At the time, many health economists believed the law’s success would depend on its “three-legged stool” approach: preventing insurers from denying coverage based on pre-existing conditions, requiring everyone to buy insurance and providing subsidies to make it affordable. If there were no penalty prodding everyone to obtain insurance, the thinking went, many younger and healthier people would forgo it, leaving only older and sicker people in the insurance pool. That, in turn, would force insurers to raise rates, leading more people to drop their coverage in a self-reinforcing cycle.
But in fact, after Congress zeroed out the law’s financial penalty for going without health insurance in 2017, it turned out that removing one of the legs had little effect on how many people signed up for coverage through the law’s marketplaces. Enrollment in the marketplaces has decreased slightly since 2017, but it has not shown any signs of a “death spiral,” when only sick people buy coverage and the cost skyrockets as a result.
In a friend-of-the-court brief defending the law, scores of economists concluded that “economic data demonstrate that the A.C.A. remains fully effective and operational even in the absence of the individual mandate.”
In addition to the arguments on the constitutionality of the mandate and whether it can be severed from the rest of the law, the challengers must also show that they have suffered the sort of injury that gives them standing to sue. It is not clear that the states and the two individuals who brought the suit can satisfy that burden.
A mandate without a penalty, supporters of the law say, does not affect state budgets or harm individuals, who now face no financial consequence for going uninsured.
Lower courts have so far sided with challengers. A federal judge in Texas ruled that the entire law was invalid, but he postponed the effects of his ruling until the case could be appealed. In December, the United States Court of Appeals for the Fifth Circuit, in New Orleans, agreed that the mandate was unconstitutional but declined to rule on the fate of the remainder of the health law, asking the lower court to reconsider the question in more detail.
If the Supreme Court strikes down the entire law, political responses remain possible. If Democrats manage to take control of the Senate along with the House, they could enact a simple legislative fix that would make the case moot. They could bring back a nominal penalty, even of $1. Or they could repeal the individual mandate entirely, deflating the plaintiffs’ argument.