Obamacare's Abominable Summer

Summer just arrived a few weeks ago. But it's already been a hot and sticky one for Obamacare.

Source: White House on Flickr. 

The most recent heat comes from the decision by the Obama administration to delay the mandate for employers to provide insurance to employees or pay a steep fine. Last Tuesday, a Treasury Department assistant secretary announced in a blog post that the Obamacare employer mandate was being pushed back until 2015. The reasons given in that blog post for the push-back were "concerns about the complexity of the requirements and the need for more time to implement them effectively." 

While business groups cheered the delay, it could now open a Pandora's box for the administration. The National Retail Federation is pushing for the employer mandate to only apply to companies with 100 full-time employees rather than the 50-employee threshold now in place. Now there is pressure to delay the individual mandate in Obamacare also.

This move by the White House wasn't too surprising considering a recent report from the Government Accountability Office, or GAO, about the state of exchanges that make up a key component of Obamacare. The GAO found that implementation of Small Business Health Options Program, or SHOP, national online health insurance exchanges was behind schedule in 33 states. That shouldn't be too big of an issue now with the employer mandate delay.

However, the GAO also found that implementation of individual insurance exchanges is also behind schedule in 34 states. The Health and Human Services, or HHS, department maintains that the exchanges will be ready on schedule in October. The GAO, though, said that whether a successful launch is possible by then "cannot yet be determined."

Simmering below the headlines
While these two news stories grabbed headlines, a couple of other Obamacare developments didn't receive quite as much publicity. One involved privately held Hobby Lobby. The company sued the federal government over a requirement in Obamacare that insurers cover abortifacients. This requirement applies to Hobby Lobby because it is self-insured. Hobby Lobby requested an exemption on religious grounds, but the Obama administration maintained that secular organizations didn't qualify for an exemption.

An earlier district court decision agreed with the White House. However, the 10th Circuit Court of Appeals ruled on June 27 that the contraception coverage requirement violated the company's religious beliefs. As a result, a temporary restraining order is now in place that protects Hobby Lobby from huge financial penalties. While many expect this case or a similar case to ultimately be decided by the Supreme Court, the recent ruling could make it more likely that other for-profit companies will seek exemptions from part of Obamacare.

Another hidden holiday surprise stemmed from HHS' final rule for some provisions of Obamacare released on July 5. The federal government won't try to verify whether or not a person qualifies for insurance subsidies. Instead, it will rely on self-reporting. Individuals will be able to provide projected annual household income and insurance status without further verification. HHS says that it "conducted an extensive search" but wasn't able to find a comprehensive data source that could be available by Oct. 1, 2013.  

Hot investing angles?
All of this surely provides plenty of fodder for political discussion. The Motley Fool's focus, though, is on what the headlines (and stories that don't quite find their way to the headlines) mean for investors. And there are a few investing implications. 

First, delay of the employer mandate could negatively impact hospital chains that were counting on more individuals gaining insurance. That would especially be true if the mounting pressure to delay the individual mandate also succeeds.

Large hospital operator Health Management Associates (NYSE: HMA  ) dropped 4.4% in the aftermath of the story breaking last week. Tenet Healthcare (NYSE: THC  ) fell 4.3%. Both stocks have more than doubled in the last year as investors eagerly anticipated full implementation of Obamacare. These tremendous run-ups could lose steam with the delay.

Temporary staffing agencies also felt the brunt of the employer mandate push-back. Shares of Robert Half International (NYSE: RHI  ) , for example, slipped 5% on the day after the Obamacare delay was announced. The staffing agency reported earlier this year that it was receiving lots of inquiries from employers with around 50 employees, with the implication being that companies would use temporary workers to avoid meeting the 50-employee threshold for the Obamacare mandate.

For investors hoping that financial penalties would hurt Hobby Lobby sufficiently to make a planned initial public offering by its rival Michael's look attractive, those hopes probably need to be put on hold. Texas-based Michael's, the nation's largest arts and crafts chain, still plans an IPO after a delay last year. 

Look for politicians on both sides of the aisle to push for a better verification system for the Obamacare subsidies. One winner if they succeed could be CGI Group (NYSE: GIB  ) . The Canadian information technology firm is heavily involved with development of the federal exchanges as well as several state-run exchanges. More extensive verification means more work for some company. CGI's expertise with the exchange systems make it a good candidate to land the added business.

Overall, the best play for investors with the Obamacare woes looks to be with staffing agency stocks like Robert Half. I think that the pullback for temporary staffing agencies will be short-lived. There are plenty of other variables that are influencing companies to use temps rather than hire. Obamacare might be having an abominable summer so far, but for Robert Half and its peers the outlook still looks bright and sunny.

Even with the latest delay and other troubles, Obamacare will still affect you in more ways than you might realize. Check out The Motley Fool's new free report, "Everything You Need to Know About Obamacare," to find out how your health insurance, your taxes, and your portfolio could be affected. Click here to read more. 


Read/Post Comments (4) | Recommend This Article (1)

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 July 08, 2013, at 3:39 PM, truzak wrote:

    Oh what tangle webs Obama and the Democrats have woven.

    A new entitlement program sold to the public by outright lies.

    Passed by illegal and unethical behind-the-door midnight deal-making.

    So convoluted and complex it is incomprehensible to understand and impossible to implement.

    And once implemented, it will be so full of unintended consequences that America will never be the same again.

    And all this just to "bend the cost curve down." And all so unnecessary.

    Obamacare is like taking an atomic bomb to swat a fly. In the end, costs will rise, doctors will continue to desert the practice in droves, and accessible health care in America will be a thing of the past.

    Good job, Barack. But no worries for you and the rest of the governing elites who foisted this monstrosity on middle America. You all will continue to receive "Lexus-quality" health care, while the rest of the masses will be stuck with a Yugo.

    At least there is some justice. This disaster will always have Obama's name tied to it. Obama cares my &$#@!

  • Report this Comment On July 08, 2013, at 5:09 PM, airjackie wrote:

    Republicans have said Americans don't want Universal Health Care but would rather just pay in the system and let a chosen few get vouches and allow the Insurance companies to deny service and over charge premiums for profit. Americans have said Women don't need Rights and minorities should be put back in their place. Obama still thinks Americans want Democracy. President Bush is doing very well with the 40 billion dollar aid he gave Africa during his two terms and even set up a free Health Care program that is going really well. Like Mitt Romney said if you want Universal health care move to Mass. as it has been successful for over 8 years.

  • Report this Comment On July 09, 2013, at 12:01 AM, gulfcoastrebel wrote:

    If you've had your head stuck in conservative blogland like writer Speights here, you might be deceived like him, into believing "Obamacare" is falling apart, which is false. The one-year delay only affects a relative few businesses complying with the law. Meanwhile, the exchanges are largely on schedule and for people looking to get affordable insurance, which is what it's really all about; everything is on track, except where Republican state legislatures have messed things up for their states' poor to get on Medicaid, or even a subsidy. Republicans, like those that work for Motley Fool, just keep trying to create their own false reality.

  • Report this Comment On July 20, 2013, at 6:56 PM, guest67890 wrote:

    Obamacare has a lot of good ideas. It's true that those who cannot currently afford healthcare will definitely benefit, and the lower classes will enjoy themselves wholly.

    However, some of the other changes are a little hard to swallow. If this employer mandate goes into effect, millions of jobs will most likely be eliminated, and growing businesses will be more likely to fail. This is going to be a killer to the American economy! Some ill advised things are definitely happening here.

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