Supreme Court Upholds Health Care Reform Law

In a narrow 5–4 decision, with Chief Justice John Roberts writing for the majority, the U.S. Supreme Court has upheld the constitutionality of the Patient Protection and Affordable Care Act. Opponents had argued that the “individual mandate,” which requires almost all U.S. citizens to buy health insurance, was an unlawful exercise of the Congress’s authority under the Commerce Clause. Although a 5–4 majority of the court agreed that the mandate was not supported by the Commerce Clause, by the same margin it ruled that the mandate can be supported as a valid exercise of Congress’s taxing authority. In a surprising twist, it was Justice Roberts, not perennial swing vote Justice Anthony Kennedy, who provided the decisive vote to uphold the mandate.

The other major issue in the case was whether Congress could expand the Medicaid program, effectively requiring states to spend more money on the program. A majority of the court held that the federal government can offer funds to expand the availability of health care and can require states that accept such funds to comply with conditions on their use, but states cannot be penalized if they choose not to participate in the new program by taking away their existing Medicaid funding.

The court decision effectively upholds all of the major provisions of the PPACA, including the employer provisions. ASA will present a Webinar for ASA members, July 12 at 2 p.m. Eastern time, to update staffing firms on efforts by the association to mitigate the effects of the employer provisions on the staffing industry and to discuss the political implications of the Supreme Court’s ruling on the fall elections.

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Headline News

Jobless Claims Fell Last Week, but Still High
Reuters (06/28/12) Lucia Mutikani

First-time filings for jobless benefits last week fell slightly but remained near the highest level of the year, the U.S. Department of Labor reported today. Initial claims declined by 6,000 to a seasonally adjusted 386,000 in the week ended June 23. The prior week’s figure was revised up to 392,000 from the previously reported 387,000. Economists polled by Reuters had forecast claims easing to 385,000 last week. The four-week moving average for new claims, considered a better measure of labor market trends, slipped 750 to 386,750. First-time claims have totaled 380,000 or higher over the past five weeks, a level usually associated with mediocre hiring trends.

U.S. First-Quarter GDP Growth Stays at 1.9%
MarketWatch (06/28/12) Jeffrey Bartash

The U.S. economy’s growth rate in the first quarter was unchanged from earlier estimates at 1.9%, but corporate profits fell for the first time in four years while expansion in exports was much smaller than originally estimated, the U.S. Department of Commerce reported today. Economists surveyed by MarketWatch had been expecting GDP to be 1.9%.

Profits of U.S. companies, originally estimated to have risen $11.4 billion, actually fell $6.4 billion, based on more complete data drawn from private-sector and government sources. It was the biggest decline since the third quarter of 2008. The drop in corporate profits largely stemmed from the expiration in 2011 of an investment tax credit. As a result, companies paid sharply higher taxes in the first quarter compared with the fourth quarter.

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