The AHCA (&/or BCRA) Is Unconstitutional
Republican Senators appear to have forgotten their own success. Provisions of the bills to “repeal and replace” the Affordable Care Act offered by House and Senate Republican leadership both include a “continuous coverage” provision. These rules would require insurers either to raise premiums 30% (in the House) or force customers to wait six months (in the Senate) for individuals who purchase health insurance without having been covered continuously in the past. Continuous coverage fills the same key role in these bills that the “individual mandate” plays in the ACA. And, according to the successful arguments made by Republican Senators to the Supreme Court, continuous coverage is unconstitutional for the same reasons, too.
It’s easy to forget that the Supreme Court agreed with Republican Senators (and many other challengers) that the individual mandate was unconstitutional. In the end, the Court upheld the mandate as an exercise of Congress’ power to “lay and collected taxes.” Along the way, though the Court first declared that the mandate could not be justified as a lawful exercise of the Court’s power to regulate Commerce. Congress can regulate “existing” commerce, Chief Justice Roberts wrote, but cannot “regulate individuals not currently engaged in commerce.” (That was the path, incidentally, argued by me & my fellow amici: though we thought that Congress had power to enact the mandate under the Necessary & Proper Clause, we said the Court could reach the taxing power argument even after first ruling adversely on the Commerce issues).
Like the mandate, continuous coverage provisions are an effort to force individuals into a market they might not otherwise have entered. By playing on consumers’ worry about their future need for timely and affordable health care, the bills incentivize individuals to buy health insurance. Some of these individuals may never get sick, and thus might ultimately never have purchased insurance if not for that incentive.
It could be argued that continuous coverage rules only affect existing commerce, but this is probably too narrow a view of what it means to “regulate.” A premium increase or waiting period affects consumers at the moment they are trying to enter the market for health insurance, and so looks like a regulation of “existing” commerce. By that some logic, however, we could say that tort liability for dangerous or defective products does not “regulate” the manufacturing process. After all, no damages can arise until consumers actually buy and use a product, long after it is manufactured. Would the mandate be a constitutional exercise of the Commerce power if it were payable in arrears, instead of in the year a consumer skips coverage? Perhaps, but that would make the ACA ruling almost trivially easy to avoid.
The continuous coverage provisions also could not be saved by use of the taxing power, as the mandate was. Logically enough, the Court says that taxes are virtually any funds that are turned over to the government. Neither of the continuous coverage provisions results in any new revenues for the Treasury.
If the continuous coverage provisions are held to be unconstitutional, the rest of the legislation might fall in Court, too, and in any event would be unworkable. Systems that limit insurers’ ability to differentiate between the healthy and the unwell are likely to struggle or even collapse without some incentive for healthy individuals to buy insurance before they get sick. This is the now-familiar “death spiral” or “adverse selection” problem. In their challenge to the ACA, Republican Senators argued that this logical dependence on the mandate meant that, if the Court struck down the mandate, it should strike down other parts of the Act, even if they were unproblematic on their own. That same logic might apply in a challenge to the Republican leadership bills.
The bills’ drafters might try to lessen these constitutional worries by making the continuous coverage provisions optional, but that would greatly weaken their effectiveness. If Congress simply permitted insurers to discriminate against those without continuous coverage, it might argue that it was not regulating at all, but simply letting the market function.
The problem is that optional continuous coverage rules would probably not be enough of an incentive for the healthy to buy into the insurance system. Denying coverage or raising rates is costly — the insurer has to pay to investigate the new customer’s old insurance coverage, and, worse, will have to turn away some healthy and profitable customers who lacked insurance. At the same time, the benefits will go mostly to other insurers, since customers motivated by continuous coverage worries can also buy insurance from the insurer’s rivals. Therefore insurers would likely fail to enforce continuous coverage rules at least some of the time, and consumers who observe that failure will not be motivated to buy.
The Supreme Court was wrong, in my view, to conclude that preventing death spirals is not a regulation of “commerce.” But, while that ruling is still on the books, it is hard to see how similar provisions that work similarly and have similar purposes should be any less unconstitutional.