As Supreme Court Prepares for Oral Argument on PPACA, Impact on Employer Plans Weighed

March 23, 2012

With oral arguments on PPACA’s constitutionality scheduled to begin early next week and continue for an almost unprecedented three days, it is anyone’s guess whether the Court will uphold the law, invalidate the individual mandate alone, strike other provisions along with the mandate or nullify the entire law.  If the Court only strikes down the mandate, Congress would need to address its impact on the health insurance programs that would be sold in the exchanges—under PPACA, carriers must accept all applicants and generally cannot raise premiums based on health conditions.  It is unclear how Congress would tackle this problem, but so far the most frequently discussed alternatives include expanding employers’ automatic enrollment requirements, imposing penalties for late enrollees in public insurance programs, and providing tax incentives for those enrolled in the individual market.  However, any serious consideration of possible alternatives to the individual mandate or PPACA revision in general would not take place before the 2012 elections, which will decide the direction of any changes to the law.  The only sure bet is that any future health care reform will have a major impact on employers and employee participation in their plans.  Meanwhile, the Congressional Budget Office (CBO) recently updated its estimate of the number of people who will lose employer-provided health insurance under PPACA from three million to five million in 2019.  However, according to Mark Wilson, principal of Applied Economic Strategies, “the actual drop is likely to be much closer to CBO’s ‘alternative’ estimate of 10 million as employers reduce the hours of at least 4 million part-time employees to avoid the mandate and any penalty.”