The ruling by the Supreme Court to uphold the Affordable Care Act means the country will be going through a number of changes over the next few years that will not only affect the health of Americans, but also their money.
Now that more of the law will start to be implemented, advisors should be taking the time to go over what it will mean for clients. According to UBS, not too many controversial parts of the law have set in yet that individual have felt, but they may feel different in 2014 when the majority of them have been implemented.
The tax from the individual mandate is one that most Americans already know about, but there are other provisions in the law that will begin to take effect as early as Jan. 1, 2013. For instance, a new 3.8% tax on income will apply to investors with adjusted gross income of more than $200,000 for single filers or $250,000 for joint filers.
Plus, there will be limits beginning next year on the amount that can be contributed to health savings accounts, which many high-wage earners have, according to UBS.
Of course, there is also the individual mandate tax on those who choose not to buy health insurance. This tax, or penalty, will kick in during 2014. At that point, when most of the law has been implemented, we’ll have a better idea of how Americans feel about reform, according to UBS.
Instead of benefitting from the Supreme Court ruling, commercial insurers got a nasty shock when the Affordable Care Act and the individual mandate were upheld by the Court. Now, these insurers will have to cover all comers and the first to line up will be those who are the sickest, and therefore the most expensive to cover. As a result, there’s a lot of uncertainty in the future for insurers.
However, insurance companies, according to a UBS health care equity analyst, do not have to participate in the state-run insurance exchanges. And these companies may choose not to if they can’t get the pricing they want. Since there will be a lot of transparency in the exchanges — as consumers can compare insurance packaging prices side-by-side — insurers won’t get much demand if they can’t or won’t price competitively.
Overall, though, the implementation of the health care reform law will bring about modest gains for the health care sector, and large gains for companies in areas like hospitals or Medicaid, UBS forecasted.
According to UBS, the increase of consumers in the U.S. market will, in general, help out pharmaceutical, medical device and biotechnology companies, among others. However, they won’t see a dramatic increase because reform means more fees, taxes and restrictions on profitability.