Q&A: Obama health law faces Supreme Court judgement

US Supreme Court, 25 June 2012

The US Supreme Court is due to decide this week whether President Barack Obama's signature Affordable Healthcare Act is constitutional. What's at stake?

At the heart of the case is one of the most far-reaching US laws of the past several decades: President Obama's landmark healthcare reform law, aimed at providing health insurance to the tens of millions of people who currently lack it and at curbing runaway growth in healthcare costs.

Unlike most industrialised nations, the US has no system of public, universal healthcare akin to the UK's National Health Service.

America's healthcare system instead comprises a patchwork of employer-provided insurance, public programmes for veterans, the poor, and elderly, and costly insurance plans bought by individuals for themselves and their families.

As many as 50 million people lack health insurance, either because they cannot afford it but are not poor enough to qualify for Medicaid, or because they simply make a gamble not to buy insurance and instead to pay for healthcare costs out of their own pockets.

For decades, presidents had tried and failed to reform the nation's healthcare system. In 2009, Mr Obama and the Democrats pushed through the Affordable Care Act - with no Republican votes.

Within minutes of Mr Obama signing the bill into law, Republican opponents filed court challenges. Ultimately, 26 states joined the opposition.

Who's uninsured?
  • Who's uninsured?
  • Nearly 50 million, or 16.3% of Americans are uninsured
  • By ethnicity, the rate of those who lack insurance is
  • 15.4% White
  • 20.8% Black
  • 18.1% Asian
  • 30.7% Hispanic
  • Source: US Census Bureau

What issues will the court decide?

The keystone of the law is a requirement that Americans who lack health insurance from their employers or the government purchase it on the private market.

Opponents argue the federal government lacks authority to require Americans to buy what is essentially a commercial product.

They say if the government is permitted to require Americans to buy health insurance (by making them pay a tax penalty if they don't), it could, for example, force Americans to buy broccoli to keep healthy or support American farmers.

The Obama administration, meanwhile, argues it has broad authority under clauses in the US constitution giving the federal government power to regulate interstate commerce and to levy taxes.

It says healthcare accounts for 17% of the US economy and people who do not have insurance nevertheless participate in the healthcare industry (either paying for healthcare out of pocket or simply not paying for it at all).

Rather than forcing people to purchase something they are not already purchasing, the law merely shifts how and when they pay for it, the government argues.

The Supreme Court last overturned such a major act of economic regulation in 1936, when it struck down a law requiring a minimum wage and a working-hour limit in the coal industry.

How could the court rule and what would be the fallout?

A stock photo of pills Democrats say the only path to universal healthcare was an insurance purchase requirement

The court has several options, including:

  1. Upholding the entire law
  2. Finding the individual mandate - the requirement to buy insurance - unconstitutional but leaving the rest of the law intact
  3. Overturning the entire law
  4. Ruling the lawsuit is premature as the individual mandate has not yet taken effect

What will be the fallout?

If the court deems the lawsuit premature, the individual mandate and the rest of the healthcare law will take effect as intended in 2014.

Although it is possible Americans might ultimately decide the healthcare reform is not as bad as conservatives had warned, a suit challenging the law would probably be considered timely in 2015, when a potential plaintiff who declined to purchase an insurance plan is required to pay the tax penalty.

If the law stands, it would re-envigorate conservative political opposition, including a new push by Republicans in the US Congress to repeal the act.

The Republicans would take advantage of the ruling to rally conservative voters around Mitt Romney, who has made repeal of the Affordable Care Act a centrepiece of his campaign platform.

But on the other hand, if Mr Obama's forecasts are correct, in the next few years the number of uninsured Americans would decline dramatically, the rapid growth in healthcare costs would slow, and Americans' overall health would improve.

If the mandate that individuals buy health insurance is thrown out but the rest of the law stands, the entire US healthcare system would be thrown into disarray.

That is because in 2014, when the individual mandate is due to take effect, health insurance companies will be barred from denying health coverage to people with pre-existing medical conditions. Think diabetes, HIV, cancer and other costly ailments.

The ban on restrictions of pre-existing conditions only works if healthy people are also required to buy insurance, thereby expanding the pool. If not, people will wait until they are sick to buy insurance, driving insurers' costs to unsustainable levels.

If the law is thrown out entirely, Republicans would be under pressure to devise a replacement for its more popular provisions, including a ban on "pre-existing condition" restrictions for children and a law allowing children to remain on their parents' health insurance plans until age 26.

In the political realm, Republicans would declare victory - then watch as one of their most potent organising principles (opposition to Obamacare) is taken from them.

Seeing one of their signature accomplishments taken from them by a group of unelected, conservative jurists, Democrats would probably rally around President Obama and their Congressional caucus.

The constitutional implications could be devastating, legal analysts say, because a ruling against the law would hinder future efforts to solve pressing problems on a federal scale.

And it could be a generation before another US president takes on America's broken healthcare system. Surveying the political landscape and the power of the entrenched interests, future presidents could shrug their shoulders and decide it's better to leave the status quo in place than to launch a political war.

The rising cost of healthcare over 50 years, 1960-2010
  • By 1960, in GDP terms, American spending on health was
  • 5%
  • By 2010 it was
  • 18%
  • Medicare was
  • 4%
  • and Medicaid was
  • 3%

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