The Biggest Obamacare News Getting Little Attention

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What is perhaps the biggest Obamacare news story of all from the past couple of weeks isn't getting much attention. You have probably heard and read plenty about delays of some parts of the Affordable Care Act, or ACA, special financial assistance for Congress and its staff beyond what ordinary Americans will receive, and what will happen with the health insurance exchanges scheduled to start up on Oct. 1. But relatively little publicity has been given to a recent federal court decision on a lawsuit that could be huge if ultimately successful.

Letter of the law
The State of Oklahoma filed a lawsuit in 2011 that challenges an IRS ruling concerning Obamacare. The federal government asked the U.S. District Court in Oklahoma to completely dismiss the suit. Last week, U.S. District Judge Ronald A. White refused to do so.

Judge White did throw out two parts of the Oklahoma lawsuit, but he ruled that three others can proceed. The U.S. government will now be required to defend the legality of an IRS ruling that authorizes tax credits to be paid for individuals in states that opted out of creating the health insurance exchanges established by Obamacare.

At the heart of Oklahoma's case is the letter of the law -- what is literally stated in the Patient Protection and Affordable Care Act. Section 1401 of the legislation authorizes federal tax subsidies to help individuals purchase insurance. To qualify for the subsidies, these individuals must be enrolled "through an Exchange established by the State under [section] 1311" of the bill. Section 1311 defines how states must set up health insurance exchanges but makes no mention of federally operated exchanges. That provision isn't addressed until section 1321.

After Obamacare was passed, the IRS ruled that subsidies can be given to individuals in states that use federally operated exchanges. The question that federal courts must decide in the days ahead is whether the IRS can make tax regulations based on what Congress intended to say in the law or if it must be limited to what lawmakers actually said.

What's the big deal about the subsidies? Individuals who don't receive subsidies and can't find coverage that costs less than 8% of their income won't be assessed any financial penalties if they don't buy health insurance. Organizations that employ these individuals won't have to pay a penalty, either.

If the Oklahoma prevails in its lawsuit, the effects will be enormous. As Washington and Lee University law professor Timothy Jost wrote in a Health Affairs blog post, "If the ACA opponents are correct in their interpretation of the law, some of the most important ACA reforms are essentially a dead letter in states that choose not to establish a state exchange."

Binary bets
How this lawsuit ultimately plays out presents what investors call a binary outcome. There are two possible results -- each with big implications. We see binary outcomes frequently in the world of biotech, where a decision by the Food and Drug Administration can make or break a stock. 

If the federal government wins the case, the current investing outlook remains unchanged. But if Oklahoma emerges victorious, things turn topsy-turvy.

Hospital stocks would likely plunge, especially those that operate in states that aren't operating health insurance exchanges. Tenet Healthcare (NYSE: THC  ) , for example, has hospitals in 10 states. Nine of those states opted against setting up their own exchange.

eHealth (NASDAQ: EHTH  ) would be another big loser should Oklahoma win the lawsuit. The company recently gained a big contract with the Centers for Medicare and Medicaid Services, or CMS, to support enrollment in health insurance plans through its website. Shares are up around 20% since the contract was announced. It's likely that those gains and perhaps more would be given up with an adverse court decision.

Which stocks win from an Oklahoma legal victory? The large health insurers could benefit to some extent, particularly those that have bowed out of some of the state exchanges.

UnitedHealth Group (NYSE: UNH  ) , the nation's largest insurer, has taken a wait-and-see attitude toward the exchanges. CEO Stephen Hemsley  said his company was cautious because of concerns that initial enrollees could run up high medical expenses. UnitedHealth is only participating in 12 exchanges at this point. Should the individual mandate and employer mandate unravel in the 27 states not operating exchanges, shares in this big insurer could go up.

No one knows what the outcome will be at this point. The federal courts could give the IRS latitude in interpreting the intent of Congress. If the court decides in favor of Oklahoma, though, you can count on one thing: It will be big news that will definitely get major attention.

What if the federal government wins this lawsuit and Obamacare moves ahead as scheduled? There are several opportunities for investors to profit tremendously. How? By investing in a handful of specific health care stocks. In this free report, our analysts walk you through these opportunities and the companies that are positioned to exploit them. The informational edge contained in it is invaluable, but can only be exploited profitably while the rest of the market remains in the dark. To access this free report instantly, simply click here now.

Read/Post Comments (27) | Recommend This Article (19)

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  • Report this Comment On August 21, 2013, at 7:28 PM, Orlandca wrote:

    Read the 6th amendment of the Constitution and read the R.I.C.O. Act

    This is a fraud !

