If the Individual Mandate is Struck Down, How Will That Affect Physicians?

March 29, 2012

As the ACA hearings come to a close, speculation about what the justices will decide, and how that decision will affect physicians, has only begun.

As the Affordable Care Act hearings come to a close, speculation about what the justices will decide, and how that decision will affect physicians, has only just begun. 

But that isn’t stopping experts, analysts, and physicians from weighing in on the what-if scenarios.

One of the key what-ifs applies to what would happen if the court decides to throw out the individual mandate portion of the law, which requires that most individuals possess health insurance by 2014 or face financial penalties, but leaves the rest of the law intact.

A key problem with this scenario - for physicians, patients, and insurers - is that the individual mandate is deliberately intertwined with significant changes to the health insurance industry. These changes include provisions requiring that insurers guarantee coverage to all individuals regardless of medical history, and requiring more uniform rates for all individuals, regardless of medical condition.

In other words, the individual mandate would bring an influx of new healthy consumers to the insurance industry, and this influx would help balance out the cost to insurers of providing insurance to everyone - even the very sick.

If the mandate is struck down, however, and the insurance provision remains, that balance would be upset. For instance, as family physician Glen Stream, president of the AAFP, told Physicians Practice, a patient could wait until he is horribly sick (because he knows he is guaranteed insurance at that time), sign up for coverage, and then get $200,000 in benefits.

In November, Physicians Practice asked David Merritt, then an independent consultant and former CEO of the Center for Health Transformation, how physicians would be affected if the individual mandate is thrown out but the rest of the law remains standing.

Like Stream, Merritt, who is now senior advisor to Leavitt Partners, said he fears patients would wait to purchase insurance until they are very sick. “What incentive will they have to buy insurance when they are healthy?” he said in an e-mail to Physicians Practice. “Insurance costs will absolutely soar for everyone.”

In general, that means physicians would be see fewer patients for preventive services, and when they would see patients, they would already be sick. For healthcare as a whole, that’s a bad combination. Lack of preventive care naturally leads to increased healthcare spending.

Merritt added that physicians would likely take a reimbursement hit. “When the insurance costs soar, the government will look for savings elsewhere,” he said. “And provider reimbursement is always the first and often the only target.”

But other analysts argue that the consequences of striking down the mandate and letting the rest of the law stand - including the insurance provisions - would be less dire.

Larry Levitt, a health insurance expert with the Kaiser Family Foundation, recently told the Washington Post that as the healthcare law will offer millions of Americans generous subsidies to buy insurance, more people will acquire it voluntarily. “You are more likely to enroll even without a mandate,” he said.

That influx of patients could potentially help balance out insurance premiums and the amount of patients who purchase health insurance before they get sick.

Paul Starr, a health policy expert at Princeton University, pointed to Medicare’s Part B and Part D plans as an example of the likelihood that individuals would purchase insurance voluntarily. Both plans have high enrollment rates, and “seniors don’t have to sign up, but they do because it’s a good deal,” he told the Post.

Other analysts predict that alternative options could keep insurance rates from spiraling of control. According to the New York Times, some analysts say states could pursue their own alternatives to bolster insurance enrollment rates. Although unlikely, those alternatives could even include implementing statewide mandates, like the individual mandate currently under scrutiny.

This week, the White House said it is not working on contingency plans for what would happen if the Supreme Court strikes down all or part of the healthcare law. And if it does, analysts say the White House will likely wait until after the November general election to move forward with plans, according to the Chicago Tribune.

The uncertainty surrounding the Supreme Court’s decision is unsettling, says Stream. “If the Affordable Care Act is upheld, at least our direction for the next several years is pretty clear,” he says. “… If a significant piece is thrown out, and certainly if the whole thing is overturned, I’m concerned we have directional chaos.”

The Supreme Court’s decision is expected this June.

Marisa Torrieri, associate editor of Physicians Practice, contributed to this article.