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Posts Tagged ‘U.S. Supreme Court’

Market failure in individual, small business health insurance market segments forces insurer to act

Aetna CEO Mark Bertolini reveals to Sarah Kliff of The Washington Post’s Wonkblog that a strategic review Aetna undertook in 2005 showed the individual health insurance market segment failing and the small group segment in decline.  Market failure can be a strong motivator to act — and will remain a mortal threat notwithstanding how the U.S. Supreme Court opines this week on the constitutionality of the Patient Protection and Affordable Care Act.

Some excerpts from Kliff’s post:

 “We saw an individual market in inexorable decline and, on the small group side, fewer were offering benefits and costs were rising. We knew we had to change something,” Bertolini said.

Aetna has a strong business reason to create a cheaper insurance product: Namely, getting more people to buy it. That motivation stays in place regardless of what happens with the Supreme Court this month.

“We’re really working right now on the underlying cost of health care,” he says. “These investments we’re making are about finding a different way to make models work. We’re committed to fixing that, and feel like we need to fix that.”

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Law school article suggests Supreme Court could reject challenge of PPACA’s constitutionality

In less than one month, the U.S. Supreme Court is expected to issue its ruling on the constitutionality of the Patient Protection and Affordable Care Act (PPACA).  The high court will decide what’s referred to as a “facial challenge” to the law, which as the name suggests means a claim the law is unconstitutional on its face.  The other test of a statute’s constitutionality is an “as applied” challenge.  In an as applied challenge, the constitutionality of the law itself isn’t called into question. Rather, the contention is the manner in which the law is being implemented is unconstitutional.

Facial challenges are tougher to win because there are no underlying facts on which to judge if the law is being applied such that it doesn’t violate the Constitution.  Plus they face an uphill battle because the courts presume statutes to be constitutional as written.

An indication that the current Supreme Court headed by Chief Justice John Roberts may not be inclined to rule the PPACA unconstitutional on its face appears in this 2009 Columbia Law School white paper written by Gillian Metzger.  The year before the PPACA was enacted, Metzger observes:

One recurring theme of the early Roberts Court’s jurisprudence to date is its resistance to facial constitutional challenges and preference for as-applied litigation. On a number of occasions the Court has rejected facial constitutional challenges while reserving the possibility that narrower as-applied claims might succeed. According to the Court, such as-applied claims are ‘the basic building blocks of constitutional adjudication.’ This preference for as-applied over facial challenges has surfaced with some frequency, across terms and in contexts involving different constitutional rights, at times garnering support from all the Justices on the Court. Moreover, the Roberts Court has advocated the as-applied approach in contexts in which facial challenges were previously the norm, suggesting that it intends to restrict the availability of facial challenges more than in the past.

If this continues to reflect the current philosophy of the Roberts court, it could well reject the challenge to the PPACA and leave the statute and its dual mandates on health insurers and citizens to sell and have health coverage, respectively, intact.

UCLA research note: Elimination of PPACA’s coverage mandate would accelerate adverse selection

January 28, 2012 Leave a comment

If the U.S. Supreme Court severs a keystone element of the Patient Protection and Affordable Care Act that mandates all Americans have public or private health coverage by 2014 but leaves intact another key provision requiring insurers and managed care plans to accept all applicants without medical underwriting, payers would experience adverse selection and premium rates would necessarily rise in response, making coverage less affordable.  That undermines a key objective of the 2010 law designed to reduce the number of people who are medically uninsured, the UCLA Center for Health Policy Research concludes in a research note issued this month.

The note determined this scenario would result in only a small reduction in the number of medically uninsured Californians by 610,000 or 13 percent of the eligible uninsured by 2019. Eliminating the minimum coverage requirement while leaving in place the PPACA’s modified community-based rating where coverage is guaranteed to all applicants would not allow payers to avoid covering less healthy individuals more likely to need expensive medical care.

The UCLA research note effectively concurs with an amicus curiae brief in the Supreme Court case filed by health insurers and plans who contend the PPACA’s coverage mandate is designed to work in conjunction with community-based versus individual medical underwriting and therefore cannot be excised from the law.  “The result would be a ‘marketwide adverse-selection death spiral’ that would thwart rather than advance Congress’s goal of expanding affordable health care,” they warn.

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