The Supreme Court Decision

Abstract

The Supreme Court's ruling to uphold most elements of the Accountable Care Act (ACA) provoked a political and legal firestorm that likely will continue past the 2012 election cycle. Numerous commentaries have already been written about the political and legal ramifications of the ruling. Ultimately, however, the Court's decision is likely to have its biggest impact not on politicians or legal experts but rather on those who the current system fails: the uninsured. Perhaps the most influential part of the Court's ruling was its decision to uphold the individual mandate. The mandate, scheduled to phase in over 3 years, will require most US citizens and legal residents to purchase insurance or face an annual tax penalty of either $695 per person (maximum $2085 per family) or 2.5% of household income, whichever is greater. Assuming that most uninsured Americans opt to purchase insurance rather than face the penalty (which is what occurred in Massachusetts following implementation of the individual mandate¹), many of the young and healthy who are currently uninsured—the so-called invincibles, who feel they do not need health insurance—will become part of the insurance market. Premiums from these relatively low-cost members will help subsidize sicker, more costly patients, allowing insurance providers to fulfill their obligations to insure everyone, including those with preexisting conditions. For the first time in recent US history, the insurance system could function as it was intended by covering a broad population, both healthy and sick, at more affordable rates.