Q and A on Supreme Court Health-Care Decision
July 2, 2012
- What sort of repercussions can we expect from the Supreme Court's decision to uphold large portions of the Affordable Care Act, including the individual mandate?
- It seems like the public—just like the Court itself—was fairly divided on the health-care reforms. After this decision, does the picture change for this fall's elections, not only for the President but for control of Congress as well?
- What types of businesses especially welcome this decision, and what kinds were disappointed?
- This may remove an immediate uncertainty, but there's always the possibility down the road of another attempt to overturn this law. How soon do you think it will be before the politics allow for another challenge to the health-care mandate to surface?
What sort of repercussions can we expect from the Supreme Court's decision to uphold large portions of the Affordable Care Act, including the individual mandate?
We can expect both practical and political repercussions.
On the practical side, the decision to uphold the bulk of the law provides some certainty going forward. For wealthier taxpayers, there's confirmation that new taxes will go into effect on January 1, 2013. Joint filers with adjusted gross incomes above $250,000 (and single filers with adjusted gross incomes above $200,000) will see a 0.9% increase in Medicare taxes and a new 3.8% Medicare tax on unearned income, including capital gains, dividends and interest. Beyond that, the law will take several years to implement, so there will be other changes down the road.
Politically, the decision sets up a pretty stark contrast between the Republicans' and the Democrats' positions as we head toward the November elections. Republicans will argue that the only way now to change the law is to elect them so they can repeal all or some of it. Democrats will say that the Court vindicated their work and that the time has come to stop arguing and work together to implement the law.
It seems like the public—just like the Court itself—was fairly divided on the health-care reforms. After this decision, does the picture change for this fall's elections, not only for the President but for control of Congress as well?
While it is likely to become fodder for more campaign ads in the months ahead, we don't think the landscape for the elections has dramatically changed as a result of this decision. At the end of the day, the economy and jobs will likely remain the issues of greatest concern to voters.
In terms of the decision's impact on the presidential race, Mitt Romney said shortly after the decision came down that he would propose repealing the law on his first day in office if he is elected1. That's a clear and simple talking point that you'll hear again and again.
For President Obama, the decision was a little bit of a mixed bag. Obviously, the upholding of the most significant legislative accomplishment of his first term is a big win for him. But the way it was upheld, with the Court declaring the penalty for not purchasing insurance a "tax," is going to be problematic for the president, because one of his bedrock principles has been that he would not raise taxes on middle-income Americans. Republicans have already shifted their line of attack to this point: that the President increased taxes at a time when the economy is struggling.
In the battle for control of Congress, the situation is similar. Republican leaders in the House of Representatives have already announced that they will take a vote on repealing the health-care reform law on or about July 112. While it may pass the Republican-controlled House, we believe it has no chance of being considered in the Democrat-controlled Senate.
What types of businesses especially welcome this decision, and what kinds were disappointed?
Many of the major provisions affecting larger businesses—such as the mandate that employers provide insurance to employees—could be considered an overall negative. These provisions will be costly, and they're due to come online in 2014, so larger businesses have a lot of work to do over the next couple of years. Many small businesses are unhappy with the decision, and worry that the costs of providing health-care coverage for their employees will go up.
In the health-care space, we think there is widespread agreement that public hospitals are a big winner in this decision because more people will have health-care insurance—which means hospitals won't have to swallow as many costs associated with caring for the uninsured. Insurance companies are generally happy, we think, because the individual mandate means that more young, healthy people will be in the insurance pool to help offset the risks of less healthy people. Medical device makers are likely disappointed because the decision means that a 2.3% surtax on medical devices will go into effect as scheduled next year.
This may remove an immediate uncertainty, but there's always the possibility down the road of another attempt to overturn this law. How soon do you think it will be before the politics allow for another challenge to the health-care mandate to surface?
It all depends on the election outcome. If Republicans win the White House and both chambers of Congress, they are very likely to make a run in 2013 at repealing the entire law, or major elements of it. If the President is re-elected, or if Congress remains divided, then repeal is not likely to happen.
1. MittRomney.com, "Mitt Romney: I Will Repeal Obamacare," June 28, 2012.http://www.mittromney.com/news/press/2012/06/mitt-romney-i-will-repeal-obamacare-0
2. Reuters, "Top Republicans press healthcare law repeal effort," July 1, 2012.
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