BUSINESS: Leaders Worry About Employers' Burden
By DAYNA WORCHEL
The reaction in Tyler's legal and business community to Thursday's U.S. Supreme Court decision upholding federal health care reform was one of disappointment and uncertainty.
Most expressed concern about the cost effect on businesses and whether insurance premiums will increase for individuals.
The U.S. Supreme Court upheld most of the federal law known as the Affordable Care Act, which President Barack Obama signed into law in 2010, with the exception of penalizing states that don't comply with the Medicaid expansion.
The law includes the mandate that virtually all Americans buy health insurance.
In a 5-4 decision on Thursday, the justices agreed that the penalty someone must pay if one chooses not to buy health insurance is a type of tax. According to the ruling, those who do not comply with the mandate to purchase health insurance by 2014 must make a "shared responsibility payment" to the Internal Revenue Service along with their taxes.
The act states that the IRS is prohibited from using "several of its normal enforcement tools such as criminal prosecutions and levies."
Tom Mullins, president and chief executive officer of the Tyler Economic Development Council and the Tyler Chamber of Commerce, said now, at least, business owners "know which way to jump." Some businesses could decide to expand or add people, he said.
"Many have not added employees because they did not know what the outcome would be," Mullins said. He said he thinks the decision to uphold the law will contribute to the costs of running a business.
Some business owners may not be happy with the decision and may postpone making any decisions about their businesses until after the fall presidential election.
"The economy has been gaining slowly, some small businesses saying they may need more people, and the decision may force them to delay hiring people because of the cost involved," Mullins said.
The issue has been very polarizing, and he thinks the people who don't like the law will find ways to change it. "It will be interesting to see how the stock market reacts," Mullins said. The Dow closed down 24.75 points at the end of business on Thursday.
Bill Hammond, president and chief executive officer of the Texas Association of Business, echoed Mullins' statements about possible job losses as a result of the U.S. Supreme Court's decision. He said in a prepared statement Thursday that he is disappointed that the U.S Supreme Court upheld the law, especially as it maintained the individual mandate.
"The business community has always been very concerned about the cost of the law, the economic effect it will have on the country when fully implemented and the effect on employees trying to navigate a complicated and confusing system," Hammond said.
Hammond added that unless Congress replaces the plan with something more workable, "we will see many jobs lost and many businesses that offer insurance to their employees now will drop that coverage."
There is still time for Congress to change the law before the full implementation in 2014, Hammond said. "We will be working hard to make sure that happens," he said.
Dr. Mike Russell, a partner in the Texas Spine and Joint Hospital, said Thursday that the law will have an effect on the hospital's ability to expand in the future.
The hospital, along with Physician Hospitals of America, a trade organization, filed suit in federal court two years ago, challenging the portion of the law that states that doctor-owned hospitals that accept Medicare payments are barred from expansion.
"We were disappointed (in the ruling) because we felt the law limits competition -- the goal of reform should be increasing access, decreasing cost and improving quality. We believe it takes competition to do that. The law, as it is written, limits competition," Russell said.
The hospital is undergoing a $20 million renovation to some of the outpatient facilities, about half of what was originally planned, Russell said. He said the hospital is still able to care for its patients.
Russell said the ruling does not make the lawsuit moot, because "we are looking at only one specific portion of the law."
Spokeswoman Leslie Fossey said, "Our suit is still with the 5th Circuit Court of Appeals."
It's unclear to some people how the court's decision to uphold the law will play out for the average person.
Jim Hedrick, a business transaction attorney from the Potter-Minton law firm in Tyler, said there is disagreement about whether health insurance premiums will go up or down. But the legal battle is largely decided, he said. The Supreme Court has no control over the setting of health insurance premiums, Hedrick said.
The statute calls the charge to those who do not purchase health insurance a penalty, Hedrick said. "The Supreme Court has upheld it as being a tax. It's a valid exercise of the federal government's taxing power," Hedrick said.
The penalties for not having insurance will be paid to the federal government.
"I don't know if those regulations have been written yet," Hedrick said. He said he thought those who don't pay for health insurance will get a notice that they have a penalty.
Hedrick said if someone's income is low enough, poor people will be covered and won't have to pay.
The Medicaid expansion penalties portion of the law was not upheld because the Supreme Court held that it was unconstitutional, Hedrick said. The federal government reimburses states for a portion of Medicaid. The new law expanded greatly the scope of Medicaid and who was covered and also increased funding to the states, Hedrick said.
The federal law told the states that if they didn't go along with the expansion, they would cut off all of the state's funding, Hedrick said. The law now is that the federal government still can go forward with the expansion plan, but they can't penalize the states if the states don't agree, he said.
"I don't know what other legal challenges there will be," Hedrick said. "Politicians are saying they could revoke it. The legal fight is largely over with, and it puts to rest the constitutional issues."