Friday, June 22, 2012

Krause Prediction: The Supreme Court will decide to uphold the 2010 Patient Protection and Affordable Care Act

The centerpiece legislation of President Obama and his Administration – the Patient Protection and Affordable Care Act (PPACA) – is in the hands of the U.S. Supreme Court. They are soon to rule on the constitutionality of the “individual mandate” which requires U.S. residents to purchase health insurance. The Court could also maintain or drop the other key elements of the law.

Most observers (and the Intrade market) have a greater than 75% probability that the Supreme Court will rule the individual mandate unconstitutional. While it is impossible to know which way the court will vote, I am going out on a limb to predict the mandate and the law will be upheld.

It should be noted that I am not a lawyer, but I believe that those who have challenged the mandate as violating the U.S. Constitution’s Commerce Clause (which grants Congress the authority to regulate interstate commerce) will not prevail. The argument against the mandate is that a person’s decision not to get healthcare coverage is not interstate activity, but rather inactivity, which Congress does not have the right to regulate. The opposing argument – which I think will prevail - is that a decision not to get health coverage has implications for all health plan sponsors, other payors that must cover the cost of compensated care, and health care providers, and does not constitute inactivity.

I believe that Justice Kennedy, who might be the lone centrist on the Court, will uphold – even though experts believe that his questions during oral arguments suggested strongly that he was leaning against the individual mandate’s constitutionality. Chief Justice Roberts might also be a surprise supporter of the law. With this being an election year, he’s well aware that the most pivotal presidential and senate election issue would be whether or not to repel the health care act. He could simply kick the can down the road; something that the European Central Bank has done with the recent sovereign debt issues. His Court already is much criticized for the Citizen's United ruling.

Roberts might also uphold the mandate because the genie is already out of the bottle and that many of the benefits of the Act and its multiyear of reforms have already started being implemented.  The fact that the Act does not contain a “severability” clause, a standard provision in most legislation, will keep the Supreme Court from making piecemeal decisions. Again, I know I’m swimming against the current, but I believe Obama Care will be upheld by the Court – in the upset of 2012!