The Supreme Court’s ruling on the constitutionality of President Barack Obama’s health care law may remove some of the uncertainty that businesses have about the law’s effects on their bottom line, but whether that will translate into jobs is another question.
Economists and business leaders have expressed concern over the job-killing aspects of the law since it was enacted in March, 2010, particularly the individual mandate that requires people to have healthcare coverage beginning in 2014.
Paul Howard, a senior fellow and director of the Center for Medical Progress at the Manhattan Institute for Policy Research, told Congress last year that there is a critical need for healthcare reform.
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“Unfortunately, the Patient Protection and Affordable Care Act is not the solution to our healthcare woes,” he said in an appearance before the House Committee on Education and the Workforce. “If anything, the Affordable Care Act ‘doubles down’ on many of the worst aspects of our current system, while adding new cost pressures and problems that will serve as a drag on economic growth and job creation for years to come.”
Howard told Newsmax that overturning the law will be a move in the right direction. “If the Supreme Court overturns Obamacare it won’t end the uncertainty hanging over the economy — too many deficit and tax questions still have to be resolved by Congress. But it will help,” he said.
“Taxes on employers who don’t offer creditable coverage, taxes on medical device companies, drug companies, and insurance companies will all go away. Young and healthy Americans won’t face large price increases from Obamacare’s heavy handed insurance regulations. Smaller businesses, and businesses that employ low-wage employees, won’t have to worry about cutting staff to avoid penalties for not carrying coverage.
“Congress will have to go back to the drawing board on health care reform, and should focus on incremental and less expensive options for expanding coverage and improving health care delivery through consumer choice and competition.”
The court is expected to make its decision on the Affordable Care Act — probably the most hig-profile cases it has dealt with since Bush vs. Gore in 2000 — within the next two weeks.
Andrew Puzder is the CEO of CKE Restaurants, a company that employs about 21,000 people in Carl’s Jr. and Hardee’s restaurants. In an Op-Ed for Bloomberg he noted his company’s healthcare consultant estimated that when the law is fully implemented it will cost his company an additional $18 million a year and that could translate into job losses.
“A Supreme Court decision declaring Obamacare unconstitutional would unquestionably be a positive for job creation and economic growth,” he told Newsmax. “Declaring the mandate unconstitutional would render most of the law unworkable and also be a positive. However while either decision would meaningfully reduce the uncertainty currently facing American businesses, it would not eliminate such uncertainty.
“Among other things, uncertainty would remain with respect to whether taxes will materially increase this January, whether the EPA’s war on carbon fuel will continue to drive energy prices up and whether the NLRB will continue to be an advocate for unions threatening to increase labor costs and decrease productivity.
"Job creation will not meaningfully increase until the government gets out of the way of American businesses," Puzder said. “However, a Supreme Court decision voiding Obamacare would be a big step in the right direction.”
The middle ground for the court, striking down the controversial individual mandate but leaving intact the rest, will likely result in a scramble involving Congress, insurers and businesses to fix what’s left.
“If the mandate is struck down, but the rest of the law is upheld, expect insurers and providers to go back to Congress and ask for additional reforms to try and prevent young and healthy people fleeing from the insurance market (thanks to other Obamacare regulations,” Howard said. “That may force additional reforms to the overall package.”
Gail Johnson, the founder and CEO of Rainbow Station, a nationally accredited preschool and school-age recreation franchise, said that “anything short of full repeal of the law … will continue to create uncertainty and higher costs for employers such as myself in a still recovering economy.”
Johnson, who has 225 employees at three corporately-owned Rainbow Station campuses in Richmond, Va., agreed that a decision to strike down the individual mandate would be a step in the right direction, but she said it would not go far enough. She noted such a move would leave in place other aspects of the law that place a significant cost burden on small business owners.
Striking down the entire law, she said, would get the country “back to square one; which would be an improvement over the current law given the costs and mandates it places on employers like me.”
“However, we need to implement intelligent health care legislation that the country can afford and that gives employers flexibility they need,” Johnson added. “We need Congress to pass legislation that balances the need to improve access to coverage together with controlling the rising costs of care.
“We must enact new legislation that incentivizes consumer-oriented solutions to health insurance and finally enable my franchise system to band together across state lines to purchase affordable coverage for our employees.
“This combined with tort reform should really make a difference in the escalating cost of health care. Controlling rising costs will provide certainty in this area — certainty that will go a long way to restarting the economic engine of small and midsized businesses like mine.”
Should the court uphold the law, businesses will be exposed to increased uncertainty as new regulations come on line and they may be forced to choose between profits and people.
“Companies will have to make plans to implement it, the costs require them to either lose profit or find other ways, that includes not hiring or losing employees they have,” said Veronique de Rugy, a senior research fellow at George Mason University’s Mercatus Center.
“Anything that is mandatory has an impact on the bottom line; companies either suck it up or reduce costs.”
And Howard said if the law is upheld continued uncertainty should be expected as “thousands of regulations continue to be written, and companies wonder what their exposure will be to future health care costs."
“Also expect Obamacare to be revisited by the next administration,” he added.
Puzder, co-author with David Newton of the book, “Job Creation: How It Really Works and Why the Government Doesn’t Understand It,” said should the court uphold the law it will have a “dramatic negative impact on economic growth."
Special: Should Obama's Health Plan Be Overturned? Vote Here Now!
“Clearly, the last three and a half years have demonstrated that economic uncertainty is a negative with respect to job creation,” he said. “The only thing worse than economic uncertainty is a certainty that things will get worse.
Upholding Obamacare would create a certainty that health care expenses for American businesses will go up, job creation will decline and the current economic malaise will continue or, more likely, accelerate."
At the end of the day, Howard said that “getting health care reform right would be a boon to the overall economy, and for job creation.
“That’s not what we have today — but the Supreme Court might help us get there a little faster.”
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