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The Effects of ObamaCare on Supply Chain Management

On June 28, 2012, the Supreme Court upheld a mandate for Barack Obamas signature health care law for individual insurance referred to as ObamaCare. Whi...

Freddie Pierce
|Jul 17|magazine7 min read

On June 28, 2012, the Supreme Court upheld a mandate for Barack Obama’s signature health care law for individual insurance referred to as ObamaCare. While U.S. citizens are as divided as the Supreme Court justices (who voted 5-4 in favor of upholding the mandate) in their views of ObamaCare, the fact remains that its validity will greatly affect the economy, including supply chain.

Most directly, healthcare supply chain management will be impacted. Quoted in Forbes, Joe Ruggieri, a trading analyst at International Strategies & Investing, said the law had positive implications for healthcare supply chain. He said that although many are upset with the decision, the clear-cut logistics of the law are predictable and better from a financial standpoint for forecasting revenues brought in by healthcare services.

With more people given the ability to acquire healthcare, the demand for services, supplies and products will increase tremendously. This means an increase in production for those businesses catering to healthcare organizations – from prescription medications to latex gloves. ObamaCare also means cuts in Medicare and Medicaid as well over the next 10 years and a 2.3% excise tax on drugs and medical devices in 2014.

The law will affect many other industries. As reported in The Wall Street journal, UPS has already begun to reap the benefits of citizens with healthcare – they signed a deal with a medical device company to ship up to 4,000 insulin pumps daily to patients. Additionally, FedEx has announced a new temperature-sensitive packaging that will boost its supply chain revenues internationally, in Europe, the Middle East and Africa.

It is of great benefit for supply chain managers to be aware of the implications this law presents to prepare for changes in production levels. That is, at least until Inauguration Day (Mitt Romney has said he will disband the law on his first day in office, if elected), which may bring change to healthcare and supply chain management.

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