5 Stocks That Will Benefit if Obamacare Is Overturned

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When the Patient Protection and Affordable Care Act was signed into law by President Obama in March 2010, the winds of change began blowing in the health-care sector. For many lower-income and previously uninsurable persons it was meant to give them access to health-care coverage that simply didn't exist before. For hospitals, it was meant to give individuals accountability for their own coverage.

But the law itself isn't peaches and cream for all those involved. With the Supreme Court just days away from issuing its ruling on whether the Affordable Care Act is constitutional, there are quite a few companies that would love to see the law struck down as unconstitutional. Here are just five of those companies:

Intuitive Surgical (Nasdaq: ISRG  ) and Medtronic (NYSE: MDT  )
Medical device manufacturers would see a big boost across the board with the failure of Obamacare.

One of the many implementations of the Affordable Care Act is that an excise tax of 2.3% be placed on total medical device revenue by 2013 to help pay for the expanded Medicaid coverage that the law would provide. This tax could force many device makers to cut back on their research and development budgets, as well as potentially laying off workers and moving their operations overseas just to curb costs. Medtronic, the largest medical device maker in the world, recently shed 1,100 jobs while announcing plans to hire 1,500 over the coming 11 months. The catch, however, was that these new hires would predominantly be overseas.

If the Supreme Court strikes down Obamacare, health-care innovation would continue to thrive, health-care jobs would probably stay in America, and companies like Intuitive Surgical would continue to command incredible pricing power. Intuitive's da Vinci robotic surgical systems aren't cheap, and Obamacare has made it very difficult for these device makers to pass along higher prices to end users.

WellPoint (NYSE: WLP  )
Whereas Medicaid HMOs like Molina Healthcare and Centene are crossing their fingers for Obamacare to be approved, WellPoint is facing approval with a bag over its head.

WellPoint is a managed-care provider that is heavily focused on small group and individual businesses. It's also an area where WellPoint often rejects people due to pre-existing conditions, where it can readily raise premiums, and where it spends quite a bit on administrative expenses. Obamacare would require WellPoint to accept all patients as well as spend 80% of its collected premiums on patient care. It also would make enacting price increase incredibly difficult.

If the Supreme Court shoots down Obamacare as unconstitutional, WellPoint could be off to the races. The constrictive nature of the bill would basically cap WellPoint's earning potential. Without Obamacare, WellPoint will maintain strong premium pricing power (say that three times fast) and will still have a say over who's in and who's out of its patient network.

AT&T (NYSE: T  ) and 3M (NYSE: MMM  )
Yes, AT&T and 3M. Your eyes are not deceiving you, your computer is not on the fritz, and yes I've had my coffee for the day!

AT&T and 3M are really just the tip of the iceberg of more than a dozen companies that enacted huge one-time health-care reform charge-offs just days after President Obama signed the Affordable Care Act into law in 2010. AT&T took a gigantic $1 billion charge while 3M wrote off $90 million in health-related expensing. The reason these big companies took these non-cash charges was due to the upcoming removal of a key Medicare tax benefit in the ACA. The removal of this benefit could mean the reduction of health-care coverage to retired workers, as well as the potential cutback on coverage to existing employees.

If Obamacare fails to get past the Supreme Court, companies like AT&T and 3M that were forced to take these writedowns are suddenly going to be sitting pretty -- and to boot, they're going to have a happy workforce because health-care benefits would be unlikely to be cut. This isn't an across-the-board trend, but there are enough large-cap companies that are going to be negatively affected by Obamacare that its failure and the continuance of these tax breaks, as well as the happiness of their employees, would be a welcome outcome.

Your move, Supreme Court
Now it's just a matter of waiting to see which way the Supreme Court will side. However, one thing is a near certainty: If Obamacare is struck down, these five names should be heading higher.

Agree? Disagree? Think I'm just a loon? Tell me and your fellow Fools about it in the comments section below.

With the U.S. elections around the corner, our team of analysts at Motley Fool Stock Advisor realizes there's more at stake for stocks than just what we're witnessing in the health-care sector. Find out which stocks could benefit based on which president-elect wins in our latest special report. Get your free copy by clicking here!

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Intuitive Surgical, Medtronic, and WellPoint. Motley Fool newsletter services have recommended buying shares of Intuitive Surgical, WellPoint, and 3M. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that never takes a sick day.

Read/Post Comments (24) | Recommend This Article (37)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 23, 2012, at 12:16 PM, rlippin100 wrote:

    Great argument for single payer.

  • Report this Comment On June 23, 2012, at 12:59 PM, Chontichajim wrote:

    I tend to agree with some of these selections and have two of them on my watchlist just for this reason. Unfortunately the amount we may receive from investing here won't help cover much of the higher prices or cancelled coverage when we go back the 2008 "system".

