The suspense is over. On June 28, 2012, the Supreme Court approved the Affordable Care Act or “ObamaCare” by a 5-4 margin, with Chief Justice Roberts casting the deciding vote. It was a controversial decision, particularly from a conservative viewpoint, as Roberts decided that forcing Americans to purchase health insurance or pay a penalty was really a ‘tax’ (something the Obama Administration denied many times) and not a ‘penalty’ for not buying health insurance. Since Congress has the Constitutional right to establish taxes, “ObamaCare” was legal.
If Roberts had chosen to make his decision purely on the 2700 page law he was given, without the ‘tax’ interpretation, the most likely judgment would’ve been finding “Obamacare” unconstitutional and thereby restarting the health care war between Republicans and Democrats. It would’ve created a great amount of uncertainty for the healthcare industry, which might have damaged economic recovery since healthcare represents 19% of GNP. But most importantly, striking down “ObamaCare” might have made the Supreme Court appear to be political and favoring conservatism, reinforcing the perception that it was not neutral and objective. (critics have argued that since their decision to award the Presidential election to Bush in 2000, the Supreme Court was a branch of the Republican party).
Most of “ObamaCare’s” impact will be felt in 2014, although some popular elements have been implemented already. For example, people with pre-existing health conditions can’t be excluded from health insurance eligibility, children up to age 26 are eligible for health coverage under their parent’s plans, and there is no lifetime maximum for health claims.
It’s still possible for the Republicans to overturn or modify Obamacare but in order to do that, they’ve got to gain a majority of seats in the Senate and House of Representatives AND win the Presidency in the Fall 2012 elections. It’s possible, depending on the state of the economy and other unforeseen events. If that doesn’t happen, “ObamaCare” will go into effect.
How will this affect companies doing business in the U.S.?
1) Beginning January, 2013, companies will be required to list the value of health care on employee W-2 statements. A tax will not be applied (for now), but it’s likely that employees will be taxed on health benefits above a certain amount for very generous health plans (the so-called “Cadillac Plans”).
2) Employers will be given an option of continuing health care coverage for employees OR paying a modest penalty ($2,000) and cancelling company health insurance. Employees losing their health insurance will be able to purchase coverage in state exchanges, choosing coverage from a variety of health insurance companies based on plan cost and coverage (eg. Doctor and hospital networks, co-pays, etc.)
3) Employees who choose not to have insurance will need to pay a penalty or ‘tax’.
4) Original estimates for “ObamaCare” savings have already been challenged ? in fact, most economists now feel that “Obamacare” will require billions of additional tax dollars as the cost of adding 30 million people to healthcare, particularly those with expensive health conditions, will drive up healthcare costs considerably.
5) Employers offering health insurance may face more complaints of delays for employees for operations or other medical procedures or lower quality of doctor care. Hospitals will benefit under “ObamaCare” since they’re legally required to treat uninsured people now but “ObamaCare” will ensure that people will have insurance or pay the government a penalty to offset hospital care Costs. However, doctors will now be compelled to see more patients (since 30 million people will be added to insurance eligibility) AND provide more data to the government to study medical ‘outcomes’. There is a real fear that many doctors will quit medicine rather than endure higher patient volumes and paperwork requirements, thereby increasing wait times and reducing quality.
But the Supreme Court has spoken. Unless the voters of the U.S. provide a Republican majority in Congress and a Republican President, “ObamaCare” will mark the beginning of a new era for companies and their employees. Companies may welcome the new era by paying a modest penalty and not providing healthcare for their employees or continue to provide healthcare to attract the best talent. No one knows how this will affect healthcare inflation, now projected to be 7% in 2013, but it will have a huge impact on employees. A benefit once taken for granted will now be yet another decision, much like investment options under 401k plans.
College degrees, once needed for only professional and managerial jobs, may be required just to understand the many choices employees in the future will have.