The Supreme Court is shaking up the political chessboard today by ruling on the constitutionality of the Affordable Care Act – a.k.a. “Obamacare” – and there is one player who will win no matter what the decision may be: the insurance industry.
When Congress was debating healthcare three years ago, health insurers were no fans of reform. They were making gobs of money with the system just as it was. For years, their lobbyists managed to kill any attempt to tinker with the status quo, and major tinkering, like instituting a Canadian-style single-payer scheme, was out of the question because it would cut them out of the healthcare equation.
Also, for sensible business reasons, insurers had never been especially keen on being forced to offer coverage to people with preexisting medical conditions or to pay for preventative care or various other benefits the Democrats and President Obama wanted as part of a healthcare reform package. Nevertheless, they were finally lured into acquiescence by a tempting trade-off. Yes, they would have to provide health insurance for high-risk individuals, but in return they would get a vast expansion of the insurance market because the government would require everyone to be insured.
More than 16% of Americans have no insurance – close to 50 million people. If a big share of those folks are required to buy coverage, that is a big bunch of new customers for the insurance companies. But, of course, that mandate is at the heart of the challenge to “Obamacare.” If it is tossed out by the court, then the other pieces of the deal fall away, like insurance for people who are already sick.
If the court ratifies the mandate, the insurance companies will get access to that bigger market in 2014, when the requirement kicks in. If it declares the mandate unconstitutional, the system largely reverts to what it was before the healthcare battle began.
Either way, the insurance companies will make money and keep on smiling.