The signing of the Affordable Care Act (ACA) by President Obama must be considered a landmark event in the history of the nation regardless of how one views the constitutionality of the legislation. Passage of the legislation marked the end of a long and acrimonious debate and brought the United States in line with the rest of the developed world in terms of providing universal health coverage to its citizens (Orszag, 2010). Unfortunately, the debate over the constitutionality of the ACA did not end with Obama's signing of the legislation as within days several different states filed suit against the law's requirement that most Americans purchase health; against the health care mandate.
The health care mandate was first offered as an option by the conservative think tank, the Heritage Foundation, as an option to the single-payer system that had been historically supported by Democrats and liberals (Ponnuru, 2012). In a brief entitled as "Assuring Affordable Health Care for All Americans," Heritage Foundation member, Stuart Butler, stated: "Many states now require passengers in automobiles to wear seat-belts for their own protection. Many others require anybody driving a car to have liability insurance. But neither the federal government nor any state requires all households to protect themselves from the potentially catastrophic costs of a serious accident or illness. Under the Heritage plan, there would be such a requirement." Following this pronouncement by the Heritage Foundation, the mandate was publicly suggested by Congress Republicans during the course of the legislative debate over President Clinton's health reform bill. After the Clinton health care reform failed, the Democratic Party, which had opposed the health care mandate, found itself having to re-examine the viability of such measure. The Democratic Party remained committed to finding a way to enact a national health care plan and began to consider that the adoption of the Republican suggested health care mandate might represent its best chance at reaching a bi-partisan compromise. During the period between the failure of President Clinton's attempts at health care reform and the eventual passage of the ACA the health care mandate continued to pick up steam. In the intervening years, more and more politicians, when discussing the possibility of a national health care plan, began suggesting that a health care mandate might be a viable solution. Even liberal Democrats such as Senators Ted Kennedy and Hillary Clinton included a health care mandate as part of their health care reform proposals. Senator Obama, however, and, later, as President did not favor such a proposal. Obama still favored a single-payer system and he presented his health care legislation to Congress with such a system in place. In time, however, as it appeared that Congress was reluctant to pass a single-payer plan, President Obama, realizing the need for more widespread health care coverage relented and abandoned the single-payer plan for one that incorporated the health care mandate. Interestingly, and ironically, as the ACA came closer to passing, Congressional Republicans, who had originally advocated the adoption of the health care mandate, began to organize their opposition to the ACA based upon the inclusion of the health care mandate in the bill. After years of advocating for the health care mandate, Congressional Republicans were now arguing that such mandate was "unconstitutional."
Recently the U.S. Supreme Court trumped the arguments suggested by opponents to the ACA and ruled that that health care mandate was indeed constitutional. The Court's decision, however, has not ended the debate. The debate rages on and only time will determine the ultimate outcome. In the meantime, however, it is essential to determine what possible effects the implementation of the health care mandate may have on the delivery of health care in America.
Impact on Consumers
The purpose behind the enactment of health care reform was to increase the number of individuals covered by health insurance to make all coverage more comprehensive, reliable and affordable. Provisions in the ACA are intended to reform the insurance market, offer clearly differentiated coverage options, assign coverage responsibilities and to expand Medicare eligibility (Jost, 2010). It is hoped that by doing these things that overall health costs will be reduced substantially. Whether this becomes true remains to be seen.
Beginning in calendar year 2014, every health insurance company in the country must be begin to accept every individual and small company that applies for coverage. Insurers are allowed to limit enrollment periods but they may not impose either annual or lifetime caps on benefits. Additionally, insurance companies may not reject applicants on the basis of their having pre-existing conditions. These are only a small portion of the changes that the ACA brings to the insurance market place but it is the individual mandate, that is, the requirement that everyone must purchase insurance that is the most controversial. The individual mandate, in essence, forces insurance companies to disregard the former factors that they used in establishing premium rates. Insurance companies are no longer allowed to consider health status, limit pricing flexibility, or standardize benefit offerings. Instead, coverage must be made available to everyone.
Enforcing the individual mandate requirements of the ACA will increase the number of insured Americans by approximately 16 million people. This estimate serves to not only bring more Americans under the umbrella of health coverage but it also should serve, as some experts predict, to lower the overall insurance premiums of all Americans. Without the implementation of the individual mandate, younger and healthier Americans can be expected to forego health insurance coverage and, thereby, cause older Americans, who are more dependent on the need for health insurance, to shoulder the burden of health care premiums. By imposing the individual mandate, health care costs will be spread among a larger pool and, thereby, lower insurance premiums for everyone.
From the perspective of the consumer the health care mandate is not all positive. The provisions of the ACA impose a requirement that nearly every resident of the United States will be required to have health insurance by January 1, 2014. Those who fail to comply with the health care mandate will be assessed penalties, now defined as taxes by the U.S. Supreme Court, in an amount that ranges from a flat rate of $95 to a percentage amount that begins at 1% of a taxpayer's adjusted gross income (Sussman, 2009). This provision, like many other provisions of the ACA, has been subject to considerable debate but a sanction of some form was deemed necessary in order to ensure compliance. The ACA provides that the Internal Revenue Service (IRS) will be responsible for enforcement although the act fails to detail the specific process as to how such enforcement will be implemented other than to provide that criminal sanctions will not be available (Block, 2010).
How the public will respond to the health care mandate has not been determined. There is no empirical evidence available as only two states, Hawaii and Massachusetts, have imposed similar mandates on its citizens. Unfortunately, the data available from both states is minimal both in terms of time and application and, therefore, not analogous to the proposed national mandate. Experience, however, with other mandates such as minimum wage requirements, state required auto insurance, and payment of income taxes offer some insight. The data suggests that most people will prefer to purchase health coverage instead of subjecting themselves to possible penalties. Of course, this assumption is heavily dependent on the size of the penalties involved and the strength of the enforcement. If the penalties in cost are lower than the perceived benefits and enforcement is perceived as lax, voluntary compliance will be affected.
Impact on Employers
For many months employers have been arguing that the uncertainty surrounding the outcome of the Supreme Court's decision has caused them to take a wait and see attitude and created a near state of economic stagnation. The Supreme Court by upholding the constitutionality of the mandate has eliminated this uncertainty. Employers are now free to focus on planning for the future and implementing the various requirements of the ACA without experiencing concern that their efforts in this regard will be for naught. Within a short period of time, employers can expect to receive direction from the Departments of Labor, Health and Human Services and Treasury on how to comply with the relevant ACA provisions as they apply to employers. The receipt of these guidelines should serve to eliminate any remaining uncertainty.
Impact on Insurance Industry
The ACA will also have a profound effect on the health insurance industry. The most significant change is the establishment of state operated insurance exchanges where consumers, solo entrepreneurs and small business will be free to shop for less expensive health insurance. The theory behind these insurance exchanges is that they will give everyone involved the ability to buy insurance at rates that once were available only to large companies and organizations. Insurance companies will now also be forced to spend at least 80% of their premium dollars on medical care. This provision has…