  • Report this Comment On August 21, 2013, at 7:49 PM, doco177 wrote:

    Google.... "Obamacare Flowchart" at Intellectual Takeout .... to see a visual representation of the corrupt mess this really is

    1. Millions are losing the insurance Obama promised they could keep. Because ObamaCare forces employers to offer expensive Cadillac plans but also offers the option of paying a fine for not providing health insurance that can be cheaper than providing it, between seven and twenty million Americans are likely to lose their health insurance coverage according to the Congressional Budget Office. The original estimate was closer to four million.

    2. The cost of healthcare premiums is about to further skyrocket. Premium costs have already exploded, but that is a slow-motion explosion. In the near future, we could see costs double or worse. Naturally, these costs will hit an already burdened middle class hardest.

    3. Lost jobs. Lost jobs.

    The Federal Reserve's March beige book on economic activity noted that businesses "cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff."

    Consulting firm Adecco found that half of the small businesses it surveyed in January either plan to cut their workforce, not hire new workers, or shift to part-time or temporary help because of ObamaCare.

    4. Doctor shortages that will mean rationing: The healthcare industry is already a bureaucratic quagmire. ObamaCare is about to add steroids. As the profession becomes tyrannized by government, the talented people currently practicing medicine plan to get out sooner than expected. Who knows how many will choose not to get in. Doctor shortages are what lead to the nightmare known as rationed care.

    5. Somewhere around $800 billion in tax increases will hit America's middle class. This added burden will not only further oppress a middle class already reeling from a drop in wages over the last few years, but could damage the overall economy.

    6. Inflation, the cruelest tax on the poor. When businesses get socked with added costs brought about by higher taxes and burdensome government mandates, they pass those cost along to the consumer in the form of higher prices.

    7. Added bureaucracy. Even those Obama lapdogs over at the Washington Post's Wonk Blog are admitting that applying for health care is about to get more burdensome than the byzantine paperwork involved in buying a home.

    8. To cut costs or to avoid having to provide insurance, workers on the economic margins are already losing hours, which means a lower paycheck. There are a million sad stories in ObamaVille; here are just a few of them.

    9. ObamaCare is projected to add $6.2 TRILLION to a deficit the GAO has already declared "unsustainable." That's "trillion" with a "t".

    10. More taxes than currently estimated are likely to hit because of situations like this one.

    11.Muslims, Amish, Native Americans, Congress are exempt from mandate and penalties under Obamacare that the rest of us have to pay.

    Three years ago, Obama, Democrats, and his media lied to us about cutting the cost of health care, being able to keep our insurance, and not taxing the middle class. Today, those lies and what ObamaCare is and will do to the working and middle class are the biggest untold story in America.

    The govt becoming more involved in health care is the reason the costs have increased. So Govt creates a crisis, then provides a solution that comes at the expense of liberty and freedom, costs trillions, and by most accounts won't solve the problem but in fact make it far worse.Corruption, incompetence, disregard of the Constitution, and lying are integral to the way that this country is being run.

    Boycott and Repeal Obamacare...If only a mere 20% of the over 300 million population of the USA boycott Obamacare the government would be overwhelmed to even think they could penalize or mandate every citizen that refused to participate in the most corrupt and unlawful ways which it was passed that circumvented the constitution of the United States.

  • Report this Comment On August 21, 2013, at 8:02 PM, MajorDilemma wrote:

    Didn't the Supreme Court rule that States can't be penalized for not implementing Obamacare?

    Hard to believe they will backtrack on that now. I think SCOTUS called in coercion.

  • Report this Comment On August 21, 2013, at 8:05 PM, Freedomfirst wrote:

    obama of course lied about the cost but he is not alone everyone that signed to pass it should be held accountable and that includes obama. And no matter what the court said it is unConstitutional. The court did not do what their job is. The elected need to repeal it now. They think the average Law Abiding American Citizen is stupid and they believe we need to be led like sheep. They forget they work for us, we pay them to do a job. They also took a oath to defend our Constitution. Which obama and our elected forget. This Nov. kick them out. I'm tired of having to watch them like little kids.

  • Report this Comment On August 21, 2013, at 8:07 PM, greyhound44 wrote:

    Very, Very cool!

    Could not happen to nicer folks!

    ret expat (10 years now) MD

  • Report this Comment On August 21, 2013, at 9:05 PM, truepatriot wrote:

    I know they voted for two more terms of George Bush but the Kool Aid is clogging their brains so they can't see that Obama is just like George Bush only worse.

