Insights: Health Care After the Supreme Court Ruling

Posted June 29, 2012 by Editor

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• In a complicated ruling, the Supreme Court upheld the individual mandate, a key component of the 2010 health care reform.  But the Court limited the potential expansion of Medicaid under reform.
• While the individual and employer mandates do not unfold until 2014, it may be having a very small negative impact on hiring now, as firms may not want to incur additional health costs by hiring more workers.
• Income taxes will rise between $20B and $25B which might cut 2013Q1 GDP growth by 0.5 percentage point or more, if the increased taxes do not come out of savings.  The increased taxes on investment income may cause some to sell stocks at year-end 2012.
• The stock market has already concluded that reform is good for hospital stocks by increasing paying potential customers, while it is bad for health insurance stocks as higher health care costs are more likely. Drug company stocks were little changed.
• While a victory for Obama and the Democratic Party, the reform effort may be overturned in early 2013, if the Republicans gain control of both the White House and both houses of Congress.  Ending “Obamacare” is their first priority.

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