Obamacare Supreme Court Ruling: Congress Will Need To Act No Matter What SCOTUS Decides

There is much anticipation regarding the pending ruling by the Supreme Court of the United States (SCOTUS) on the constitutionality of the Affordable Care Act (ACA). The truth is, no matter what SCOTUS decides, Congress has much more work to do in connection with health care reform. The following represent the three major ruling options available to the Court and their likely implications.

First, SCOTUS could rule that the ACA is constitutional. If this occurs, Congress will eventually need to revisit health care reform since Washington has way over-promised in connection with health care benefits and has not focused enough on how to control related costs. For example, based on the independent and professional work of the Office of the Chief Actuary of Medicare, total unfunded Medicare benefits amount to around $40 trillion in discounted present value dollars for benefits expected to be paid over the next 75-years. This represents over $12 trillion more than asserted by politicians after passage of the ACA!

Shockingly, the U.S. is the only major industrialized nation that writes a blank check for federal health care costs. No other major nation is dumb enough to do that since they realize it could bankrupt their country. As a result, if the Republicans are in charge in 2013, there will be a major effort to "repeal and replace" the ACA. 

Second, SCOTUS could strike down the mandate portion of the ACA and leave most or all of the rest of the legislation in place. This approach would require Congress to re-address the financing mechanism relating to the ACA since, without a mandate, there are huge adverse-selection opportunities and the remaining financing mechanism for the expanded coverage would not be adequate. In addition, major portions of the ACA may not have been enacted but for the existence of the mandate. Therefore, elimination of the mandate portion would require a major restructuring of the expanded coverage portions of the Act. This would not likely occur until 2013. 

Finally, SCOTUS could rule that the entire legislation is unconstitutional. While there are portions of the ACA that are clearly constitutional and bear little relationship to health care reform (e.g., State of the USA initiative), SCOTUS may not want to take the time to separate the wheat from the chaff and may leave that to the Congress. If SCOTUS takes this approach, there will be much interest in whether the insurance industry commits to voluntarily comply with the most popular aspects of insurance reform in the ACA (e.g., allowing parents to keep their children on their policies until age 26). If they do not do so, there would be considerable political pressure to address this matter and possibly other non-health care related provisions in the ACA this year. Otherwise, the Congress would have to revisit health care reform and the related issues again from scratch in 2013. 

In summary, Congress has more work to do in connection with health care reform no matter what SCOTUS decides in connection with the ACA. The truth is, the federal government has over-promised and under-delivered in the health care area. In addition, our current health care system in unaffordable and unsustainable in its present form. 

Among other things, the president and the Congress need to rationalize federal health care promises, limit total federal health care spending, reform premium and tax subsidies, and revise health care payment and malpractice systems. Yes, there is much work that remains to be done in connection with health care reform but the heavy lifting is not likely to occur in Washington before 2013.