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Small Business Employee Benefits and HR Blog

4 Potential Outcomes of Supreme Court Hearings on Health Care Reform

The United States Supreme Court will likely have a decision on the constitutionality of health care reform in June. The following are four potential outcomes of the decision:uncertainty 

Individual Mandate and Insurance Reforms Overturned

Considered by most to be the most controversial (and vulnerable) portion of health care reform, the individual mandate is highest on the chopping block.

If the insurance reform pieces that require health insurance carriers to accept applicants with pre-existing conditions are also overturned but the remaining portions of health care reform stay, the situation may play out as follows:

  1. Employers with greater than 50 employees required to offer affordable coverage to employees beginning in 2014 or pay a fine

  2. Childen able to stay on parents' insurance policies until age 26

  3. Health insurance carriers required to spend 80% of revenue on medical expenses and quality improvements (see Medical Loss Ratio)

  4. Health insurance exchanges operate (with or without federal subsidies) and may deny applicants with pre-existing conditions 

Individual Mandate Overturned - Other Pieces Remain

If the Supreme Court decides that the individual mandate is unconstitutional and the remaining portions of health care reform remain intact, significant pricing issues could arise for health insurance carriers due to the smaller overall pool consisting of presumably more unhealthy applicants.  Health insurance costs would be almost certain to rise.

In response, the Obama administration (if re-elected) may implement financial incentives for individuals to purchase health insurance without delay.

Alternatively, there may be exemptions provided to insurance carriers to provide coverage to applicants with pre-existing conditions who waited until the illness was incurred prior to obtaining coverage.

Entire Health Care Reform Bill is Overturned

Think the world of health care reform is uncertain now?  If the Supreme Court strikes down the entire health care reform bill, the unpopular components such as the individual mandate go away, but so do the more popular pieces such as the extension of parent coverage until age 26 and the requirement for insurance carriers to accept applicants regardless of health conditions.

A likely outcome of this decision would be smaller-scale reform to keep the more popular components.

Health Care Reform Remains As-Is

The individual mandate stands and individuals are required to purchase health insurance in 2014 or pay a penalty...of $95.  Is this financial "penalty" the incentive the Obama administration was hoping would lead to the 49.1 million uninsured individuals in 2010 to purchase insurance?

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