Healthcare redux

August 29, 2011 9:20 pm

Healthcare redux

The Obama administration is pondering its strategy on a momentous piece of unfinished business: its reform of the US healthcare system. The president signed the legislation last year, but constitutional challenges have made headway. Politically, the legal timetable now spells trouble. If the Supreme Court chooses to review the law, it could rule next summer – just before the presidential election. And it might not rule the way the White House wants.

Until recently, the administration had hoped that successful lower-court challenges to the law would fail in the appeals courts. That hope has been dashed: the Eleventh Circuit Court of Appeals has ruled that the “individual mandate” – a requirement to buy health insurance, on pain of being fined – is unconstitutional.

Earlier, the Sixth Circuit Court of Appeals had upheld the healthcare law, mandate and all. So a federal law of vast significance – remember that healthcare constitutes 20 per cent of the US economy and touches much of the rest – is now deemed constitutional in one part of the US and unconstitutional in another, all but guaranteeing that the Supreme Court will take the case and settle the matter.

The question is when. The administration has legal options that might shunt the issue beyond the election. This would be wrong. Planning is well advanced and costs are being incurred. If the Supreme Court is going to reject the law, the sooner it does so the better. Rather than plotting delay, the administration should be working out how to repair the reform if need be.

Could the law, stripped of the contested mandate, still work? No, says the White House: premiums would soar because people could delay buying insurance until they were sick – at which point, the law would compel insurers to sell it to them.

Unfortunately, the administration is correct, but there is a remedy. Instead of fining the uninsured, levy a tax that is rebated to those who buy insurance. With this trivial alteration, the reform would most likely pass constitutional muster. The trouble is, it might make an unpopular policy even more so. It would also break Mr Obama’s promise not to raise taxes on the middle class (which is why the law was not framed this way in the first place).

One can understand the administration’s desire to postpone this moment of reckoning, but that does not justify delay. Too much is at stake. The question should be resolved as soon as possible.