A large part of the United States is now waiting for the United States Supreme Court to release its opinion regarding President Obama's healthcare laws. I believe the mandate at the core of the proposed laws, requiring Americans to purchase health insurance or suffer a penalty shall be struck down. Additionally, I believe that it is possible that the Supreme Court vote against the mandate will be unanimous.
As to the broader question of whether the federal government may regulate healthcare, I believe this current Court would conclude that the healthcare sector and national well being both have a substantial affect upon interstate commerce, making healthcare appropriate for the federal government to at some level regulate, including through creating new agencies, instituting minimum standards of care that could be tied to federal funding, and further influence and/or socialize healthcare through written laws.
The mandate at the center of this current scheme is its Achilles heel, and this mandate is particularly peculiar in that the concept should be contrary to both strict textualist and progressive liberal ideologies. In essence, requiring a person to buy a service from another person or a private corporation without having first actively chosen to engage in some risky activity, and that the failure to do so would be in violation of a law, is a concept few if any Supreme Court Justices are likely to support.
Under such a rule, essentially, every person would start off as a violator and have to correct their natural but illegal non-insured condition. Liberals and conservatives can come to the same conclusion for different reasons, and this mandate's major flaw is a fascist blend of state and big business. Of course, if the private insurers were removed from the equation, and replaced with a public service that was paid for through a general tax, that would be an entirely different and possibly passable law, presuming it was well drafted.
Why This Is Not Like Requiring Auto Insurance
I do not have auto insurance. That is because I do not have a car. Sometimes I rent a car, and then I procure some auto insurance. Individuals that are obligated to obtain an auto insurance policy must do so because they choose to engage in the restricted activity of operating a vehicle. This activity has been deemed dangerous, and requires a license. Moreover, the insurance you are most obligated to obtain is that which protects others who may be injured if you cause an accident, and not to protect yourself from your injury so much as to protect yourself from liability for injuries to others.
In contrast, this mandatory health insurance provision would require everyone to insure themselves, regardless of prior actions or omissions. Failure to pay is a violation of the law, and since people are not born paid up on premiums, the natural human condition is to be in violation of this law, with the cure for that condition being buying health insurance.
Further, the states and not the federal government largely set the extent of auto insurance a driver in their jurisdiction needs to get. If a state makes a bad policy decision on such an issue, or any other matter important to the people, that state will suffer due to smart and capable citizens choosing to not move there and/or to leave that state. Those people would instead opt to live and work in another state that makes policy decisions more to your personal taste. When choices are made at the federal level, beyond establishing minimums or maximums, the ability for states to compete and establish the standards most consistent with the desires of the people is eliminated, and the people have nowhere to run.
Still, this is not to say that the federal government could not establish certain minimum standards of free care, including providing preventative care, paid for through taxes, including special taxes on foods and activities deemed especially likely to contribute to detrimental health. Several alternative plans could be developed through well written laws, and paid for through proper mechanisms, but this law appears incapable of surviving. Worse yet, for the law's supporters, this law appears possibly incapable of obtaining substantial details as to the true extent of healthcare authority the Supreme Court would have provided the President under a less ambitious first attempt at overhauling healthcare.
The Supreme Court Often Reaches Unanimous Decisions And Probably Will Regarding The Mandate
Despite public impression and the polar nature of some Supreme Court members on a great many things, the truth of the matter is that the Court regularly concludes matters unanimously. It just works out that it is generally those closely split cases that the press covers. Most issues go 9-0.
In 2012 alone, multiple cases involving the federal government have reached a unanimous decision against the government, including: Hosanna-Tabor Church v. EEOC, US v. Jones and Sackett v. EPA. This shows that this Supreme Court, including the current President's own picks, have agreed on other recent matters regarding the the federal government's authority.
Additionally, because of the crucial importance of the mandate to the total Obamacare plan, the Supreme Court may prefer to here deny the matter solely on the mandate issue. The Court could conclude that if the mandate fails, its absence makes the greater scheme wholly defective and make any further analysis moot. This may allow the Court to punt the other questions regarding healthcare socialization and modernization to a time where a better-drafted law has contemplated the matter.
If the Supreme Court does choose to determine additional issues within the greater Act, the Court is likely to determine that the federal government does have at least some power to regulate healthcare under its interstate commerce authority.
Who Stands To Benefit Under The Mandate (Or Lose If It Fails)
While the largely untested law may create many winners and losers, the clearest present beneficiaries would be large companies that run healthcare plans. Examples of such companies would include UnitedHealth Group (UNH), WellPoint (WLP), Aetna (AET) and Cigna (CI), as these companies would likely gain more clients. The mandate would require that individuals procure insurance through these companies, and the added customers should mean increased premiums and cash flow to these providers. Similarly, companies such as Express Scripts (ESRX), which provides pharmacy benefit management services, should stand to benefit under the mandate due to an increased volume of business being done through their system.
Many other businesses would likely increase their volumes under Obamacare, but the clearest beneficiaries have to be the insurers, as they are the most direct ones. Be that as it may, it is their very presence that should doom this system. If the insurance was run through a single social federal insurer, without directly requiring a flat fee, the mandate would probably be more legal, though the services provided would probably be worse. The striking down of the mandate would lessen the insurer's future client-base and premium flow projections, which are what matters most to a large insurer.
These plan providers may have the most to lose if the mandate fails, which I believe it will. If a premium based upon anticipated new business under the mandate, has been built into the shares of these plan providers, or the expectations of Wall Street analysts, those expectations and that premium will likely have to be revised out of the equation.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.