Economic Implications of Severing the Individual Mandate

In November 2011, the U.S. Supreme Court agreed to rule on the constitutionality of the Affordable Care Act (ACA).  In addition to reviewing the decision by the U.S. Court of Appeals for the Eleventh Circuit to strike down the individual mandate, the U.S. Supreme Court will hear arguments related to whether the individual mandate, if found unconstitutional, can be severed from the remainder of the healthcare law; whether consideration of the mandate is premature based on a federal law that bars court challenges to any tax until the tax is actually collected; and whether Congress exceeded its constitutional authority and was “coercive” toward the states in expanding Medicaid. This paper addresses specifically the economic implications of whether the individual mandate can be severed from the remainder of the healthcare law.