MEDIA ALERT - June 29, 2012

Smith Experts React to Supreme Court Upholding Health Care Reform

Robert H. Smith School of Business faculty have weighed in on the Supreme Court’s 5 to 4 ruling to largely uphold the 2010 Affordable Care Act and its broad health care system overhaul to reduce the total of Americans without insurance coverage.

Ritu Agarwal: Maryland Poised to Lead
The Supreme Court's decision has vindicated the belief that many of us share: our health care system is in need of transformations that will improve access, reduce costs and enhance health care quality. Now the nation can move on to the important business of implementing all the envisioned changes. The State of Maryland is in a strong position: we have already made significant strides in quality measurement and health information and insurance exchanges. We want to become a model for the rest of the country to emulate. Agarwal is the Robert H. Smith Dean's Chair of Information Systems, Director of the Center for Health Information and Decision Systems and advises Smith's Health Insurance Exchange Leadership Program.

David Kass: The Decision by the Numbers
As a result of the Supreme Court decision, up to 30 million Americans are expected to gain health insurance coverage under the Affordable Care Act. Most of the mandates will not start until 2014, when most Americans will be required to purchase health insurance or pay a penalty. The penalty will start at $95 a year, or up to one percent of a person’s income, whichever is greater. In 2014, businesses with 50 or more employees will pay a penalty of $2,000 per full-time employee if they do not provide insurance or their plan does not meet a standard. Workers will be able to buy health insurance in new exchanges set to open in 2014, with many lower earners being able to claim insurance tax credits. States will have the option of expanding Medicaid, with the Federal Government covering 100 percent of the additional cost over the first three years, and at least 90 percent thereafter. Kass is a Tyser Teaching Fellow in finance.

Bill Longbrake: Interstate Commerce Clause Potentially Significant
The Supreme Court’s decision to uphold the Affordable Care Act almost in its entirety was a big surprise, particularly since Chief Justice Roberts provided the pivotal fifth vote and wrote the majority opinion. The majority opinion also was a surprise because it stated that the Act is constitutional on the basis of taxing authority and not on the interstate commerce clause as the Obama administration had argued. In fact, Chief Justice Roberts joined with four conservative justices in rejecting the interstate commerce clause argument. While Democrats are joyful at the outcome, the rejection of the interstate commerce clause argument may prove to be very significant in future legislative matters. Longbrake is an executive-in-residence and senior advisor to Smith’s Center for Financial Policy.

Prior to the ruling, Kislaya Prasad, research professor and Center for International Business Education and Research director, said “exploding health care costs” will “require resolute action by our government to ensure that the cost-saving potential of the law is realized.”

Joseph Bailey, research associate professor in Smith’s Decision, Operations and Information Technologies Department, said prior to the announcement that U.S. global leadership in health care IT would be jeopardized by a negative ruling. “Just as this country has become global leader in developing digital platforms from Facebook and Pinterest to iTunes, a similar opportunity with health care IT lies in the balance.”

Peter Morici, professor of international business, wrote in an op-ed the Supreme Court decision could lead to a single payer system: http://www.baltimoresun.com/news/opinion/oped/bs-ed-health-care-morici-20120628,0,49509.story

Read more faculty commentary from prior to the court’s ruling: http://www.rhsmith.umd.edu/news/hottopics/2012/062012.aspx

About the Robert H. Smith School of Business
The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, MS in business, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.