Beyond its constitutional importance, the outcome of the U.S. Supreme Court’s decision on President Obama’s national health care law will have dramatic policy and legislative implications.
There are three ways the Supreme Court could rule (which it’s expected to do by June). It could uphold the law, strike down the whole law or only strike down parts of the law.
If the Court upholds the entire law, the only option left to opponents of Obamacare will be to repeal it legislatively. This would be an extremely difficult process.
To repeal the law, a Republican would have to win the presidency in November. The GOP would probably have to retain the House and gain a majority in the Senate as well.
Because it is unlikely that Republicans will gain the 13 seats needed to secure a filibuster proof 60-vote majority, Republicans would have to pursue repeal through the budget reconciliation process. And although reconciliation allows legislation to pass with 50 votes plus that of the vice president, it’s a messy parliamentary tactic that might leave many parts of the law intact.
If the Supreme Court strikes down the entire law, it would take a lot of pressure off Republican lawmakers. But the GOP would still have to unite around an alternative plan to reform the health care system. Without Obamacare, they will still need a plan to bring down the unsustainable cost of government health care programs, a primary driver of our nation’s debt. If Republicans don’t pursue market-based reforms when they have the opportunity, Democrats will at some point regain power and try again – and the result could be an even bigger expansion of government’s role than Obamacare.
More difficult questions arise when considering what would happen if the Supreme Court only overturns parts of the law – particularly the mandate requiring individuals to purchase health insurance.
The mandate is a central aspect of the law, because it’s the mechanism for bringing healthy people (and their money) into the insurance pool. The mandate is meant to offset the distortion in the marketplace caused by another part of the law, which requires insurers to cover those with pre-existing conditions at the same price as others.
In the absence of a mandate, healthy people would have an incentive to go without insurance, knowing that insurers couldn’t deny them coverage if they got sick. This would drive up the price of insurance, which would then cause more healthy people to leave the market, leading to even higher rates. Eventually, the so-called “death spiral” would ensue, and the private insurance market would fall apart.
If only the mandate is overturned, Republicans would push for legislative repeal of the rest of the law while Democrats would push for some way to “fix” Obamacare. If Americans elect a divided government in November, this will be a bruising battle that could make the debt ceiling debate look tame.
The Supreme Court also has the option of striking down both the mandate and the ban on pre-existing conditions, on the grounds that the two are inseparable. That would take some of the heat out of any legislative battle, given that the threat to private insurers’ viability would be less acute. But Congress and the President would still have to fight over what to do with the rest of Obamacare.
In addition to the mandate, the Supreme Court is also hearing a challenge to the law’s Medicaid expansion brought by 26 states led by Florida. If the Court found this to be unconstitutional, it could have wide ramifications, not only on one of the largest government programs, but on federal power over states in other programs that they manage jointly.