Health insurers foresee rising premiums if court nixes 'individual mandate'

When President Obama pushed for a sweeping overhaul of America's health insurance system in 2010, the health insurance industry went along with a central premise of the law: that it would agree to insure "all comers," regardless of their state of health, if a new mandate also coaxed younger and healthier Americans to buy insurance.

In principle, millions of Americans who could not otherwise afford insurance would be covered, while the influx of healthy purchasers of insurance would help pay the costs. Any day now, in a ruling by the US Supreme Court, this central bargain in Mr. Obama's Affordable Care Act could unravel.

It's not hard to see why the health insurance industry doesn't like that idea. The Supreme Court could rule that the "individual mandate" in the law is unconstitutional, thus removing a big expected stream of revenue, while leaving in place the law's guaranteed-access provisions, which impose big costs on insurers.

But outside experts say the negative consequences also would ripple beyond the insurance business to affect the pocketbooks of millions of Americans, who would face a rising price for their health insurance.

"We have the worst possible outcome" in this scenario, says J.D. Kleinke, a health-policy expert at the conservative American Enterprise Institute. Yet this outcome appears quite probable, he says, because the Supreme Court is tasked with considering questions of law and the Constitution, not what would be optimal for America's health-care system.

"They're thinking about it legally.... They've got pressure not to be activist," says Mr. Kleinke. He predicts that "their tendency is going to be to do as little as possible but still do what they believe is legally correct. You do the math on that, you end up with: They take away the mandate, they leave the rest."

The court case could bring new and sharper definition to the clause of the Constitution that allows Congress to regulate interstate commerce. The central question is: Does a mandate on individuals to carry insurance (or pay a fine) represent a lawful regulation of commerce or an unconstitutional intrusion of the federal government on the affairs of individuals and state governments?

It's possible that the high court will opt for a ruling that doesn't center solely on the individual mandate. The justices could vote to uphold the entire Affordable Care Act (ACA), or they could strike it down entirely. Or they might sweep away both the individual mandate and the law's central marketplace reforms (guaranteed access to insurance) together, following the reasoning of the industry and the Obama administration that those provisions have an inherent linkage.

If the court strikes down the individual mandate without doing anything else, many Americans would still be glad to have the ACA's provision of access to insurance, without regard to preexisting health conditions.

And it's not clear how much insurance costs would rise. Some studies by health-care experts suggest the price jump could end up being smaller than the dire rhetoric from the industry implies – especially after factoring in the law's tax credits that defray the cost of buying insurance.

Other studies conclude that the rise would be substantial for families who don't have coverage through employer-sponsored plans. One midrange estimate of the impact, from the Congressional Budget Office, is that insurance premiums could go up by about 15 percent.