Supreme Court Health Care Decision: What it Means to Small Businesses
CREDIT: Supreme Court Image via Shutterstock
The Supreme Court of the United States today (June 28) upheld President Barack Obama's health care law in a 5-4 decision. Chief Justice John Roberts cast the defining vote in a decision that will impact the way millions of Americans will get health insurance.
"The Affordable Care Act's requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness," Roberts wrote in the ruling.
With the ruling upholding the individual mandate as a tax, all Americans will now have to purchase health insurance by 2014 or face a penalty.
"The mandate being upheld as a tax means that if you are the sort of person who can afford to buy health insurance but choose not to you are not going to be treated as an outlaw or thrown in jail," Perry Dane, professor of law at Rutgers–Camden, said. "You will, however, pay a fee if you don’t purchase insurance."
Although the effects of this ruling will be felt by all Americans, few may feel the effects as immediately as small business owners. With this decision, small business owners, those with more than 50 full-time employees, will now need to provide affordable health benefits to employees.
An Associated Press report described the requirements of affordability to be "the insurance must pay for at least 60 percent of covered health care expenses, and employees may not be forced to pay more than 9.5 percent of their family income (before deductions and adjustments) for coverage offered by employers."
That means that small businesses will also have until 2014 to comply with the ruling or they will face penalties that can reach up to $2,000 for each employee.
"A person who has insurance will have little change from this ruling," said William Maruca, health care partner with the law firm Fox Rothschild. "If anything, this is probably positive news for people who have insurance to the extent that it is a mechanism that will be bringing more of the uninsured into the insurance world, which will mean the rest of people won't be subsidizing as many uninsured people."
"It also means insurance companies will have to pay 80 cents on the dollar for care and no more than 20 percent on non-care, which will keep premiums down," Maruca said. "It also means that if you change jobs, you can't be denied insurance because of pre-existing conditions. There is a lot of positive in there. The negatives are there really isn’t enough in the law to hold cost down so this isn’t a magic bullet by any means."
Reaction to the news has been varied.
"This law will have a dramatic, negative impact on every employer and employee in the United States and further constrain job creation and economic growth," National Retail Federation President Matthew Shay said in a statement.
Those in favor of the ruling are praising the decision as a major boon to small businesses.
"The U.S. Supreme Court’s ruling today upholding the Affordable Care Act is a victory for small business owners who have struggled with the excessively high cost of health insurance for decades," John Arensmeyer, founder and CEO of Small Business Majority, a progressive small business group said. "The Affordable Care Act tackles small business owners’ top priorities when it comes to health care reform: cost and accessibility. The law will significantly rein in costs while providing more health coverage options for entrepreneurs. Our opinion polling has found that small businesses support the law, believe health care reform is needed to fix the economy and they support key provisions, particularly the health care exchanges and tax credits."