Key Takeaways from the Supreme Court’s ruling on the Affordable Care Act by Dan Clifton, Head of Policy Research at Strategas Research Partners

This decision upholds all of the law with the exception of Medicaid expansion. The justices decided The Supreme Court’s decision upholds the individual mandate based on Congress’ taxing power. that the federal government cannot punish states for refusing to comply with the expansion of Medicaid. Interestingly, the four dissenting Justices noted the entire legislation was unconstitutional in their view.

The Supreme Court decision will mark a victory for the Obama administration in the short run and will also make full repeal efforts more difficult. However, the fiscal provisions of tax and spending items will remain a target as Congress deals with deficits greater than $1 trillion.

The justification to uphold the individual mandate based on the taxing authority of Congress now puts the tax issue back on the table. The individual mandate remains deeply unpopular with voters, and calling it a tax will only exacerbate this. Republicans will use this as a key argument, and make the point that the President promised not to raise taxes on the middle class, but today’s court ruling confirms that he did.

Despite the ruling on the individual mandate, the Supreme Court decision was just one of the many catalysts for Healthcare reform. The individual mandate and insurance provisions were not that meaningful in the larger macro sense. Most of the meat of the Healthcare bill, measured in total cost and coverage, comes from the expansion of Medicaid and subsidies for health insurance exchanges. In fact, these two provisions largely constitute the $2 trillion of spending over the next 10 years as part of the Affordable Care Act. Given the large cost, these provisions will generate attention as Congress gets set to pass tax and entitlement reform in 2013. As such, the fate of these programs will be determined by the election results. Since these measures are direct spending items, changes could be made with 51 votes in the Senate through the reconciliation process. Hence, if one party controls both chambers of Congress, they will have more leverage with regards to these spending items. Obviously, the results of the Presidential election will also influence how these programs are shaped in the future.

 

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