Health Insurance Industry OK With ObamaCare As Long As There's a Mandate to Purchase Health Insurance


America's Health Insurance Plans, a trade group representing the health insurance industry, has filed an amicus brief asking the Supreme Court to review challenges to last year's health care overhaul. The brief makes it pretty clear how the health insurance industry perceives the law—as well as what it gets out of it: AHIP, which was generally supportive of reform during the debates that led to its passage, urges the Supreme Court should move quickly in order to settle any questions about whether insurers have to comply with the law's many implementation requirements. "Only a prompt and definitive ruling by this Court on the individual mandate's constitutionality can restore needed certainty to the health care market," the brief says. 

The trade group also argues that the Court should resolve the question of the mandate's severability from the rest of the law, with a strong implication that the law should only be allowed to stand if the Court believes the mandate is constitutional. Otherwise, the whole thing should go. From the brief:

Evidence underscores the very real likelihood that implementation of ACA's market reforms in the absence of the individual mandate would confound the legislation's central goal of increasing the availability of affordable health care coverage.  Congress, moreover, enacted the individual mandate in conjunction with its market reforms because it was acutely aware of the widespread difficulties that had arisen from the efforts of States to implement similar insurance market reforms without the economic counterbalance of an individual mandate.  

Given AHIP's history of contingent support for the health care law, this is not exactly a surprising position. But it does reveal, once again, the industry's bottom line when it comes to the legislation. Health insurers are willing to accept ObamaCare as long as they get what they want out of it: a requirement that everyone purchase their product. 

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  1. “Only a prompt and definitive ruling by this Court on the individual mandate’s constitutionality can restore needed certainty to the health care market,” the brief says.

    True. Let’s hope they rule unconstitutional, to give real certainty.

  2. Dear Occupy Wall Street participants,





    Excellent drum circles, dudebros.

  3. Peter:

    One could read this piece and think that the Health Insurers simply supported PPACA to obtain more customers. I think this is incorrect. In my opinion insurers reluctantly supported PPACA because they thought that it was going to get passed anyway and wanted to have some say in how it shaped up. We can debate whether this was a good or bad strategy (especially considering how the administration and its fellow-travellers in Congress villified the health insurance industry during the run-up to passing PPACA), but that was the thinking. Bottom line is that PPACA makes business much tougher for insurers (think MLR and rate review) and any extra business they get will come via the exchanges and be subject to Guaranteed Issue, strict rating restrictions, rate reviews and MLR combined with a (weak?) mandate. Therefore any mandate is better than nothing, but the severability of the individual mandate from the rest of the law guarantees the end of the private individual health insurance market in this country (assuming the IM is ruled unconstitutional). At least with the mandate the private individual insurance market has a chance.

    So yes insurers want the mandate not because of some expected windfall, because they will be out of the individual insurance business without it.

  4. The insurers are doomed either way. All they can do is delay the inevitable.

    The public and its panderers are dead set against the notion that there should be any economic limits on health care of any kind; dead set against the notion that there should be any relationship between the number of services a plan covers and how much it costs; dead set against the notion that premiums should bear any relationship to actuarial risk.

    Eventually this ends in bankruptcy for the insurers or premium rates that consume the entire GDP. It’s just a matter of time.

    1. The banks are bankrupt but we bail them out. Insurance companies are also in the “highly-leveraged, fractionally-reserved” business and expect to be bailed out. Certainly some insurance companies will disappear, but others will be sanctified with taxpayer money, regardless of solvency, by the DC Royalty and their minions.

  5. There is a give and take from their viewpoint. First, if people are obligated to buy insurance then they are obligated to take pre-existing conditions.
    You can’t have one without the other.
    The insurance industry is the least of the problems when it comes to healthcare cost.

  6. Self-evident post of the century.

    Seriously, is there anyone claiming that the insurance industry would oppose the mandate?

  7. This is kind of side-topic, but there is this fascinating anecdote about the rise of Walgreens and prohibition.

    In 1920 druggist Charles Walgreen had 20 (twenty) stores in Chicago, but thanks to prohibition, Walgreens could legally sell booze, for “medicinal purposes”. A decade later Walgreens had over 500 new locations.

    Walgreens claims it was from the milkshake, which family historians have credited with the chain’s rocketing expansion, but Walgreens essentially cornered the market on legal sales of alcohol during prohibition, and you would have to be ignorant to suggest that this wasn’t a major factor in their success.

  8. I can’t see the court ruling that the mandate is severable after lawmakers were forced to drop it from the bill to get the insurer’s buy in. Although it would be fun the see Ignatious squeal like a stuck pig if they rule it is severable.

  9. Then again, after the 11th circuit ruled it severable despite Justices own lawyers insisting it couldn’t be doesn’t give me much confidence.

  10. Peter, btw, your lovely wife did an excellent job on the Washington Journal this morning.

  11. Props, Peter, for finally stopping with that vaguely sycophantic “PPACA” and going straight with “ObamaCare”.

    1. He should wait for someone to take offense at “Obamacare” and start calling it “pee pee caca” instead.

  12. Just as CLASS was unsustainable. You can’t have voluntary participation and guaranteed issue. nIt’s called adverse selection and will death spiral

  13. For once I’m giving you a pass on the lack of alt-text.

  14. Translation: the individual mandate is “necessary and proper” in connection with the regulation of interstate commerce embodied in the rest of the statute. The individual mandate does not stand on its own separate from the rest of the statute; it is an integral and inseperable part thereof.

    Told you so, hosers. Watch your Objectivist dreams melt like Nazi faces looking into the Ark.

  15. I don’t think we’ve seen a more obvious example of an attempt by the regulated to capture the regulators as described by James Buchannan.

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  17. The insurance companies are getting what they can get in the next 3 years before ObamaCare puts them out of business. After that, welcome to the single-payer, socialist system. (Yes I know single-payer isn’t “officially” in the law that was passed, but after you run everyone else out of town, health care will be a de facto single-payer system.)

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