The Free Market Speaks

Posted on June 11, 2012 at 6:30 pm by JM Ashby

UnitedHealth, Aetna, and Humana announced today that they will maintain some provisions of Obamacare even if the Supreme Court rules against the law later this month, but the most important part of today’s announcement is what they will not maintain.

Customers of UnitedHealth, the largest U.S. health insurer, can keep children on plans until age 26, get free preventive care and won’t face lifetime benefit limits, the Minnetonka, Minnesota-based company said yesterday in a statement. The insurer also won’t rescind policies except for cases of fraud and will retain a simplified appeals process for denials.

Aetna, the third-largest health insurer by market value, said today it would cover preventive services, let young adults stay on their parents’ plans and continue outside reviews of coverage denial appeals. [...]

“A number of provisions in the health-reform law have been woven into the fabric of our health-care system, bring value to customers and consumers, and should be maintained,” Hartford, Connecticut-based Aetna said in an e-mail.

Humana (HUM) said today it would maintain various coverage provisions, all of which match UnitedHealth’s pledge.

“Humana believes its health plan members should have the peace of mind of knowing the company embraces and will maintain these common-sense provisions that add stability and security to health-care coverage,” the Louisville, Kentucky-based company said in a statement.

What each insurer has not agreed to continue is covering those with pre-existing conditions if the law is struck down.

The explanation for that is simple. Without an individual mandate, the cost of covering those with pre-existing conditions will be unmanageable. And with any luck, the Supreme Court is listening.

The legal objection to Obamacare is centered around the individual mandate, and the Supreme Court has been put into a position where it will either be forced to repeal the entire law or uphold the entire law because, in their own words, repealing just the individual mandate would require far more nuance in their decisions.

From my perspective, today’s announcement by the insurance industry represents a coded message to the Supreme Court meant to encourage them to uphold the law. Because the industry is admitting that the other provisions in the law have had no adverse effects on their business, but repealing the individual mandate by itself will.

Upholding the entire law seems far more likely to me than either repealing the entire law or just the individual mandate. It’s the path of least resistance.

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  • astrocat96

    I hate to say it, but I think you’re being overly optimistic. Maybe I’m being too cynical, but this announcement sounds like the insurance companies are telling the court they don’t need the law to continue with some of the more popular provisions. They really don’t want to cover people with pre-existing conditions. It sounds like the insurance companies are trying to offer this as a compromise of sorts.

  • GrafZeppelin127

    Two things about the SCOTUS and the ACA. Well, three, if you include the fact that I hope I never have to freaking talk about this again after the Court rules. I’m so sick of explaining it to people that I wish they would just rule already and get it over with so that President Romney and the 113th Congress can get started on drafting the Pay Or Suffer Act of 2013.

    1.

    The SCOTUS will have to create new law, or resurrect very old law, in order to invalidate the ACA. Congress has the power to regulate interstate commerce, and to “make all laws which shall be necessary and proper” to the implementation of such regulation. (Note the phrase, “make all laws,” not “make only those laws” or “no laws but those”.) Constitutional Law (i.e., the Supreme Court) has established the scope and limitations of the Commerce and Necessary & Proper Clauses; the ACA is within the established scope (medical insurance, and lack thereof, has a “substantial effect on interstate commerce”) and does not exceed any of the established limitations. The Court will have to establish new limitations on either or both of those clauses. Moreover, As both the Sixth and D.C. Circuits pointed out, the “activity/inactivity” distinction (or the “create commerce in order to regulate it” argument) made by the law’s opponents has no foundation in either the text of the Constitution or any Supreme Court precedent. (Again, “make all laws which shall be necessary and proper” means make ALL LAWS which shall be necessary and proper.)

    In the alternative, the Court could resurrect some pre-New Deal, pre-Lochner doctrines pertaining to things like freedom of contract and federalism, that have been dormant and discredited for decades. Much of the precedent cited by the law’s opponents in briefing is at least 75 years old. A ruling striking down the law on the basis of pre-Lochner jurisprudence would be a major step backward for American law and could imperil or even invalidate all manner of federal economic regulation.

    It should be noted that none of the law’s opponents argued in briefs, and as far as I recall none of the courts that found the law unconstitutional ruled on the basis, that the individual mandate violates any specific constitutional rights or individual liberties, enumerated or unenumerated, under any of the Amendments. If the court were to rule on those grounds, it would have to (1) create a new, unenumerated constitutional right, and (b) invalidate all state-level mandates, including Massachusetts’, as equally violative of that right.

