What if the health reform mandate dies?

@CNNMoney March 26, 2012: 7:14 AM ET

NEW YORK (CNNMoney) -- Is the new requirement that people buy health insurance unconstitutional?

That's the principal question before the Supreme Court this week as it takes up the 2010 health care reform law.

The Affordable Care Act is meant to help more people get affordable health insurance coverage -- including the 49 million uninsured today -- and bring health costs under control. But those goals could be harder to achieve if the court strikes down the "individual mandate."

Just how much harder is not certain.

The individual mandate is intended to work in conjunction with two other new rules in the law: Insurers must offer everyone coverage regardless of health status, and insurers may not charge people with pre-existing conditions more than other policyholders in their geographic area who have the same plan.

The argument goes like this: The mandate, which wouldn't start until 2014, would mean the vast majority of Americans will be insured, and that would reduce the costs imposed by the uninsured on everyone else.

Health reform coverage cost falls slightly

Why? Because the uninsured seek care when they need it the most -- often by going to emergency rooms. When they can't pay for that care, the cost is absorbed by hospitals. The hospitals in turn raise the cost of their services on the insured. And then insurers raise their premiums on policyholders.

The mandate would also reduce premium costs for those who are older or sicker since younger, healthier people would start to buy policies. (CNN: The 4 big issues before the court)

So what would happen if the Supreme Court. which is expected to decide the case in June, finds that the mandate is unconstitutional?

Much depends on how the court rules. If it also finds the mandate is not "severable" from the overall health reform law, the whole law could get struck down and most of the potential benefits from it eliminated.

But the court could also find that the mandate is unconstitutional and can be repealed on its own.

In that scenario, experts say, some premiums would go up and fewer people would have insurance relative to how many there would be with a mandate. On the other hand, these analysts say, neither change would likely be so drastic as to totally undermine the benefits of the law's other provisions.

What health reform is (and isn't) doing now

The Congressional Budget Office last year estimated that 16 million fewer people in 2021 would be insured as a result. The Lewin Group, a health care consulting firm, estimated about 8 million fewer people would be insured overall.

The CBO further estimated that premiums for people who would buy policies on the new insurance exchanges or on their own could go up by between 15% and 20%.

But that doesn't necessarily mean a bigger bite for everyone. Many individuals would still get federal subsidies that would help absorb the premium increases. The Lewin Group estimated that two-thirds of everyone buying insurance outside their workplace would be eligible for subsidies.

That's also one reason why the reduction in the number of insured might not be as drastic as feared without a mandate.

In terms of the federal cost burden, both the CBO and the Urban Institute estimate that without a mandate the deficit would drop -- by $282 billion, according to CBO. That's in part because without a mandate there would be fewer people than expected to subsidize on Medicaid and on the exchanges.

But the bang for the buck that the government would get for subsidizing coverage would go down too, said Matthew Buettgens, a senior research associate at the Urban Institute.

He estimates that the government would spend about 3% less without a mandate, but far fewer people would get coverage than if the mandate stays. To top of page

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