Connecticut health insurers say end of health mandate is end of reform

Washington — Few will be watching the arguments next week in front of the Supreme Court over the health care law more closely than Connecticut insurers whose financial health hinges on the justices’ decision.

At the heart of the legal challenge to the Affordable Care Act is a mandate that will require most Americans either to buy health insurance or pay a fine.

But if the mandate goes, the industry says, so must the reforms, especially the most popular one that would bar insurers from denying coverage to individuals with pre-existing health conditions.

The mandate, which would bring many young and healthy people into insurance pools, is what persuaded health insurers to accept other reforms in the health care act.

“If you’re going to … take all comers, which the law requires by 2014, then you have to have a means to get the healthy people into the pool also,” said Mickey Herbert, former CEO of ConnectiCare. “And that’s where I think the insurance industry is really nervous right now about how this thing could play out.”

The Blue Cross and Blue Shield Association and the America’s Health Insurance Plans filed a companion brief to the case before the Supreme Court in the hope that the justices in their ruling will to allow them to wiggle out of several reforms. The brief is supported by Connecticut’s insurers, including Aetna, Anthem Blue Cross and Blue Shield and Cigna.

“Were the mandate to be invalidated, those interdependent legislative provisions would be torn apart and the ‘essential’ counterbalance stripped away, leaving the insurance-market reforms incapable by themselves of functioning as Congress intended,” the insurers’ brief said.

It warned of a “market wide adverse-selection death spiral” that would “thwart rather than advance Congress’s goal of expanding affordable health care.”

Besides an end to the ban on denial of coverage to any American, even those with pre-existing health conditions, insurers want to eliminate a requirement that they uses a community rating system. That system prevents health plans from setting premium prices based on an individual’s medical history, age or other factors, like smoking.

“The brief is intended to serve as a resource to deepen the Court’s understanding of the real-world economic implications for consumers of delinking major provisions of the law that were widely understood to be companion solutions as the nation debated health care reform,” an AHIP release said.

A Powerful Ally

To be argued from March 26-28, the case before the Supreme Court pits the Obama administration against the National Association of Independent Businesses and 26 states that say Congress overstepped its authority by requiring Americans to obtain health insurance. A decision on the case is expected in June.

The administration is going to argue for the Supreme Court to keep the health care act intact. Administration officials will also argue that if the mandate is judged unconstitutional, insurers should be required to cover sick people or use community rating in setting premiums.

The administration thinks this is the only way to salvage some of the health care bill, its biggest accomplishment.

Like the insurers, Farmington-based Advocacy for Patients with Chronic Illness has filed a brief in the health care case urging the court to reject the challenge to the ACA. It realizes premiums would skyrocket if insurers were forced to cover people with pre-existing conditions without the mandate.

But Jennifer C. Jaff, executive director of the Farmington group, disagrees with the insurers and the administration that certain reforms are irretrievably linked to the mandate. “I think there are other mechanisms to try to encourage healthy people to purchase insurance,” Jaff said.

Sen. Richard Blumenthal, D-Conn., said it’s unlikely that insurers will be freed from some of the act’s reforms.

“It’s not right legally and it’s not right morally,” he said.

Blumenthal acknowledged that Connecticut’s health insurers “will be in a difficult position,” and said he’d assist them in seeking help from state regulators on the issue.

“But they just can’t ignore the law,” he said.

Sen. Joe Lieberman, a Connecticut independent, is more sympathetic.

“Unless you have a mandate, the insurance companies will not have the money to cover all the things in the Affordable Care Act,” Lieberman said.

He said it was a “mistake” to not include a severability clause in the ACA and indicated that Congress may have to revisit the issue.

“If the Supreme Court finds the mandate unconstitutional, the Affordable Care Act has to change,” Lieberman said.

Skyrocketing Premiums

As evidence that reforms don’t work without a mandate, health insurers are citing eight states — Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, New York, Vermont and Washington — that barred insurers from rejecting anyone who wanted coverage but failed to force healthy people to buy insurance.

“Our role now is to highlight the experience in those states that tried market reforms without a mandate,” said AHIP spokesman Robert Zirkelbach. “Premiums skyrocketed, consumers had fewer choices and the number of uninsured went up.”

Stephen Wermiel, who teaches constitutional law at the American University Washington College of Law, said, “it’s a tricky issue” for the court to agree to throw out other parts of the health care law with the mandate.

The 11th Circuit Court decision the appeal to the Supreme Court is based upon ruled that the mandate should be eliminated, but kept the rest of the ACA intact.

The high court will also consider whether the ACA’s expansion of Medicaid, the government’s health program for the poor, is constitutional.

Since Medicaid is a shared federal/state program, states will eventually have to pay for some of that expansion, prompting more than half of them to challenge that requirement.

Wermiel declined to predict what the Supreme Court would do. “The ultimate outcome could take a lot of shapes and forms,” he said.