    The Court has been loathe to create any new unenumerated rights since the days of Loving (marriage), Griswold (privacy) and Roe (reproductive choice), and such cases (categorized as “substantive due process”) almost always concern state laws that violate federal constitutional rights. It is very difficult to imagine the court making a broad, or even a narrow, ruling declaring it a constitutional right to, inter alia, not be required to make a purchase, not be required to insure one’s own medical risk, to self-insure one’s medical risk, to pass the cost of one’s medical risk on to society, &c.

    So the Court won’t rule that it violates anyone’s rights, freedoms or liberties. The Court might create the activity/inactivity distinction in law. Or it might turn back the clock to the Gilded Age.

    • i_a_c

      If they do strike it down, the reasoning will invariably be some kind of liberty of contract, substantive due process thing. And Roberts et al. will take us back 100 years straight to Lochner.

      IMO the activity/inactivity distinction essentially the same as the economic liberty argument.

      (IANAL but I like to read about this stuff!)

      • GrafZeppelin127

        Not substantive due process; that would require creating a new unenumerated constitutional right (or resurrecting an old one), which as I said they’d be loathe to do. They’re more likely to place a limitation on the Commerce power along the lines of the purported “activity/inactivity” distinction, and limit Wickard and Raich to affirmative, deliberate acts by the citizen (and, by extension, figure out a way to characterize the choice to self-insure and impose the costs of your risk on society as somehow not an affirmative, deliberate act).

        Either that or they’ll simply reject Congress’ reasoning that the mandate is necessary and proper to the regulation of the medical-insurance market. There’s no standard in precedent by which they could do that, but with this court, precedent is hardly a predictor of the outcome.

        The “economic liberty” argument is essentially what came out of Lochner. The Constitution itself makes no explicit provision for “economic liberty” or “freedom of contract.” The doctrine went away after Nebbia v. New York and West Coast Hotel v. Parrish. Substantive due process cases almost always involve state laws that infringe on federal constitutional rights, not the other way around. I can’t think of a substantive due process case involving a federal law.

        • i_a_c

          Maybe I misunderstood substantive due process–I had understood it as something that’s invoked anytime someone tries to claim freedom of contract.

          But nonetheless it looks like if the law is struck down, either Emperor Kennedy will write his own law, or he will take us back to Lochner. Neither of which is particularly appealing for the future of Commerce Clause legislation.

          I bet Ron Paul fans loved the Lochner era.

          • GrafZeppelin127

            No, you had that right; I meant that I didn’t think the decision would be based in substantive due process.

            Substantive due process is the doctrine that enables the recognition of unenumerated constitutional rights or “liberty interests,” viz., the “liberty” part of “No state shall … deprive any person of life, liberty or property without due process of law.” Meaning, the state can deprive a person of those things but a whole bunch of stuff has to happen first; determining what has to happen first, that’s procedural due process. Substantive due process refers to what exactly a person can’t be deprived of before all that stuff happens. “Life” and “property” have very simple and specific meanings; “liberty” on the other hand is more generalized and harder to define.

            There are very few unenumerated constitutional rights, as opposed to enumerated rights in the first eight Amendments like freedom of speech, free exercise of religion, right to bear arms, right to a jury trial, etc. The right to vote, to privacy, to marry and raise children; these are about the only ones recognized by the SCOTUS, although under the umbrella of “privacy” are various other rights such as reproductive choice and consensual sex. Freedom of contract was an unenumerated right recognized in law until Nebbia and West Coast Hotel.

            Ron Paul fans love the Lochner era only because (1) they didn’t live through it, and (2) they imagine they would have been the ones in position to exploit, rather than the ones in position to be exploited, in the absence of economic regulation.

    • http://mdblanche.myopenid.com/ mdblanche

      What happens to things like Social Security and Medicare if the court goes pre-Lochner?

      • GrafZeppelin127

        I’d say they’re both in jeopardy.

  • GrafZeppelin127

    2.

    What’s ironic is that the “conservative” justices are poised to strike down, and the “liberal” justices are poised to uphold, a law that is inherently conservative, in the sense that it is the most conservative approach possible to achieving what might be an inherently liberal goal, viz., universal or quasi-universal medical coverage.