  • Report this Comment On June 23, 2012, at 1:01 PM, ooldguy wrote:

    Personally, I have a fair amount of AT&T stock. I'd rather it never went up a penny & the universal healthcare remained!

  • Report this Comment On June 23, 2012, at 1:07 PM, rmondave2 wrote:

    You must own just a piddley amount of ATT stock. Move to Greece you will be in the right place.

  • Report this Comment On June 23, 2012, at 1:20 PM, xetn wrote:

    For those of you who think you understand Obamacare and its implications, you should read:

    What nobody speaks about is the unintended consequences as well as what is not seen by the law. For example, for every person that is benefited by the law, how many are not? Since the government has no money of its own, it must take from the productive and pass it on to the nonproductive. For every company that is "just hanging on", how many will fold from the added expense or as in the case of Medtronic, just leave the country?

    In addition, you can bet your bottom dollar (which you are) that the costs will skyrocket while the quality will fall and services will unlikely become rationed.

  • Report this Comment On June 23, 2012, at 3:18 PM, perkb wrote:

    It's official name is not Obamacare.

  • Report this Comment On June 23, 2012, at 4:14 PM, woolibulli wrote:

    xetn, by the nonproductive, do you mean all of those people displaced by companies outsourcing overseas? Or is it the greedy firemen, policemen and teachers who, having been promised good pensions find them being renegged on? Soldiers that went to fight for our country and came back without a job? If we are such a poor place to run business,I invite all to leave and see how they like it living where they outsource.

  • Report this Comment On June 23, 2012, at 4:17 PM, royhobbsxx wrote:

    if not about welfarecare?

  • Report this Comment On June 23, 2012, at 4:38 PM, mrpraxis wrote:

    I work in the healthcare industry and I can tell you that WE know that "xetn" 's comments are spot on. In the end the PPACA ("obamacare") will increase access do little to lower costs. It actually will do great things for my company...but not for me the taxpayer. There's a lot of ignorance out there about this law. Please take it from someone whose has studied and (it least until next week, perhaps) must work with it. This was a bill that was only half-baked. If they had gone after addressing costs and not just improving access..then perhaps the hopes of all Americans for some better system we would be justified. We must accept that we have to start over and try again.

  • Report this Comment On June 23, 2012, at 5:53 PM, xetn wrote:


    Ask youself why all those jobs got outsourced overseas. The reason is the ungodly complicated regulation system and high taxes.

    The US government has devolved to bunch of thieves writ large. They live off of legalized theft (taxes) and corersion with men with badges and guns. You have no rights left as the 4th and 5th amendments have been virtually eliminated by the so-called Patriot Act and the NDAA.

    Also ask yourself why, if Obamacare is such a great benefit to everyone, exactly why are all the members of congress, the administration and the supremes exempt? Why not have the eat their own dog food? But as you may know, the opt out of every thing they do, unless it adds to their power and wealth.

    There is nothing that government does that is necessary or cannot be provided by a free-market better or more cost effective. It is too bad we do not have a free-market. If such a system existed, we would only pay for what we desired on a purely voluntary basis. Just like you do every day when you purchase your food, clothes, etc. Nobody has to force you to do it and nobody forces you to pay for something you don't want or need, nor at a price you believe to be higher than the product is worth TO YOU.

    As for firemen, police and teachers, exactly right.

    They bargained for those benefits from a local government that lives off their citizens just like the federal government does. Why would a local politician care what their benefits cost when they are extracted from the citizens by force? And doing so, might get them reelected.

  • Report this Comment On June 23, 2012, at 5:54 PM, Lindale2 wrote:

    The individual mandate eliminates welfare which is present in the current plan. You can't show up at the ER and get taxpayer provided healthcare!!

  • Report this Comment On June 23, 2012, at 6:54 PM, jvgfool wrote:

    Technically you could call it Romneycare too...even though he's running from it now. How is it working in MA?

  • Report this Comment On June 24, 2012, at 12:16 AM, richie54 wrote:

    How is it working in MA? Not too well. One of the reasons I'll be moving west in the near future.

  • Report this Comment On June 24, 2012, at 9:44 AM, wrenchbender57 wrote:

    Wooli, My take is that unions forcing high wages and benefits are as much to blame for outsourcing (probably more so) than regulations and taxes. Whenever a company can hire someone in another country for a fraction of what it costs to hire someone in this country they will consider outsourcing. Placing the blame on just regulations and taxes and not mentioning this part of the issue is misleading.

