This week will see the Supreme Court ruling on ‘Obamacare’, the President’s health care law which seeks to impose minimum health insurance coverage or the punishment of a penalty on individuals not covered. This law has created a serious debate between many at the top, with hopes that the court will declare the law unconstitutional, a move cited as positive for job creation and economic growth.
The court could this week uphold the ‘Affordable Care Act’ (ACA), which was passed in Congress back in 2010 however current expectations are that the court will find the mandate unconstitutional. Other options open to the court include declaring the mandate part unconstitutional which would mean further moves and debates on whether the program can function without the mandate. And finally the court may strike the entire law although this looks to be the least likely of the options available. Whatever the outcome, many could see the decision by the court as politically motivated, especially as we head into the November election. It looks likely that the House of Representatives will call for a total repeal if any part of the ‘Obamacare’ law remains in tact.
As Goldman Sachs note - If the court strikes the key components of the law that are under review, it is unlikely that Congress will act quickly to "repair" the court's action. Such a ruling would reduce net federal spending by more than USD 300bln over the next ten years, and in the current fiscal environment lawmakers are less likely to want to allocate those funds to coverage expansion than they were when the law was originally enacted.
The Supreme Court is likely to conclude its term and issue all remaining decisions by Saturday June 30th.
Print 14:20, 25 Jun 2012 - Economic commentary - Source: RANsquawk
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