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Obama’s healthcare reforms upheld by US Supreme Court

Rules law is constitutional following Republican criticisms

The US Supreme Court voted by 5 votes to 4 in favour of upholding President Barack Obama's controversial healthcare law, which will extend medical insurance coverage to around 32m currently uninsured Americans.

At the heart of the Affordable Care Act of 2010 (ACA) is the introduction of an 'individual mandate', requiring all Americans to buy a minimum level of health insurance from 2014 or be subject to a fine, along with a major expansion of the Medicaid programme.

"We will continue to implement this law and we'll work together to improve on it where we can," said Obama after the Supreme Court decision, which ruled that the law was constitutional because it was effectively a tax, and that is permissible under the US Constitution.

The justices also considered the planned expansion of Medicaid, and concluded that this would stand, albeit in a modified format with the introduction of a get-out clause for individual states that choose not to participate in the programme.

The decision has been attacked by Republicans, who have long argued that the legislation will lead to sweeping job losses in the pharmaceutical sector.

Presidential hopeful Mitt Romney - who is credited with coming up with the concept of the individual mandate whilst serving as governor of Massachusetts - has already promised to repeal the law if he wins the election campaign.

"What the court did not do on its last day in session, I will do on my first day if elected president of the US, and that is I will act to repeal Obamacare," said Romney yesterday.

Republicans will seek to scrap the law via a vote on July 11 in the House of Representatives, where they currently hold sway. Even if this effort succeeds, the Democrat-dominated US Senate would have to agree to allow the Act to be repealed.

The ACA has split opinion up and down the US, with the overall law attracting widespread criticism while some measures enjoy public support.

Preventing insurers from refusing to cover people with pre-existing medical conditions, a removal of lifetime caps on coverage, allowing children to stay on their parents' policies until they are 26 years old, and closing the 'doughnut hole' in Medicare Part D prescription drug coverage are all elements which have gone down well with voters.

Pharma industry groups issued guarded statements in the wake of the Supreme Court verdict having already committed to absorbing tens of billions of dollars in federal cost reductions over the next 10 years in return for concessions on issues such as parallel imports of medicines from Canada and government controls on Medicare drug pricing.

Biotechnology Industry Organisation (BIO) president and chief executive Jim Greenwood said  the group "will continue to work with relevant federal and state agencies to ensure implementation of the law in a manner that helps enable the US biotech community's continued development of lifesaving cures and other medical breakthroughs while expanding patient access to these critical cures, medicines and innovations".

John Castellani of the Pharmaceutical Research and Manufacturers of America (PhRMA) was equally non-committal, saying: "[W]e respect the Court's decision and recognise that there will be ongoing policy discussions about the future of health care in America, and about the impact of today's decision on the healthcare law."

Medical device manufacturers were unable to agree concessions with the White House, however, and are now facing a hike in excise taxes equivalent to more than 2 per cent of revenues.  Stryker Corp has blamed its decision to shut two US plants and cut 5 per cent of its workforce on the ACA.

29th June 2012

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