At this very moment, the economic basis of the entire health-care system is up in the air, as a result of the imminent U.S. Supreme Court opinion in the health care reform law cases. Court observers expect the decision any day now, and most likely before the end of June.
"This is going to be one of the biggest decisions to come down in our lifetime," said Robert Litan, vice president for research and policy at the Kauffman Foundation. "The economic impact could be tremendous."
For American entrepreneurs and employees so far, the waiting has been the hardest part. That's because the decision is likely to have so many ramifications and third-order effects that it's nearly impossible for business owners to forecast all the possible outcomes.
"As the person responsible for setting up health care for our 70-employee company, what I want most is some certainty," said Josh King, vice president of business development and general counsel at Avvo.com, a company for which health care is the second-largest expense after salaries.
"While the [law] has its issues, at least it's a step toward more predictability in health care," King said. "If the court starts tearing it apart, I fear we'll have to spend more time thinking about health care and less trying to run and grow our business."
Here's how most observers expect the decision to play out — and what that means for this country's small and fast-growing companies.
Businesses With Fewer Than 50 Employees
First, an important caveat: Most of the employer provisions of the health care reform law apply only to businesses with 50 or more employees. So, if your business is smaller than that, you're mostly off the hook — and you won't be required to provide health insurance to your employees regardless of what the court decides.
But if your company is larger — or if you're already growing and expect to someday employ more than 50 people — there's a lot of unsettled business. Bigger firms that fail to offer their employees insurance could wind up paying government fees, which would kick in when employees obtain insurance independently. At the same time, the law would create exchanges and subsidies for individuals who buy insurance on the open market, and would also expand the Medicaid program.
Of course, there are many other provisions and exceptions. For example, even though companies with more than 50 employees would be required to provide insurance, they would also be allowed to skip paying the $2,000-per-employee government fee for the first 30 employees who didn't have health insurance. (If you're having trouble with that exception, rest assured that we had to think it through a dozen times before it made sense, too.) The truth is that once you get deep in the regulations —many of which haven't even been written yet —nobody really knows how things will settle out.
The Individual Mandate
Most of the legal attention has been focused on the so-called "individual mandate," which requires people to purchase health insurance, either through their employers or on the market. It was this provision that garnered the most pointed questions from the justices at oral argument in March.
"Can you create commerce in order to regulate it?" Associate Justice Anthony Kennedy asked at the time, apparently trying to figure out how the United States could justify requiring people to buy health insurance under the Commerce Clause of the U.S. Constitution. He later added that he believed the government faced "a heavy burden of justification," and was "changing the relationship of the individual to the government."
Under the mandate, individuals who fail to acquire insurance would be subject to government fees — although the exact nature of those fees, and whether they would amount to taxes, penalties or something else — is one of the more esoteric but important issues in the case before the court.
Despite the 2,400-page law's complexity, the possible outcomes really fall into three categories. The court could strike down the law, uphold the law, or strike down some provisions. If that happens, it's most likely that the court would get rid of the individual mandate will while upholding the rest of the law.
What Happens if the Court Kills Obamacare?
Most experts don't seem to think the court will strike down the health-care law in its entirety. But it could happen.
And if it does, that outcome would amount to, "the greatest change for employers," according to Maureen M. Maly, a partner in the benefits and executive compensation practice at the law firm Faegre Baker Daniels in Minneapolis.
"Under this outcome, employers would need to undo, or at least reconsider, all of the changes that they have made since 2010," Maly said.
Having to turn back the clock to the day before the health-care reform law was enacted is the option most feared by entrepreneurs, according to the Small Business Majority, a lobbying group, which released a poll this month showing 56 percent of business owners surveyed wanted the act upheld.
However, a competing small business lobbying group, the National Federation of Independent Businesses, is one of the plaintiffs in the cases trying to overturn the law.
If the Supreme Court Upholds the Whole Thing
Let's also consider the possibility that the court could uphold Obamacare in its entirety —although most observers don't seem to think that's any more likely than the idea that it would strike the whole thing down.
"Even if they they uphold the whole thing, there's still some uncertainty," Litan said.
That's because while most of the law is supposed to go into effect in January 2014, and 18 months ahead of that deadline, the government has not yet developed most of the regulations that would implement the act.
For example, the law itself doesn't define how extensive a health care plan employers would have to offer; those details are supposed to be filled in by the U.S. Department of Health and Human Services.
Also, the law would require states to set up insurance exchanges so that individuals would have more bargaining power in dealing with insurance companies. But as Litan pointed out, many states have not done any of the groundzwork to set up the exchanges — especially those states with Republican majorities.
"What happens in all those states without exchanges?" Litan asked. The short answer is that the federal government is supposed to step in, but he added, "my understanding is that HHS is way behind the eight-ball. Each state is a different market, so there will be enormous burden on HHS to get these health exchanges in place."
All of that would almost would be impacted by the next milestone on the horizon--the November election — which could quickly turn into a referendum on the law itself.
Perhaps Most Likely: A Split Result
Perhaps the most likely scenario is that the Court might strike down the individual mandate, or the expansion of Medicaid included in it, or both — but that it would uphold the rest of the law.
And that would bring with it still more uncertainty.
"From the insurance companies' standpoint, [it would be] the worst outcome by far," Litan said, because insurance companies would still be required to provide coverage to high-risk applicants who ask for it, "but they would lose the risk-pooling aspects of Obamacare."
It might even mean fewer opportunities for individuals to purchase insurance on the independent market — ironically, the exact opposite of what the law originally intended.
Insurers have already begun lobbying Congress to fix that potential imbalance. But the current political environment in Washington makes it less than likely that Democrats and Republicans will work together. That could lead to still more uncertainty.
"If only the mandate is thrown out, look for insurance availability to dry up," said Bill Maruca, co-chair of the health law practice group at law firm, Fox Rothschild. "Insurers might not be willing to wait for political fixes...and simply drop out of the market."