Friday, June 22, 2012

The Affordable Care Act Waiting Game, Part One, Act III.

The Affordable Care Act (ACA) is the official name for the health reform package that Congress passed in early 2010. For most adults, the full impact of this legislation will not be felt until 2014. In two years, all Americans will be required by law to have health insurance; in exchange, insurance companies will be forbidden from denying coverage to anyone, regardless of previous health concerns.

For millions of children and families however, the ACA's protections are currently providing critical coverage and services. Under the ACA, insurance companies were required to offer insurance to all children immediately, even those children with a pre-exisiting condition. In addition, children and their families no longer have to worry about lifetime caps on medical expenses, young adults can stay on their parents insurance until age 26 and, perhaps most importantly, the ACA offers home visitation services to at-risk families to prevent child abuse and neglect and ensure the healthy development of all children.

In April, the Supreme Court heard arguments regarding the constitutionality of the Affordable Care Act. To better understand these arguments, think of a play in four acts, and please note that Acts I and II were posted yesterday - here.

Act III: If the individual mandate is ruled unconstitutional, would the remainder of the law also have to be nullified as this provision is such a critical piece (aka: severability)?

In essence, insurance companies are in the gambling business; in order to make money, they bet on their customers. When an individual purchases car insurance, the bet is that the policy holder won't have an accident. Similarly, when health insurance is purchased, the company places their odds on a given policy holder not having to visit the doctor or the hospital very often.

Congress understood this when crafting the ACA, that's why the provision for the individual mandate is so important to the law. Most people are healthy most of the time; therefore, if everyone is covered by insurance, the insurance companies' odds of making a profit are pretty high. However, if the mandate is struck down and the remainder of the law is upheld, there is nothing to prevent an individual from waiting until he or she is ill to purchase insurance, thereby guaranteeing the insurance companies would incur the cost.

So, if the Supreme Court decides that Congress when too far in declaring all Americans must puchase health insurance, they must then decide if the ACA can feasibly be enacted without this provision.

The Supreme Court will issue their decision regarding the ACA any day now. Act IV will be posted tomorrow.

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