Will Health Insurance Mandates Survive?

Anyone who thought the debate over health reform ended when President Barack Obama signed landmark legislation into law was badly mistaken. Indeed, it appears opponents of the law have only begun to fight—both in court and at the ballot box.

First, a federal district court judge refused to dismiss a lawsuit by Virginia challenging the constitutional authority of Congress to force everyone to buy health insurance coverage or pay a penalty.

Second, Missouri voters on Aug. 3 overwhelmingly approved a proposition looking to nullify the insurance mandates.

These are not isolated protests. Arizona and Oklahoma residents will vote on a measure similar to Missouri's later in the year, while five other states are taking steps to defy the federal mandate. And nearly two-dozen states are challenging the law in court.

The question now is where will this titanic legal battle end? My guess is that the last word will inevitably come after what appears to be an unavoidable showdown in the U.S. Supreme Court.

This outcome would be entirely appropriate not only given the weighty constitutional issues at stake, but also because the nation needs a sense of finality on the health care reform law that only a Supreme Court ruling can provide.

That's not to say that even a high court decision would end the debate over whether Uncle Sam can force people to buy health insurance or pay a fine—decades after Roe v. Wade, we are still debating and litigating abortion rights, after all.

But once the Supreme Court weighs in on the jurisdictional and constitutional disputes over federal health insurance mandates, at least we can get started actually implementing this controversial law—or, if the ruling goes against supporters of mandates, to legislate an alternative to cover the uninsured.

There is time to sort this out, since the law on mandated coverage does not go into effect until 2014. But meanwhile, we are all trapped in a sort of legal limbo, not knowing whether the mandate will survive—and with it, the reform law as a whole.

The insurance industry in general is normally against federal meddling in the free market, at least on principle. But in practice, mandates are not always a bad thing for this industry. Forcing drivers to buy auto insurance is a good thing for society, right? Requiring business owners to purchase workers' compensation coverage is also a plus for safety and liability certainty, is it not?

You would think the industry would favor a mandate to buy health insurance as well. For one, it will bring tens of millions of uninsured individuals into the insurance market. And it would prevent adverse selection by forcing healthy people to sign up, thereby spreading the risk more efficiently and lowering premiums for all.

There would likely be less cost-shifting to workers' comp as well, with fewer people having to lie about non-work-related injuries because they lack health coverage.

Stripping the mandate out of the law on constitutional grounds would gut the reform program and be bad news indeed for the insurance industry. If insurers must cover all comers—but not everyone is required to buy coverage—that means people could game the system, waiting until they get hurt or become ill to sign up.

Honestly, however, I don't expect this debate to come to that. I believe the Supreme Court will back the federal government on mandates.

What do you folks think?