    We all know that Republicans and conservatives dreamed up, proposed and supported an individual medical-insurance mandate or 20 solid years, between the Heritage Foundation proposal in 1989 and the moment the 111th Congress wrote it into the ACA. That’s really beside the point.

    What this seems to mean is that the “liberal” justices would accept a conservative approach to achieving a liberal policy goal, whereas the “conservative” justices, only slightly more cynical, would reject that conservative law without necessarily or explicitly rejecting the liberal goal. Scalia et al. may not overtly state that universal/quasi-universal medical coverage cannot, should not, must not be achieved by -any- means, but if the ACA fails, it can only be achieved by more liberal means, viz., some form of public/social insurance.

    So a decision striking down the ACA will have two possible eventual results: (1) a more progressive medical-insurance system, or (2) no universal or quasi-universal medical coverage of any kind, ever.

    I’ve been asking for weeks for someone to describe to me a solution to the uninsured/free-rider problem, viz., an approach to universal/quasi-universal coverage that is to the right of the ACA, and no one has been able to do it. One apparent ‘bagger even suggested creating a fully-socialized public insurance/medical system, in his words, “just for the uninsured,” and eliminating all regulations on private insurance for the rest of us, which I pointed out is way, way, way to the left of the ACA. I asked, what’s to stop those who have insurance from dropping their expensive, unregulated private coverage, becoming “uninsured” and taking advantage of the public system? He suggested charging them for it, up to the amount of everything they own. But they already pay for it through taxes, I said; why make them pay twice? He didn’t have an answer, except to say that those who can afford insurance should be “held accountable” for not getting it. Which is exactly what the individual mandate is for.

    The only thing to the right of the ACA is a strict Pay Or Suffer system. The only alternative to attempting universal or quasi-universal coverage is attempting to keep the uninsured out of the health care system altogether. This would entail, at a minimum:

    - repealing EMTALA;
    - making it illegal to treat or dispatch EMS to anyone the provider has reason to believe cannot pay;
    - limit or eliminate liability of providers for negative medical outcomes caused by delays and errors in determining insurance and/or payment;
    - provide civil and/or criminal penalties for using or attempting to use the health care system if you’re uninsured and can’t pay in full;
    - exempt medical debt from being discharged in bankruptcy.

    Let’s hope the SCOTUS takes all this into account.

    • D_C_Wilson

      The SCOTUS may take all of this into account. But in the end the law will stand or fall based on how many justices think Obama has Kenyan cooties. This debate isn’t about rights. It’s not about the best way for Americans to cover the costs of health care. It’s not not about how to cover the uninsured.

      It’s about how badly does the right want to snatch a victory away from Obama. If they could, many of them would hire Doctor Frankenstein to patch Bin Laden’s body up and bring him back to life just so they could deny Obama that win as well.

      • GrafZeppelin127

        Personally, I think the Court will have a hard time balancing the interests of the Republican Party with the interests of the insurance, pharmaceutical and biotech industries. The former hates the mandate (or, at least they started hating it in 2010 after loving it for 20 years), while the latter loves it.

        The Court can be counted on to do whatever’s in the best interests of whatever industries that have the most to lose. If anything comes out of this decision that will hurt WellPoint, Aetna or Blue Cross, I’ll eat my hat.

  • D_C_Wilson

    “The legal objection to Obamacare is centered around the individual mandate, ”

    But we all know the real objection is that Obama has cooties. That’s why the Supreme Court is poised to strike down the idea that originated from the Heritage Foundation.

  • trgahan

    Unfortunately, as great as the legal arguments for the ACA, I think the law is doomed. Even if the Supreme Court upholds it, it will die the death of a thousand cuts under the next congress and republican president. To conservative policy makers, the ACA is a symbol of government working for the people and passing laws that will positively affect millions of Americans. After 30 years of convincing America that “government is the problem,” laws like this cannot stand. To your average conservative voter, laws like this represent a give away to the lazy shiftless “them” at the expense of hard working “us.” After convincing themselves that American will be great again if everyone would just re-learn their “place,” laws like this cannot stand.

    • GrafZeppelin127

      The poor won’t want to work if we give them anything. The rich won’t want to work if we don’t give them everything.

  • jimtowndem

    does anybody think that just possibly the insurance company’s have some insider info that the aca is ok and they are trying to sound like the good guys by agreeing with the aca ahead of the decision.