How The Health Law Could Survive Without A Mandate

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The Supreme Court will hear oral arguments next week on, among other things, whether the 2010 health law can require most Americans to have health insurance starting in 2014.

The so-called individual mandate is the centerpiece of the law, and the conventional wisdom says the rest of the law will crumble if it is found to be unconstitutional.

But many policy wonks say that's not necessarily the case.

The idea behind the mandate is to ensure that enough healthy people buy insurance to allow the government to require something much more popular — that insurance companies sell policies to people who have pre-existing health conditions.

Perhaps it's ironic that one of the most articulate spokesmen for the individual mandate is someone who is currently campaigning for the repeal of the federal health law — GOP presidential candidate Mitt Romney. While he wants the federal law overturned, he does still back the mandate in the law he signed as governor of Massachusetts.

"If someone doesn't have insurance, then we have to care for them in the hospitals, give them free care," Romney said in a debate in Jacksonville, Fla., in January. "So we said no more, no more free riders. We are insisting on personal responsibility. Either get the insurance or help pay for your care. And that was the conclusion that we reached."

But what if the Supreme Court decides that Congress lacks the constitutional authority to require such personal responsibility? The result wouldn't necessarily be catastrophic.

"The other provisions of the law could go forward without a mandate," says John Rother, CEO of the nonpartisan National Coalition on Health Care.

Those other provisions include things like expanding the Medicaid program for the poor and setting up new marketplaces where people can compare plans and buy health insurance.

But Rother says without the mandate, the law wouldn't be nearly as effective. "We wouldn't see as many people covered by insurance," he says. "And also, health costs would be higher."

Indeed, according to a new study by the RAND Corp., 12.5 million fewer people would gain insurance coverage, premiums would rise by 2.4 percent, and total government spending would go up slightly.

That's because unless healthy people can be somehow persuaded to buy insurance, only the sick will sign up. That raises costs because everyone paying in is also collecting benefits.

But experts say there are ways to strongly encourage people to sign up that stop short of a mandate.

One possibility, says Paul Starr, a sociologist and health care watcher at Princeton University, is to "have limited enrollment periods, open enrollment periods the way employers do. That is, there would be a time once a year to have open enrollment, instead of allowing people at any time both to sign up for coverage and then to stop paying for coverage."

Allowing people to sign up or drop out anytime, Starr says, "then allows people only to pay when they're sick, and that's disastrous for any insurance system."

Starr has also been pushing another, even more dramatic idea. It would let people opt out of the law's requirement to have health insurance for a period of five years at a time. But they would also have to opt out of the law's benefits.

"That means that you wouldn't be eligible for the subsidies, or use the insurance exchanges, you wouldn't be guaranteed a policy with no pre-existing conditions," he says.

Rather than a mandate, Starr says, it asks people to make a choice: "Are you in or are you out? And I think it would allow people to opt out without any penalty, but it would also nudge a great many people to take part. And I think it would deal with both the constitutional issues and a lot of the political opposition to the mandate."

But it's not just liberals like Starr who think the law could survive without the individual requirement. Tom Miller of the conservative American Enterprise Institute is no fan of the law. But he, too, says he can see ways to encourage, rather than require, people to get health insurance.

"Some of those proposals have talked about basically limiting the protection against pre-existing conditions to people who maintain continuous coverage," Miller says. "We did that with the group market."

That, in fact, was a law passed with bipartisan support back in 1996.

"It could be done with the individual market," Miller says. "And that doesn't have that same type of sticking it right in your face, in your nose, to say 'you must buy this,' as opposed to 'no, this just would be better and would be more worthwhile for you.' "

Until now, neither side has been willing to budge when it comes to the health law. Republicans want it repealed, Democrats want it left unchanged. But Miller says if the Supreme Court finds any piece of the law unconstitutional, the sheer need to keep the health care system functioning is likely to force some sort of compromise.

"It's the reality veto," he says, "which is: things have to work."