In the coming days the Supreme Court plans on handing down its decision on the constitutionality of the Affordable Care Act (ACA), the hotly contested health care reform bill that was passed in 2010. In appears increasingly likely that the court’s decision will strike down the “individual mandate” at the crux of the legislation. Health insurers around the country are bracing for this decision and the consequences on their bottom line.
The mandate, originally the product of a conservative think-tank and championed by Governor Mitt Romney when he passed health care reform in Massachusetts, is the most controversial part of the ACA because it requires all citizens to either purchase a health insurance plan or pay a fine. The idea behind this is that if everyone, young or old, healthy or sick, is required to pay into the insurance system then insurance companies will be able to provide care at lower rates for everyone.
If the goal is to have all Americans insured at a reasonable price, this is the only way it can happen. History shows that when a requirement for everyone to be covered is enacted without a mandate, entire insurance systems collapse.
Despite this apparent truth it appear that the court composed of four conservatives, four liberals, and a moderate is going to rule that this piece of the law is unconstitutional on personal liberty grounds. Supporters of this argument say that the government has no legal right to require citizens to purchase a private good. If this occurs, the pool of customers that health insurance companies expected to reap as a windfall of the legislation will be severely curbed.
The Congressional Budget Office, the nonpartisan number cruncher in Washington, has estimated that without the mandate sixteen million fewer people will purchase insurance. With the mandate, it is estimated that the insurance industry would collect $1 trillion in new revenue in the first eight years that the law is in effect, beginning in 2014.
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A number of possibilities still exist as to how the Supreme Court will rule. It could uphold the legislation or put insurers and the Obama Administration in a sticky situation by striking down only the mandate provision. Additionally, it could scratch the entire law, which insurers likely would not mind because it would allow them to go back to the arguably shady and profitable practices of the past.
Mark Bertolini, C.E.O. of insurance giant AETNA (AET), said, “if the Affordable Care Act were to go away tomorrow, we would still be better off as an organization.” Other companies, such as United Healthcare, have publicly said that even if the law were wiped out they would keep some of the more popular requirements in place, although this practice could squeeze profit margins if the pool of customers is not as big as expected.
We have compiled a list of the largest health insurance companies in the industry, all of which will be affected by the impending decision.
1. Aetna Inc. (AET, Earnings, Analysts, Financials): Operates as a diversified health care benefits company in the United States. Market cap at $14.42B, most recent closing price at $41.50.
2. Cigna Corp. (CI, Earnings, Analysts, Financials): Operates as a health service organization. Market cap at $13.01B, most recent closing price at $45.12.
3. Assurant Inc. (AIZ, Earnings, Analysts, Financials): Provides specialized insurance products and related services in North America and internationally. Market cap at $2.89B, most recent closing price at $33.71.
4. Humana Inc. (HUM, Earnings, Analysts, Financials): Offers various health and supplemental benefit plans in the United States. Market cap at $12.89B, most recent closing price at $79.02.
5. WellPoint Inc. (WLP, Earnings, Analysts, Financials): Operates as a health benefits company in the United States. Market cap at $23.09B, most recent closing price at $69.80.
6. Coventry Health Care Inc. (CVH, Earnings, Analysts, Financials): Operates as a managed healthcare company in the United States. Market cap at $4.68B, most recent closing price at $32.73.
Written by Dan Connelly
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So you don't like the individual mandate in the health care law.
Fine.
What would you replace it with?
Why do you think Newt Gingrich back in Hillary's days was for it — after they had looked at everything else?
There was no way around it.
"The insurance mandate is socialism, plain and simple."
If it's socialism, you'd have to buy it from the government, which would also tell you what doctor or hospital to go to. But you can buy health insurance from anybody, and you can get treated by the doctor and hospital you want. What's socialist about that?
"Can't you see, the government is making us buy insurance. We have no choice in the matter."
Do you have a choice not to get hurt, or not to get sick? Why then do you want a choice not to have insurance to pay for it when you do?
States in fact already have an individual mandate for car insurance, and they have been putting uninsured drivers in jail for years.
"That's different. Driving is a privilege."
Then free health care must be a right in your book. Maybe this idea came from hospitals continuing to treat the uninsured the last half century.
The tradeoff to us living in a civilized society is that we have to follow rules we don't agree with. In return, we get great many things, including goods and services that otherwise would be unavailable. But, we still have to pay for them. The mandate makes sure that we do.
What's wrong with that?