Wednesday, March 28, 2012

For Healthcare Marketers, Severability is Key

While political protesters have spent the past few days on the steps of the United States Supreme Court arguing for or against an individual mandate, for healthcare marketers it is today may be the most important day of oral argument. This was the day the Court was to consider the severability test on the healthcare reform bill of 2009. That is to say, if the idea of an individual mandate to purchase healthcare reform is unconstitutional in their interpretation, does the court throw out the rest of the law?

That will determine among other things if device makers face a new tax, or if a new tax would have to be re-enacted. A highly unlikely possibility in the current House of Representatives.

The argument of severability has legal scholars divided just as they are divided on the mandate. It could be argued that only the mandate portion is unconstitutional. But at least one Federal Circuit judge ruled the whole law unconstitutional, because lawmakers designed it as parts that would move together - mandate, prexisting condition discrimination ban, and subsidies. Taxes are designed to fund the subsidies. The logic is, if only the mandate is thrown out by the Court, then insurance companies would be unfairly punished -- all pain and no gain. All the burden of new insurees with pre-existing conditions without the gain of new healthy customers from the mandate.

This has increasing importance as watchers of the oral argument seem to agree that the mandate portion of the bill could be in danger with a court skeptical of the government's ability to order a citizen to purchase insurance or be penalized. Justice Anthony Kennedy's comments seemed to go in this direction:

Justice Anthony Kennedy said that the federal government "is telling an individual he has the obligation he must act" and purchase insurance.

"That threatens to change the relationship between the government and the individual in a profound way," Kennedy said.

And Chief Justice Roberts seemed to follow the same logic.

If Congress could regulate health care in the name of commerce, added Chief Justice John Roberts, "all bets are off" on a range of areas subject to federal oversight.

The mandate would determine if the healthcare industry will see millions of newly insured person, for its good and bad consequences to the industry. On one hand, there is the possibility of millions of device consuming, drug-taking, doctor-visiting customers, on the other primary care docs might see waiting rooms strained and hospitals may not be able to handle the influx for industries to ever see new revenue.