Advisors’ Work Begins With Supreme Court’s Ruling on Health Law

Now that the Supreme Court has handed down its 5-4 ruling in favor of President Obama’s health-care overhaul, markets and businesses are dealing with whatever consequences may follow now that the individual insurance mandate is the law of the land.

For registered investment advisors (RIAs), many of whom own small businesses, the challenge now lies in incorporating the Patient Protection and Affordable Care Act’s realities into their business operations. The Supreme Court said the landmark health-care law’s mandate to buy coverage is permissible under Congress’ taxing authority. However, the court did significantly restrict the expansion of Medicaid by preventing the federal government from terminating a state’s Medicaid funds if a state declines to comply with the PPACA’s expansion of Medicaid rules.

“I think the court hit on all the major things that Obama wanted, so it’s a pretty big victory for him,” said Frank Fantozzi, CEO of Cleveland-based Planned Financial Services, a wealth management firm that has $250 million in assets under management and offers securities through LPL Financial. “The market usually starts feeling like it knows what’s going to happen, but I think everyone is surprised that it passed because they were feeling that it wasn’t going to pass. Setting politics aside, the market’s going to have to digest this, but long term, this all gets baked into the economy just as past legislations have come to fruition.”

Fantozzi added that his own eight-employee firm already pays for health insurance coverage, but if the act works the way it’s supposed to, he should see a reduction in his premiums.

“The question is, with all these providers, will the savings be passed on, or will there be leakage in regards to administration and everything else?” he said. “I don’t know that, and it’s the question everybody is asking.”

Gallup Poll Shows Growing Confidence in U.S. Health-Care System

Signed into law on March 23, 2010, the law led to a sense of national malaise as Democrats and Republicans argued over whether the mandate was constitutional. According to a Gallup poll on health care released Thursday, confidence in the U.S. medical system has risen since passage of the PPACA, with 41 percent of Americans now feeling confident versus 36 percent in 2009.

“Confidence in the U.S. medical system hit a low of 31 percent in 2007, a year in which confidence in most U.S. institutions dropped,” Gallup reported. “In 2010, after President Obama signed comprehensive U.S. health-care reform legislation, confidence improved a bit more to 40 percent, and has stayed at about that level—essentially the historical average—since then.”

Democrats showed the largest increase in confidence, but Republicans have typically shown greater confidence in the medical system than independents or Democrats, and that is now the case, Gallup said. Currently, 49 percent of Republicans have “a great deal or quite a lot of confidence in the medical system,” compared with 44 percent of Democrats and 34 percent of independents.

The U.S. stock market’s response immediately after the complicated ruling was handed down was one of near inactivity as participants digested the news. By noon, the Dow Jones industrial average was down 132 points, or 1.05 percent, at 12,494. The S&P 500 was down 13 points, or 1 percent, at 1,319. The Nasdaq index was down 40 points, or 1.41 percent, at 2835.

Earlier in the week, the markets had anticipated that the Supreme Court would put an end to “Obamacare.” On Monday, quoting a Goldman Sachs Q&A on possible outcomes of the Supreme Court ruling, the Zero Hedge blog highlighted the online prediction market intrade.com’s implication for roughly a 75 percent probability that the individual mandate would be struck down, up from about 35 percent prior to the oral arguments and 55 percent a month ago.

Most Small-Business Owners Favor Obama’s Health-Care Overhaul

As for small-business owners, the advocacy group Small Business Majority found in a January survey that just one-third of owners wanted the Supreme Court to overturn PPACA. Half wanted to see it upheld with few or no changes.

Small Business Majority’s national survey of 619 small business owners with fewer than 50 employees also showed how they view small business tax credits and insurance exchanges. It found that 33 percent of employers who don’t offer insurance now said they’d be more likely to do so because of the tax credits. Another 33 percent not offering insurance said they’d be more likely to because of insurance exchanges. Results for employers already providing benefits were almost identical.