This weekend, I had a conversation with someone non-crazy who thinks there is a not-insignificant chance that the Supreme Court will overturn health care reform, or at least the individual mandate (it's not clear what happens to the rest of the law if the mandate goes down; there's some possibility that this would invalidate the entire law). Mind you, this person was not suggesting that the chances were, say, 85%; more like 25%.

But in a case like this, 25% is a big chance. So we spent a bit of time speculating about what would happen next.



We know what happens if the court simply invalidates the mandate: you get New York State, where the cost of insurance spirals out of control, until the few remaining people in the individual market are so sick that the death spiral bottoms out. Adverse selection does have its limits, which is why, even before lemon laws, there was a market (however imperfect) for used cars.

What happens after that? That would leave politicians deciding whether to repeal the most popular features, or end individual health insurance as we know it. Fun choice. My guess is that we'd get some weird hybrid model of corporate and state-sponsored insurance--but the state sponsored insurance would probably itself be overwhelmed by adverse selection, or (if we simply funded universal coverage out of tax dollars), by employers dumping their employees onto the public plan. But I have no idea where the money would come from.