President Barack Obama's prescription for fixing health care boils down to this: Bring us your old and sick patients, and we'll make sure they get insurance. But bring us young and healthy people, too.
That delicate balance, the heart of Obama's Affordable Care Act, may soon come undone. The U.S. Supreme Court is about to rule on the constitutionality of the plan as early as Monday, and the betting is that all or part of the 2-year-old law will be struck down.
Experts say a worst-case scenario for insurers is the court will toss out the requirement that everyone buy insurance – but will continue to force insurers to take all comers. The companies would be deluged with sick policyholders, and premiums would spike.
By how much? Nobody's quite sure, but they aren't looking forward to finding out.
"It is not knowable," said Patrick Johnston, president of the California Association of Health Plans.
Look at it this way: The nation's health-care industry was alarmed when CalPERS approved a 9.5 percent premium increase for its members two weeks ago. Some experts said dismantling the health law might generate even higher price hikes.
"I think we'd be looking at insurance premiums going up even more than people are currently projecting," said Joanne Spetz, an expert on health-care economics at the University of California, San Francisco. "As it is, the CalPERS increase is higher than people were expecting."
Runaway health-care costs have long been a drag on the economy, crippling businesses and bankrupting families. Even large purchasers have wilted under the weight of rising premiums.
The new rates approved by CalPERS, for example, will cost the California State University system about $36 million a year, said Robert Turnage, assistant vice chancellor for budget.
That's on top of a decade's worth of premium increases that have tripled the CSU system's health-care bill, to $356 million, even though CSU has fewer employees to cover because of budget cuts.
"These health care costs exacerbate all these pressures that are driving tuition up," Turnage said.
The Affordable Care Act is built around a grand compromise endorsed by insurers, health care providers and others.
Starting in 2014, insurers will have to cover everyone, regardless of pre-existing conditions. There are also limits on how much more they can charge the old and the sick, compared to the young and healthy.
In return, practically everyone has to buy insurance, even young people who tend to put off coverage because they don't think they need it. This "individual mandate" starts in 2014, too. The federal government is kicking in tax credits and subsidies to make it more affordable.
Getting coverage for the uninsured is essential to cost containment. The uninsured often wind up in emergency rooms, even for routine care. That's where costs are highest.
Hospitals pay for the cost of treating the uninsured by billing higher fees to everyone else.
That raises premiums for those who do have insurance – by an estimated 10 percent, said Kim Belshé, the state's secretary of health and human services under former Gov. Arnold Schwarzenegger.
This cost-shift phenomenon is a big reason why entities like the California Public Employees' Retirement System, the nation's second-largest purchaser of health care, supported the Affordable Care Act.
"It's a significant chunk of dollars we are all paying to cover the folks who can't or don't have insurance," said Ann Boynton, deputy executive officer at CalPERS.
Still, the health overhaul has been controversial from the start, with Republicans labeling it a monstrously expensive big-government boondoggle.
The courts have zeroed in on the individual mandate, and last fall the 11th Circuit Court of Appeals declared that the feds were overstepping their role by forcing people into the insurance pool.
"The individual mandate is breathtaking in its expansive scope," the court wrote.
Much depends, of course, on exactly what the Supreme Court does. If the court kills the individual mandate but preserves the rest of the law, California officials say they can salvage at least some elements of the plan.
Of particular importance: the billions in tax credits and subsidies for new insurance buyers. Even if people aren't forced by law to buy coverage, the financial incentives might be enough to entice at least some of them.
"Having a subsidy, having that financial glue is enormously important," Belshé said.
Belshé is a board member of the California Health Benefit Exchange, the state-run insurance marketplace that is supposed to begin operations in 2014. The state plans to run the exchange regardless of what happens to the Affordable Care Act, and Belshé said more than half of California's 7 million uninsured could wind up with coverage.
But Belshé and others said the system would work a whole lot better if the individual mandate were kept intact.
Johnston, the insurers' lobbyist in Sacramento, said seven states have experimented with health-care reform by requiring insurers to cover everyone – without forcing individuals to buy in.
The results, he said, were disastrous. Many individuals essentially gamed the system.
"People could wait until they had a date set for knee surgery to get insurance," Johnston said.
That left insurers saddled with scads of high-risk patients and relatively few healthy patients to balance them out. Premiums soared and markets effectively collapsed. The states had to backpedal and give insurers more flexibility to screen out purchasers with pre-existing conditions.
The lesson is simple, Johnston said: "We need to create a large pool of people, most of whom are relatively healthy."