Permanent Value

President’s Message

Bruce Doole
July 27th, 2012


Recently, the Supreme Court upheld most of the Affordable Care Act with Chief Justice John Roberts  writing  the 5-4 decision for the majority. This means the Act will go into effect over the next few years. The individual mandate will not be enforced under the Constitution’s Commerce Clause, but will be upheld as a tax, according to the majority opinion. The Supreme Court disagreed with the government’s argument that it has the authority, due to its role in regulating interstate commerce to penalize taxpayers for failing to buy health insurance. However, the Court upheld the individual mandate by reframing it as a tax, rather than a penalty. Those purchasing health insurance under the new law but who choose not to, must begin paying the new tax in 2014. The health care law also required states to expand Medicaid, facing the loss of federal funds for the program as a penalty for declining.  The federal government may still penalize states for failing to expand Medicaid under the Act, but may only withhold new funds, rather than all federal funds for Medicaid. The mandate will impact about 26 million Americans, according to a recent study by the Urban Institute and an independent analysis by MIT economist Jonathan Gruber.


There are numerous reasons why healthcare premiums have been increasing; most are related to the additional costs of medical care.   So why do premiums seem to rise every year? The reason is the hidden costs health plans are required to pay to health care providers. For example, in 2011, hospital expenses were responsible for 48% of America’s medical costs, yet hospitals demand double-digit increases. When insurance companies negotiate with hospitals, they seek to balance making care affordable, yet preserving access to quality hospitals. Pharmaceutical costs comprise 15% of healthcare costs and went up along with hospital costs over 7%.

Healthcare costs can make-up a significant part of your budget which is why we encourage a review your budget on a regular basis. We hope you and your families had a Happy Fourth of July and look forward to seeing and talking to you as we review your 2012 budgets and plans for the year.


Bruce W. Doole, President