Economists say health-care ruling gives businesses clarity
To the surprise of many economists, Thursday's Supreme Court decision on the Affordable Care Act doesn't further confuse what's going to...
Los Angeles Times
LOS ANGELES — To the surprise of many economists, Thursday's Supreme Court decision on the Affordable Care Act doesn't further confuse what's going to happen next. That clarity might help businesses finally make some personnel and other moves, giving the economy a much-needed kick and President Obama one more thing to brag about, economists say.
"There is a perspective on the economy which is argued that laws of regulation have imposed a lot of uncertainty on businesses," said Gerry Wedig, an economist with the University of Rochester's Simon School of Business. "Now, there is a lot more certainty about what the rules are going to be. That might allow firms to move forward with their plans."
That includes hiring health-care personnel to meet the increase in demand sure to come with increased preventive care, said Dan Seiver, an economist at San Diego State University. And jobs are the one thing Obama needs right now, given the economy's lackluster performance — something that was underscored by Thursday's report that the nation's first-quarter GDP growth was slow, as expected. The decision also will increase demand for schools providing health-care worker training, he said.
"There's going to be a huge increase in demand for all kinds of medical services," Seiver said. "That's a good thing and a bad thing. A lot more people are going to get preventive care, but there will be costs."
Those costs are what motivated the National Federation of Independent Business to join states in the lawsuit against the Affordable Care Act. Other business groups, including the U.S. Chamber of Commerce, continue to oppose the ruling, while the Small Business Majority lauded it as a first step to increasing choices for workers.
Starting in 2014, businesses with more than 50 employees will have to provide insurance for employees or pay a penalty, Wedig said. That will increase their costs, which they likely will pass along to employees. But that's not until 2014. Until then, the reduction in uncertainty and demand for jobs could be one more boon for the president.
Health-law experts say that business owners may be pleasantly surprised to find that more insurance alternatives will be available — especially because the law provides for the creation of exchanges to sell insurance to companies and individuals.
"The health industry and the insurance industry and business in general will evolve to comply with this law," said Alden Bianchi, a health-care attorney with Mintz Levin, a law firm in Boston.
If a company decides it wants to try to find ways to avoid the law, it could try to keep its workforce below 50, split its businesses into different companies, none with more than 50 workers, or move operations overseas.
Right now, Hubworks Interactive, a Coeur d'Alene, Idaho, software company doesn't have enough workers to be bound by the law. But the company expects to have more than 50 employees in the next year or two, and that would require it to provide insurance for its workers. But co-founder Sam Winter has no plans to try to avoid the law. The company currently provides health insurance for its 18 employees and their families.
"No doubt we'll want to join in the state's health-exchange program" to try to get the best deal, Winter says, "We want to provide health care, we want to do the right thing."
But he says, "We are in a waiting game," watching to see what rates will be like.
"If rates jump 30 percent, it's going to have a huge impact on whether we'll be able to keep hiring and cover families."
Material from The Associated Press is included in this report.