The Supreme Court Upholds Healthcare Reform: Four Troubling Issues.

June 27, 2012

Today, the Supreme Court upheld the constitutionality of the president’s signature legislation, The Affordable Care Act, including the key provisions for the individual mandate and Medicaid expansion.
The story behind the news was Chief Justice Roberts' decision to join the court's four liberals to uphold the law. Roberts, usually a leader of the conservative bloc, made the decision to uphold not on what the administration has all along claimed as the reform bill's legitimacy. Roberts explained that the controversial "individual mandate" is actually just a tax. And the congress does have the right to impose taxes. Thus, the law's legitimacy -- even if for different reasons than those the administration has thus far claimed.
Republicans are fuming. Democrats are gloating. Yet, Justice Roberts' rational could turn out to be a boon for the right.
Because, if the core legislation is a tax, it can be repealed by a simple majority of the senate through the budget reconciliation process, in which filibusters are not permitted.
Suddenly, November's election becomes more important for everyone. Even for those who previously had no dog in the fight.
Let's not get overly political. Stick with two conceptual frameworks: 1) what is best for the nation? 2) Did we arrive at this point in an honest, democratic fashion from which we can benefit and be proud?
Does healthcare need reform? Yes. Do Americans thoroughly understand the issue? No. Yet four issues remain troubling regardless of with whom one's political sympathies rest.
First, Americans don’t want the legislation. An Associated Press/GFK poll released last week shows that 47 percent of us oppose the law, while only 33 percent support it. This week’s Rasmussen presidential-election poll shows that 54 percent of likely voters want the law repealed. And a recent NYT/CBS poll (no right-wing bias here) shows that two-thirds of Americans want the individual mandate or the entire law to be determined unconstitutional.
Second, given its national unpopularity, why not leave such a sweeping determination up to the states? Make it local? While everyone wants to compare ObamaCare to Romney’s health reforms in Massachusetts, let’s not forget that Romney’s policy was confined to one state. Given over to local discretion. Per the original intent of the founders. Not forced down everyone’s’ throats (and wallets) at the federal level.
Third, if SCOTUS, specifically Justice Roberts, deems the mandate to be an act of taxation, and so under the purview of the legislative branch (strict reliance on the interstate commerce clause would not have permitted such an interpretation), then what’s next? Fast-food taxes? Politically incorrect commentary taxes?
The administration has stated repeatedly that the law was not a tax. So, for its legitimacy to be upheld by the Supremes because it was, in fact, deemed a tax means that the administration was 1) disingenuous, or 2) confused as to the constitutional merits of the legislation.
But, the long-term results will be provided by those the law affects.
Many business owners say it may, in fact, be more cost-effective for them to pay the $1,800 per year penalty tax than to provide healthcare for every employee. So, the administration figured out yet another backdoor way to milk the American business owner via another penalty tax. At a time when many business owners are simply grappling with the challenge of saving the jobs of their current employees. Can assessing yet another mandated expense (or a mandated penalty) be positive with the economy still smoldering? Does this help the nation's economy right now?
Finally, one has to consider the context in which all of this reform has been enacted.
When the current administration took over, our nation’s economy was in conflagration. The American Skyscraper was burning. Productivity was nil. Unemployment was rampant. And the small business owner could see no further than the week’s economic releases to discern when she might begin again to hire and spend. Yet, did the administration ensure that everyone was safely clear of the building, and then put out the fire through forward looking, stimulus-based economic policy? Efforts focused on helping small- and mid-sized business owners to escape from the tar pits in which they were entrenched? No. Amidst the flames, the administration took the opportunity to announce an overhaul of the human resources department. Dodd-Frank. HC Reform. Suddenly, the primary employers of the nation’s economy, business owners, went from blurry eyed to bat-cave blind. No spending. Hoarding cash. No lending. No hiring. No growth.
Healthcare technology companies like McKesson will likely trade sideways as clients try to figure out when the matter will be resolved, and how the timeline impacts their very lifeblood -- customers' capital expenditures.
In the end, the ripples go well beyond the healthcare pond. The consequences of the SCOTUS decision, potentially upheld or overturned by November's election, will have consequences throughout the U.S. economy. Jobs. Strategy. Capex decisions. All will be affected, for better or for worse, by these sea-change events.
Healthcare needs a reformation. But, first things first. The fire should have been extinguished. The nation's economy lifted from its knees.
Why the slow economic recovery? Like driving through the foggy New England countryside, economies crawl when forward vision is impaired.
So, for small businesses and the U.S. economy, yesterday's decision likely ensures that the landscape remains as opaque as pea-soup fog until November's election.

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