Health Care Reform, Courtesy AP

America’s Health Insurance Plans (AHIP) today asked the U.S. Supreme Court to require the Department of Health and Human Services to defend its position on the 2014 insurance market reforms, or find them invalid on their own if the Court rules the individual mandate itself to be unconstitutional.

The difference between developing measures to implement a Patient Protection and Affordable Care Act with market reforms intact but no individual mandate versus implementing the PPACA without some or many of those market reforms is night and day, AHIP stated. 

The AHIP amicus brief, known as National Federation of Independent Business  et al. vs. Kathleen Sebelius,Secretary of HHS  et al. asked the Supreme Court to accept the 11th Circuit Court of Appeals case that struck down the individual mandate as unconstitutional, but in its ruling, include a decision on the 2104  market reforms.

Some PPACA provisions have already taken effect. Court cases involving efforts to have the  High  Court declare PPACA to be unconstitutional now have Supreme Court docket numbers. PPACA opponents are working to get Congress to repeal parts or all of PPACA and they also are trying to persuade the U.S. Supreme Court to overturn the act. 

The Appeals Court did not consider the other related provisions of the law, including the 2014 insurance market reforms. However, the reforms and the individual mandate are inextricably linked, according to AHIP, which has not taken a position on the individual mandate itself.

The 2014 market reforms will transform the way that insurance contracts are written, priced and sold, especially in the individual and small group markets, with provisions requiring insurers to issue and renew health care coverage for any individual who applies, and a “community rating” system that prohibits health plans from adjusting premium prices based on an applicant’s health status. Traditional underwriting guidelines will give way to rules that sharply limit the degree to which premium rates can be varied on the basis of age and tobacco use. Because PPACA’s market reform provisions eliminate many risk management tools used by insurers for decades, the individual mandate uncoupled from market reforms could have unintended, negative effects, according to the brief.   

AHIP noted that “each of the eight states that had enacted market reforms without a mandate experienced severe market disruptions in the form of higher premiums, lower enrollment and a general failure to achieve (goals.)”

“Should this Court determine that the individual mandate exceeds congressional power,… then the instability and uncertainty surrounding the question of the mandate’s severability and the scope of constitutional invalidation would be every bit as economically destabilizing and suffocating for business planning as the current uncertainty surrounding the legality of the mandate itself,” AHIP stated.

AHIP’s wants the issue resolved now, rather than remanded or even postponed until the next term, because of the cloud of uncertainty that hovers over businesses and consumers before the market reforms’ effective date on Jan. 1, 2014. To do otherwise would “perpetuate business instability and confusion for both member companies and their customers,” according to AHIP. 

“A scenario in which health plans must restructure every level of their business practices to achieve compliance and then, on the eve of implementation, throw the entire process into reverse, would impose crushing burdens on the insurance industry that would affect every level of the health care system nationwide,” AHIP argued.

There are widely divergent conclusions reached by the lower courts that have addressed the individual mandate’s severability from the balance of the Act, driving insurers and states into confusion about when and if to proceed with many measures, including  state health care exchanges. 

If the individual mandate were to be struck down, health insurers cannot now predict whether to have their business operations comply with an Act in which the mandate would be severed completely from the Act (as the Eleventh Circuit held), or partially severed (as two district courts have held), or is inseverable and the entire statute falls (as one district court has held), AHIP said.