She writes that he initially voted with the four other conservatives to strike down the ACA, on the grounds that it went beyond Congress’s power to regulate interstate commerce. Likewise, he initially voted to uphold the ACA’s expansion of Medicaid. But Roberts, who kept the opinion for himself to write, soon developed second thoughts.
Biskupic, who interviewed many of the justices for this book, including her subject, writes that Roberts said he felt “torn between his heart and his head.” He harbored strong views on the limitations of congressional power, but hesitated to interject the Court into the ongoing health-insurance crisis. After trying unsuccessfully to find a middle way with Kennedy, who was “unusually firm” and even “put off” by the courtship, Roberts turned to the Court’s two moderate liberals, Stephen Breyer and Elena Kagan. The threesome negotiated a compromise decision that upheld the ACA’s individual mandate under Congress’s taxing power, while striking down the Medicaid expansion.
Over at Lawyers, Guns and Money, two commentators ask a pair of great questions:
1) What would the exchanges look like without a mandate in 2014?
2) How the hell does Balloon-Juice work?
I’ll try to answer only the easy question — in a counterfactual universe that the major holdings of NFIB were reversed, how would things look?
As a reminder, NFIB held that the individual mandate was constitutional as a taxing power and mandatory Medicaid expansion was unconstitutional because it was too coercive of states and therefore it had to be a voluntary expansion.
What would the ACA look like if the mandate was found to be unconstitutional but fully severed from the rest of the ACA? This is what Congress decided to do in the tax reconciliation bill in 2017 by the way.
The obvious and important point is that the working poor in Texas, Mississippi, Alabama, North Carolina, Georgia, Florida and a few other states would have Medicaid coverage on January 1, 2014. That is probably another two million people who have coverage because of Medicaid expansion and ten to twenty million person years of additional coverage as late expansion states would have gone live on 1/1/14 as well.
Now lets move onto the individual market. NFIB was decided in the summer of 2012 while the rate review process for the 2014 plan year would only have the first submission in the spring of 2013.
I am a firm believer that insurers can and will price for things that they know about if they have enough time to figure out the rules. Insurers would have had at least nine months from the time of the counter-factual NFIB decision to figure out their underlying actuarial assumptions. I think insurers would have had these thoughts:
- Subsidies (both APTC and CSR) are creating a class of price insensitive buyers
- The market is going to be smaller than we expected pre-SCOTUS
- The market is going to be sicker than we expected
I think those are three solid assumptions that any slightly caffeinated actuary would and should make. And those assumptions can be priced on. Average morbidity (disease burden) would be estimated upwards while the risk pools would shrink. This combination could scare off a few smaller and less well capitalized insurers but the big Blues and the major regional players like my former employer (UPMC Health Plan) would still want to get involved in a multi-billion dollar market.
I think that the announced rates in the summer of 2013 would be higher in this counterfactual than they were in reality. Universal Medicaid expansion would pull out a portion of the sickest cohort from the individual market pool. At the same time, the lack of a mandate would have been perceived as a repulser of the expected to be low cost healthy folks (overwhelmingly young but not necessarily young) . These two directional impulses would be in opposition to each other. I think the lack of a mandate would have dominated the risk pool improvement by universal Medicaid expansion. This would be most evident in states like California that in this universe expanded Medicaid on Day 1. It would be attenuated in states like Texas which never had the Medicaid expansion risk pool improvement bonus.
Since counter-factual NFIB would have been decided early enough for insurers to adapt to the new rule set, I think the markets would have formed at a point of lower enrollment and higher premiums in 2014.