According to people in-the-know, the prognosis for the Patient Protection and Affordable Care Act, or colloquially nicknamed "Obamacare," isn't very good. At one point in the proceedings, Justice Scalia wondered if eating broccoli should be mandated along with health insurance coverage. "Everybody has to buy food sooner or later, so you define the market as food, therefore, everybody is in the market; therefore, you can make people buy broccoli," he said.
Intrade, a non-standard futures market used to predict future events, shows that 64.4% of its investors believe that the Supreme Court will rule the individual mandate unconstitutional and if that isn't enough, part of the arguments before the Supreme Court were whether or not the whole law had to be repealed, if one portion is found unconstitutional. It's clear that many, even some of the Supreme Court Justices, believe that the law will be repealed.
But what if Obamacare is repealed? As with just about everything in our lives, there are winners and losers and in this case, the biggest loser may be the Obama Administration and the many people who would have received healthcare, but how about the winners? Who will rent out a large banquet room and have a party if the Supreme Court decides that the government can't require Americans to purchase healthcare… or eat broccoli? Here are a few vocal activists who feel the end of the Act will be a great boon to their cause.
When you look at the front lines of this battle, special interests representing the small business community are making their presence known. The National Federation of Independent Business (NFIB) believes that Obamacare will be detrimental to the growth of small businesses. Representatives from the lobby group report healthcare costs skyrocketing between 20% and 40% since the passage of the law and many worry that the premiums will continue to rise.
If this bill is repealed, small business owners hope to see decreases in premiums, but just as important is the removal of the uncertainty that has kept their growth plans shelved.
If you still believe the old model where doctors are among the richest people in America, some doctors want you to rethink that idea. There are still some physicians with lucrative positions who live the a lavish life, but most are finding their practices struggling to survive, with health insurance companies only paying a fraction of what they once did. Because of this environment, America is facing a critical shortage of doctors by 2020.
A recent study conducted by The Doctor's Company in February, found that 60% of doctors believe that Obamacare will hurt patient care and further put their practice under financial pressure. Moreover, if Obamacare is repealed, some believe that doctors will stop leaving the profession, and more will believe that the large debt load they take on to become a doctor will result in a lucrative career allowing them to pay off the debt in a timely way.
Those making more than $250,000 per year will pay a 3.8% surtax on their investment income to help pay for Obamacare. That, along with other tax hikes, would bring capital gains taxes up to 23.8% and dividend taxes could rise from the current rate of 15% to as high as 43.4%. If Obamacare is repealed, that wouldn't bring tax rates down to Bush-era tax cut levels, but it would remove the 3.8% surtax.
When the healthcare bill was passed, companies immediately took charge-offs and raised concerns that this legislation could drastically cut employees' healthcare benefits or even cause layoffs. AT&T took a $1 billion charge-off to account for a rise in healthcare costs, while Caterpillar, John Deere and many others took smaller, yet substantial charge-offs, soon after passage.
If the bill is ruled unconstitutional and later repealed, companies who took this charge-off could see a bounce in their stock price and the same thing could happen in the broader market. Markets hate uncertainty and since nobody knows the true effect of the bill until it takes effect, many investors would much rather see it repealed.
The Bottom Line
The Supreme Court isn't expected to rule on the constitutionality of Obamacare until sometime in June, but many are hoping to see the law repealed. While it may bring health coverage to a large portion of the uninsured American population, many believe there is a better way.
Originally posted on Investopedia.com