  • Report this Comment On June 24, 2012, at 9:50 AM, wrenchbender57 wrote:

    If our current healthcare system is so great, why do we spend so much more than other countries and yet fall so low in the quality of care compared to the rest of the world? Our system is broken and needs to be fixed. Perhaps the alternative of Socialized Medicine needs to be considered again. The law that was passed was a compromise so that SM was not considered and bones were thrown to the Capitalists. But, they are still not happy with that. Many other countries seem to do OK with SM, so why not us? I know it is a hard pill to swallow but so is our current system of rising costs and inefficient care. Something needs to change.

  • Report this Comment On June 24, 2012, at 2:35 PM, vettebuddy wrote:

    Obamacare is referred to in professional circles as PPACA.

    The problem with the act is it does nothing to promote efficent use of health care resources. Concessions were made to big pharma and to hospital groups to gain their support.

    We need to know the true cost of care in advance so we, as consumer,s can shop and make decisions as to where to get quality care.

    This is a bad law since it caps the gross margins of the insurance companies. This sounds good but it will inflate the cost of care!

  • Report this Comment On June 24, 2012, at 5:13 PM, rovobo wrote:

    QUESTION if our health care system is so great why are we behind the rest of industrial world in haelthcare bang for buck. Mortality at earlier age,high infant death rate.Administration costs of private healthcare triple the rate of MEDICARE & still the insurance companies pick & choose who & what they will cover.Why are the insurance co"s spending millions of dollars to stay riding the GRAVY TRAIN that is America,s healhcare farce , SINGLE PAYER is the answer not all these convoluted half baked plans.GOD BLESS AMERICA.

  • Report this Comment On June 24, 2012, at 6:14 PM, vettebuddy wrote:

    Single payer systems have not proved to be the answer in any country or society. I would not look forward to any governement making my health care decisions.

  • Report this Comment On June 24, 2012, at 10:24 PM, Latrobeboy wrote:

    Why are we behind "the rest of the industrial world?"

    Americans are not held accountable for the health and behavior. We drink, smoke and eat like glutinous animals. Compare our obesity rates with other countries, especially the ones with better longevity. We have programs that pay people to be useless. If you smoke and are 50 lbs overweight, what do you expect to happen to you? You're going to get hypertension, your knees will degenerate, you're going to get chronic obstructive pulmonary disease, diabetes, have a heart attack or stroke.

  • Report this Comment On June 25, 2012, at 12:24 PM, polabair wrote:


    Do you have cable tv?

  • Report this Comment On June 25, 2012, at 1:55 PM, jctoucan wrote:

    Actually, "Romneycare" is working well in Massachusetts. The number of uninsured people has gone down and there is now affordable options for people who have lost jobs or don't make a lot. My 22 and 25 year olds are still on my family plan, saving them some money(one a student, one in an entry-level first job). I am very happy to be living here, where people for the most part are practical and progressive thinking. I agree, though, that a single-payer plan would save tons of money( but then the insurance CEO's won't get their multi-million dollar bonuses and stock-options; oh well.)

  • Report this Comment On June 25, 2012, at 2:58 PM, eldetorre wrote:

    "I would not look forward to any government making my health care decisions."

    Unless you are wealthy you only have one choice, whether you care to admit it or not. The government, which is at least in theory accountable to the people having some say about medical payments (not decisions) or insurance companies who are accountable to no one but their largest shareholders having an even larger say.

  • Report this Comment On June 25, 2012, at 3:08 PM, eldetorre wrote:

    "In addition, you can bet your bottom dollar (which you are) that the costs will skyrocket while the quality will fall and services will unlikely become rationed."

    This has already happened before Obama care. Only the insurance companies were doing the rationing.

    The far right are always carping about unintended consequences of government action. What? Are the millions who can't afford healthcare the INTENDED consequences of a free market system?

    Everything has unintended consequences. A free market system only works when there are many competitive providers with many consumers who can afford to pay to support a market. People who can't afford to purchase a product that will be profitable for a provider do not exert a market influence. Thus the market can't meet those needs.

    No profit potential means no marketplace. Was Obamacare the answer? Maybe not, but at least it was addressing a question that pure free market advocates refused to acknowledge was a problem.

  • Report this Comment On June 25, 2012, at 3:19 PM, eldetorre wrote:

    "Whenever a company can hire someone in another country for a fraction of what it costs to hire someone in this country they will consider outsourcing."

    The key word in that sentence is fraction. even at minimum wage many companies think labor in this country is too expensive. This is simply short term profiteering with no thought of the long term sustainability of market. The real problems in this country are not regulation, taxes or highly paid union workers, though they all affect profits. The real problem is that too many people have made too much money in the purely financial sector. Labor and capital intensive industries can't compete for investor dollars against enormous paper profit mills. So they cut costs on the backs of labor and capital investment.

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