* Alternatives to individual mandate require Congress to act
* Consumer protections could provide some common ground
By David Morgan
WASHINGTON, March 20 The U.S. Supreme Court doesn't have to strike down all of President Barack Obama's healthcare law to leave his plan to extend healthcare coverage to millions of uninsured Americans in a state of political turmoil.
If the high court opted only to reverse the law's unpopular individual mandate, which requires most adults to purchase health insurance, the Obama administration could look to several alternatives to ensure that enough people participate in coverage to make the law work as envisioned.
The options range from a new tax on individuals who do not acquire coverage to financial incentives that could encourage young, healthy people to sign up for insurance. The government could also consider special subsidies for high-risk individuals who are already sick or vulnerable to disease.
But they would require that Obama and his Democratic allies find bipartisan support in Congress to shore up the law, a daunting challenge during an election year when Republicans are already moving to repeal several of its provisions.
"All of them would require some sort of congressional action," said Larry Levitt, a healthcare adviser to former President Bill Clinton who is now at the nonpartisan Kaiser Family Foundation. "Congress could end up stalemating, and you could find yourself in a situation where there's no consensus about how to move forward."
The Patient Protection and Affordable Care Act of 2010, the most sweeping social legislation in a generation, is Obama's signature policy achievement. It would extend health coverage to more than 30 million Americans, while introducing reforms to reduce costs and improve care.
The Supreme Court will hear oral arguments on the case starting o n M onday and is not expected to rule until as late as June 30. The justices could throw out the entire law or uphold it. They may also issue only a partial ruling, striking down the mandate, for example, or overturning the planned expansion of the Medicaid health program for the poor. Or they could put off a decision until after the law comes into full force in 2014.
The individual mandate, which requires most adults to purchase private insurance in 2014 or pay a penalty, is the linchpin for the law's goal of making affordable coverage available to an estimated 16 million lower-income people through new state-run health insurance exchanges.
Its critics include 26 U.S. states that hope to persuade the court the provision is unconstitutional, on grounds that Congress has no authority to compel individuals to purchase products including insurance. Administration officials, who contend that Congress has the right to regulate interstate commerce, say they expect the entire law will be upheld.
Reform advocates say the mandate is key to making the exchanges work, because it requires participation from younger, healthier adults who cost less to insure. Without them, the exchanges could become dominated by older, sicker people, whose care would raise the cost of coverage.
That makes the job of finding an alternative vital, but one fraught with huge challenges.
Creating a new tax on individuals who do not buy insurance and adding new federal spending to subsidize insurance premiums for higher risk individuals are options unlikely to pass muster with Republicans in Congress.
Partisan politics could also obstruct options that call for scaling back the law's consumer protections or inducing enrollment by adopting cost incentives and penalties that are currently barred by the legislation itself, analysts say.
One option free of congressional entanglement would be to leave it to the states to follow the lead of Massachusetts and adopt their own individual mandates. But that could create big geographic disparities, given the slowness of many states to embrace the exchanges initiative.
No serious attempt to establish an alternative to the mandate should be expected until after the Nov. 6 presidential and congressional elections, according to analysts.
After that point, health reform might also have a lower legislative priority than tax reform and deficit reduction, delaying debate on healthcare until late in 2013 and jeopardizing the law's start date of Jan. 1, 2014.
Conservatives agree that the loss of the individual mandate would have fundamental consequences for the entire law.
"There would be a bipartisan recognition that the Affordable Care Act was unworkable," said Douglas Holtz-Eakin, former director of the nonpartisan Congressional Budget Office who served as economic policy adviser to Republican John McCain's 2008 presidential campaign.
"The thing is such an intertwined mess, the court could save us a lot of trouble by striking the whole thing even though that's what they're most reluctant to do," said Edmund Haislmaier of the conservative Heritage Foundation.
If the mandate is struck down, the Justice Department has advised the court that some of the consumer protections - such as the ban on denying insurance for people with preexisting conditions and rules prohibiting higher insurance costs for women and other groups - should be removed to help mitigate the risk to insurers. But the popularity of those protections could provide common ground for lawmakers to find consensus on an alternative that could lead to their preservation.
"There could be pressure for some sort of action to create an insurance market that addresses the affordability and availability of coverage for people with preexisting conditions or chronic illnesses," said Dr. Mark McClellan, who oversaw Medicare, Medicaid and the U.S. Food and Drug Administration for former President George W. Bush.
But many are skeptical about how far partisan-minded lawmakers would go to reach agreement to retain those benefits.
"Even if these alternatives could pass a polarized Congress, they would be more disruptive, cover less Americans, and increase premiums for people who have coverage due to adverse risk selection," said former Clinton healthcare adviser Chris Jennings.