Security Watch: Security Industry on ‘Obamacare’ Ruling

In a 5-4 decision, a sharply divided U.S. Supreme Court on June 28, 2012 upheld virtually all of the Patient Protection and Affordable Care Act, the Obama administration’s overhaul of healthcare law in the United States, including the controversial centerpiece of the Act, the so-called individual mandate requiring that most Americans buy health insurance meeting minimum federal standards by 2014, or pay a financial penalty if they refuse. Among other things, the mandate requires employers with 50 or fewer employees (considered to be "small businesses") to provide healthcare insurance as a condition of employment. The overwhelming majority of companies in the security industry fall into the small businesses category.

The decision met with nearly universal disapproval at the Electronic Security Expo ESX 2012, in Nashville, Tenn. "The decision is both extremely disappointing and likely to have a significant impact on small business," said Bob Bonifas, chief executive offices of Alarm Detection Systems (ADS) Security, Aurora, Ill., and an active member of the National Federation of Independent Business (NFIB), a small business trade association that challenged the law. "Small business, which has been waiting to spend and grow again, now may be spooked by the threat of this healthcare mandate and its potential tax consequences. The uncertainty of the impact of today’s ruling likely will further complicate the country’s economic recovery."

Opponents of the law, including 26 states and the NFIB argued that the individual mandate was an unconstitutional attempt by Congress to compel citizens to purchase insurance. By slim majority, the court agreed that the individual mandate was, in fact, unconstitutional under the Constitution’s Commerce Clause, but that the penalty assessed against those who failed to secure the required insurance "may reasonably be characterized as a tax," the levying of which does fall within Congress’ constitutional taxing powers. "In this case, however, it is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance," Chief Justice John Roberts wrote for the majority. "Such legislation is within congress’s power to tax."

"The federal government does not have the power to order people to buy health insurance.…The federal government does have the power to impose a tax on those without health insurance," he later explained.

Absent a change in the political landscape after this year’s election resulting in a legislative repeal of the law, the contested provisions of the Act become effective in 2014. Employers in the electronic security industry, which is overwhelmingly made up of small businesses, will now have to wait to see whether the potentially significant increases in health care premiums forecasted by some economists will actually occur, as well as whether and to what extent options exist for employees to share some of the burden of the potential increase, through employee contributions and co-pays, for example.

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