid of a "right wing" activist group masquerading as the high court would be to replace Scalia and Kennedy (expected to retire soon) with more "reasonable" jurists appointed by a democratic president. Well, that justification just went away.

III. Now that the issue of its constitutionality has been settled, we can get to the far more important issue of HOW BADLY DESIGNED the law was:

1. While the law is expected to reduce the number of uninsured by about 30 million, it did so primarily by adding 20 million new people to the Medicaid rolls. The SCOTUS rejected the mandatory aspects of this expansion. States now have a choice. Many states will choose to reject new federal funds, and not cover these people. Those that would have been expected to cover these people (NY, CA, IL, etc.) are all broke, and frankly can't afford it. Moreover, they already cover some of the very classes of people the law would be extended to.
2. The individual mandate actually INCENTIVIZES young healthy people to pay the penalty, not buy insurance. Why? Because the penalties are less than the costs of insurance (unless they get a subsidy, in which case their getting isnurance RAISES the overall costs of healthcare). And eliminating the ability to deny for pre-existing conditions eliminates a big reason people buy insurance in the first place, namely fear of what "might" happen.

The estimates were that nearly as many people with insurance today would drop that insurance and pay the penalty as would gain insurance through exchanges. That won't change. What will change is that many states will still refuse to put the near poor on Medicaid.

June 28 2012 at 12:06 PM Report abuse -2 rate up rate down Reply
1 reply to indisposed9999's comment

Those near poor will now get subsidies to buy health insurance, which is more expensive than Medicaid, increasing costs.

So, the net effect is that it won't insurance many more people, and it will do so at higher costs. Hardly something I would want to run for reelection on.

June 28 2012 at 12:07 PM Report abuse -1 rate up rate down Reply

Not much of a story. One thing I found interesting was the polling and those that feel hurt by the increase in premiums. Wake up and smell the Starbucks. Premiums increasing is something new???????

June 28 2012 at 9:51 AM Report abuse +2 rate up rate down Reply

YEA!!!! FREE MONEY.... FREE MONEY... FREE HEALTH CARE.... FREE DRUGS... FREE, FREE, FREE, FREE!!!! It's about time, I deserve it! It is my right... YOU pay for me... HAHAHAHAHAHHA... ROFL... yeah, I did drugs in high school and sexxed up lots of animals into my 30s... was sleeping through high school - HA, but public school... got my DIPLOMA! still mow a lawn once a week, got my food stamps, got my welfare... got my WIC & DISABILITY.... HA!!! NOW I HAVE MY FREEEEEEEEE HEALTH CARE... SET THAT UP BABY... HAHA... I'm an OBAMA VOTER..... not even a freakin' citizen - stupid Americans...

-thought process of a typical barack obama voter, exactly as baracko was elected and plans to stay in the whitehouse - DESPITE lacking any verification of eligiblity...

June 28 2012 at 6:59 AM Report abuse rate up rate down Reply

This HuffPuff/AOL Obama propaganda "story" is a JOKE!

This "story" is a big LIE! The WORST part of this law -
- RATIONING CARE to the ELDERLY ("QALY" - "quality adjusted life years" - if your too old, we will not spend the money to cure or heal you), and effectively END YOUR LIVE
- OBAMA CORRUPTION - Waivers given to Unions, and Big Corporate Friends-of-Obama

So .... AOL/HuffPuff sees the handwriting on the wall, and now wants to pretend that if the Supreme Court strikes it down this law which MOST Americans OPPOSE, as UCONSTITUTIONAL is "NO BIG DEAL"??????

Really Obama? Really HuffPuff/AOL?

LOL!! (Thanks for your "opinion"!!!)

June 28 2012 at 5:08 AM Report abuse +1 rate up rate down Reply

I would comment on the bill darlings but I don't know what's in it. How shameful and embarrassing.

June 27 2012 at 7:26 PM Report abuse +4 rate up rate down Reply

Uninsured and underinsured people should form a coalition, get organized, and deal directly with providers in case this bill is overturned. It could work and the group, not congress or the insurance companies, would control it.
Once it gets going those opposed to the present bill could then get lost since it wouldn't cost them a dime. The same for the insurance companies. Congress would want its grubby paws in the pot but should be told "Don't call us. We'll call you." The rich already do a form of this. It can work.

June 27 2012 at 3:39 PM Report abuse rate up rate down Reply

The real winners the Insurancecompanies. We gave them higher profits and 35 million new customers to make a profit on. This isn't healthcare reform it's a present to the insurance companies for their campaign donations. Nothing More!

June 27 2012 at 3:36 PM Report abuse +2 rate up rate down Reply

Just goes to show that no one really know what is "in Obamacare" preventive testing is only covered with no co-pays or deductibles if the findings are negative for ANYTHING. For example - Clonospopies are "covered" as preventative tests with no deductible. HOWEVER, if they find ANYTHING WRONG (pollips, inflamation, diverticullitis, hemmoroids, etc. the entire bill is charged to the patient and the insurer. I had to pay over $2,000 for mine since they found VERY minor issues, Basically when you hear anyone make the claim that it provides "preventative" care at no charge, they either misunderstand the law, or are just lying to play politics.

June 27 2012 at 2:22 PM Report abuse +2 rate up rate down Reply

You can bet that the GOP controlled Supreme Court lead by the Chief Misfit John Roberts have gutted Obamacare because their financial masters have given them orders to do so!

June 27 2012 at 1:09 PM Report abuse rate up rate down Reply

The article notes that the benefits already in place have resulted in higher insurance premiums for all plus layoffs. Then it lists costly benefits that have yet to be fully implemented. Without dealing at all with the cost of these. This has been the problem from the getgo........Obamacare does not reduce the overall cost of healthcare. It gives employers the opportunity to save dollars by dumping employees into the exchanges---this shifts current employer cost burdens to the taxpayers. On top of that new burden, taxpayers have to pay for increased subsidies via the exchange program. Plus increased medicaid eligibility. And makes the ludicrous claim that this will all be paid for by requiring a few of the currently uninsured to purchase insurance.

June 27 2012 at 10:40 AM Report abuse rate up rate down Reply