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No Economic Miracle if Obamacare’s Overturned

Wednesday, 27 Jun 2012 | 4:08 PM ET

It may well be that the complex tax-and-regulatory mandates embodied in Obamacare have proven to be a deterrent for business job creation. You hear it all the time from men and women in business — especially smaller businesses, but large companies too.

Stethescope and money
Stethescope and money

However, color me skeptical that business will embark on a hiring binge if the Supremes overturn the Obamacaremandate Thursday. Why? Because the uncertainty premium about future health-care policy is still going to be high, and it won’t be resolved until well after the election. Businesses will have almost no idea what Congress will propose if the Supremes strike down Obamacare.

For example, it’s going to take money and high insurance premiums to cover pre-existing conditions. There also are the stay-at-home 26 year olds and the so-called health-care market exchanges among the states. There are many other issues to be resolved, but the big question is: How will they be financed?

Will there be a tax? Will there be regulations?

Presidential Race Heats Up Over Health Care
Some 54 percent of Americans still favor a repeal of so-called "Obamacare," says Scott Rasmussen, Rasmussen Reports.

One thing’s for sure. A pure free-market health-care system is not going to happen. Many Republicans talk about a patient-centered consumer-choice system, which would be great. Give consumers tax credits for the same deductions that businesses now have. That also would be great. Include interstate insurance competition. Another winner. Tort reform. Another plus.

But the fiscal reality for health-care insurance and payouts to doctors in hospitals is going to be up in the air for quite some time. It’s a known unknown. And because of that, I think businesses are still going to sit on their hands until they know with greater certainty what the costs of hiring the extra worker is really going to be.

For the foreseeable future, there’s no economic miracle if the Supremes strike down Obamacare (as I believe they will).

Questions? Comments, send your emails to: lkudlow@kudlow.com

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  • Lawrence Kudlow is a CNBC senior contributor. Previously, Kudlow was anchor of CNBC's prime-time program "The Kudlow Report"