As the nation waits for the Supreme Court to decide by early summer the constitutionality of the health reform law, some sectors of the health care and employer community seem to be more concerned about the possibility that only parts of the law are declared unconstitutional than they are of the whole statute being struck down.

For health insurers, for instance, the biggest fear seems to be that the high court declares the individual mandate to purchase insurance unconstitutional but leaves the rest of the law intact. Such a decision, the America’s Health Insurance Plans (AHIP) trade group said in an amicus brief filed with the Supreme Court last October, would engender “widespread…instability in the insurance market and, over time, would substantially reduce access to affordable coverage.” It would be better if the health insurance market reforms died with the individual mandate, the brief suggested, calling the difference between the two scenarios “night and day.”

And a joint AHIP-Blue Cross and Blue Shield Association amicus brief filed Jan. 6 stated that certain insurance-market reforms in the law are inextricably linked to the individual mandate and need to be eliminated from the law if the mandate is declared unconstitutional in order to avoid higher premiums, coverage disruptions and loss of choice for consumers. The brief lists as those reforms:

• Guaranteed issue;

• A ban on excluding or putting a waiting period on pre-existing conditions;

• Prohibiting coverage eligibility rules based on health status; and

• Requiring use of community rating.

But the attitude is not universal among large insurers. For instance, Michael McCallister, chairman and CEO of Humana Inc., said at the JPMorgan health care conference for investors in San Francisco Jan. 11 that he views the individual mandate as “not material.” If it is struck down, McCallister suggested, the feds might be able to substitute some form of “open-enrollment period” that could have the same impact as the individual mandate would in making conditions tolerable for insurers.

Employers have a somewhat parallel fear: that the individual mandate gets struck down but the employer mandate — to either provide health insurance coverage or pay stiff penalties (if they have 50 or more workers) for not offering coverage (HRW 12/19/11, p. 6) — remains in effect. The National Retail Federation said the likely result would be employers scaling back or dropping coverage because health insurance costs would become too high.

But this kind of an impact would not apply to large employers, which overwhelmingly self-insure, or to most “middle-market” employers, which need to offer insurance to stay competitive in employment, asserts attorney Edward Fensholt. He is senior vice president of Lockton Benefit Group, which serves many middle-market employers. Fensholt tells HRW that elimination of the individual mandate would result in higher costs for employers that buy fully insured group coverage and that those costs would get passed on to employees.

While the middle market is a “hodgepodge” of employer attitudes and actions regarding health insurance, he adds, elimination of the individual mandate wouldn’t necessarily tip the scales so that these firms would stop offering insurance and opt to pay the penalty. Instead, it would be “another straw that drives them to self-insurance,” he says, noting that some employers with only about 100 employees self-insure, while other much larger ones with less “risk tolerance” don’t.

What would be the impact on Medicare accountable care organizations (ACOs) under the reform law if the individual mandate was declared unconstitutional? It won’t matter much, according to Jordan Battani, principal researcher in the Global Institute of Emerging Healthcare Practices Group at consulting firm Computer Sciences Corp. Battani tells HRW sister publication ACO Business News, “Assuming that they can’t implement the current programs the way they’re currently configured from the legal challenges, and that the accountable care movement excels on the commercial side, Medicare will find a way to make those changes to the program.”

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