Health care ruling a bitter pill for business

Raymond Keating

Raymond Keating

Chief Justice John Roberts surprised the planet by effectively siding with the Supreme Court’s four liberal activists in upholding most of ObamaCare as constitutional.

In a stunningly convoluted and contradictory majority opinion, Roberts said the ObamaCare individual mandate — that everyone must have or purchase health insurance coverage, or if not, face penalties — was unconstitutional under the Commerce Clause, but then said it was constitutional under Congress’s power to levy and collect taxes, after saying earlier that it was not a tax. Got that?

So, what does this mean for small businesses and the economy?

First, the battle over ObamaCare in the political and policy arenas continues. The StartOver! Coalition — a group of leading business organizations, including the Small Business & Entrepreneurship Council — issued a statement on the court’s decision that said, in part, “This means that the impacts of the new health care law about which StartOver! members and the American people are concerned remain very much in play and in the front of peoples’ minds as implementation of the PPACA proceeds, among which are higher costs, new and higher taxes, job losses and workers losing their employer-provided health benefits.”

The group added that “the time is now for the Congress to act to repeal the PPACA and start over on a health care reform proposal that bends the cost curve down and thus broadens access to health coverage and the quality medical care affordable coverage makes possible.”

Secondly, and directly related to what the StartOver! Coalition proclaimed, the court’s decision provides a powerful reminder the worst of ObamaCare for small businesses and the economy is still to come, further driving home the imperative this tax and regulatory mess be repealed.

For example, in 2013, the Medicare payroll (income) tax for individuals earning more than $200,000 and couples more than $250,000 is increased from

2.9 percent to 3.8 percent and it gets extended to cover capital gains and dividends. In addition, a 2.3 percent tax will be imposed on medical device makers’ revenue. None of that is good for the risk taking — namely, entrepreneurship and investment — needed to spur innovation, economic growth and jobs.

In 2014, the individual mandate is imposed with a penalty reaching as high as 2.5 percent of income in 2016. And don’t forget the employer mandate kicks in, requiring employers with 50 or more workers who don’t offer health coverage pay a $2,000 penalty (or is it a tax?) annually for each full-time employee over the first 30 as long as at least one employee receives a health insurance subsidy.

And then there are the state-based health insurance exchanges coming in 2014 as well. These were peddled as

pro-competition marketplaces, but will turn out to be nothing more than new, convenient vehicles for government to regulate and gain more control over health insurance.

In addition, 2014 will bring a new tax on health insurers, which, of course, means increased insurance costs, especially for small business owners and their employees.

For good measure, while the Supreme Court found the Medicaid defunding threat against state governments to be unconstitutional, the overall expansion of Medicaid will go ahead. ObamaCare’s overall increase in government spending promises to run far ahead of original projections, which means draining more resources out of the private sector, via debt and taxes, and the threat of even higher taxes.

From the perspective of our economic health and well-being of small businesses, the imperative to repeal ObamaCare should be even more obvious with the court now out of the picture.

Finally, another threat lurks, and unfortunately it comes straight out of the court’s majority opinion. In his decision, Chief Justice Roberts noted that if the individual mandate were allowed to stand under the Commerce Clause, it would mean opening “a new and potentially vast domain to congressional authority.” It would be an unprecedented expansion of federal power. Therefore, under the Commerce Clause, he deemed it unconstitutional. But by finding this same vast expansion of federal power constitutional under the power to tax, Roberts opens the door to the same vast expansion of federal power and control as long as there is a revenue component to the regulatory undertaking.

In a very real sense, Roberts has laid the groundwork for a vast increase in federal intrusion into both personal and business life, as long as taxes accompany the regulation. That stands out as very grave and troublesome potentiality for individuals, small businesses, big businesses and our economy.

ObamaCare must and can be defeated. But the court’s ObamaCare decision lays the ground for more federal mischief in the future.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. Reach him through the Web site at www.sbecouncil.org.
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Posted by on Jul 11 2012. Filed under Opinion. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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