  • Report this Comment On August 21, 2013, at 9:06 PM, downsized10 wrote:

    You people are stupid, keep paying for those who don’t have insurance instead of having everyone pay at least something towards their healthcare. Think you don’t pay already; do you have insurance through your employer already? Does your co-pays and deductibles; as well as your employee contributions for the costs go up every year? It’s because you’re paying for the uninsured. Don’t think so, go to a pharmacy and get a prescription filled, tell them you have no insurance and see what it costs, it’s a fraction of your cost even with your co-pay you have to pay, why? It’s because your insurance company pays way more than the un-insured does to subsidize us. I had to have an MRI for my lower back, (I no longer have healthcare because my employer closed their doors to chase profits somewhere overseas) my doctor got me the MRI for $450.00, what would it have been if an insurance company had to pay for it or what would my co-pay and what would my deductable be if I haven’t meet it? I hope they repeal Obama care so I can keep letting you people keep my prices down, thanks for the help that you don’t realize your affording us without healthcare.

  • Report this Comment On August 21, 2013, at 9:07 PM, Makikijoe wrote:

    Now, it's time to hear the OTHER side of the story.

    Benefits from the Affordable Care Act have already taken effect;

    Insurance companies can no longer deny coverage to children with pre-existing conditions — from asthma to allergies to old injuries — with the exception of “grandfathered” plans in the individual market.

    Young adults may stay on the their parents insurance up to age 26.

    Insurance companies may no longer limit the amount of coverage available to those who face expensive medical conditions. This will help Americans who develop chronic illnesses.

    Many plans, with the exception of those “grandfathered” plans in the individual market, must phase out annual limits over the next three years.

    Insurance companies must pay for preventative care, such as mammograms and immunizations.

    Insurance companies must improve the appeals process for insurance claims.

    Insurance companies must provide more direct access to OB-GYN care, instead of requiring women to have referrals from a primary care physician.

    Senior caught in the Medicare “Donut Hole” — where “Part D” beneficiaries pay all of their own prescription costs — will receive a one-time rebate check from Medicare this year.

    Tax credits will help small businesses cover employees.

    Medicare will cover the full costs of annual wellness visits and personalized prevention plan services.

    A Medicaid program will allow states to offer home and community-based care for disabled Americans who would otherwise receive institutional care. In the near future, Americans will benefit even further from health care reform.

    As of 2014, health insurance companies will no longer be able to deny coverage to adults with pre-existing conditions.

    In 2014, state health insurance exchanges will open for small businesses and individuals.

    Individuals with income up to 133% of the poverty level will qualify for Medicaid coverage.

    For people with incomes up to 400% of the poverty level, health care tax credits will become available to help them purchase coverage on the exchange.

    By 2019, health care reform will extend coverage to 32 million Americans who would not otherwise be insured.

    Yet, the work of health care reform is only beginning. It must be defended against obstruction and attack, in order for Americans to experience all of its benefits. Like other programs that the overwhelming majority of Americans support — such as Social Security — the support for health care reform will continue to grow as more Americans feel its positive impact in their lives:

  • Report this Comment On August 21, 2013, at 9:16 PM, Dadw5boys wrote:

    Yeah we don't want to cut into the weekly beer money or dope money asking them to pay for Medical Insurance !

    All the beer joints and dope dealers might lose out.

  • Report this Comment On August 21, 2013, at 9:23 PM, Freddbe wrote:

    The same fight was here for Social Security in 1935, Medicare in 1965. People love these programs and will love Obamacare. To really want to know if it is a good program, just watch the Republican fight to take it away from you. Republicans haven't been right about what is good for you since 1935 years.

  • Report this Comment On August 21, 2013, at 9:28 PM, KaneoheB wrote:

    You mean THIS Judge White?

    "2011 Reprimand

    In 2011 White was reprimanded by the Judicial Council of the 10th U.S. Circuit Court of Appeals for "using his office to appoint friends to serve as adjunct settlement judges, even though they were not qualified, and by ordering certain parties to pay them fees for their services despite a local court rule to the contrary."The council settled on a reprimand after White apologized for his behavior and promised to conduct himself more appropriately in the future. "

    Can always trust on Republicans to be hanging out with crooks. No wonder they want to deny people healthcare, no more grifting the uninsured,,,

  • Report this Comment On August 21, 2013, at 9:55 PM, keithens wrote:

    So Oklahoma wants to screw their residents and deny them the federal help available to purchase health insurance. How charitable of them. Go figure?

  • Report this Comment On August 22, 2013, at 12:58 AM, kasprz4 wrote:

    makikijoe. you comment the other side of the story you say defending obamacare. as a dem who voted for Obama the first time many things you say may be true but there are cost implications for them which you do not state. and you don't say any of the broken promises made by Obama. he said all people will be insured. not true. he said that Obamacare is not a tax. and then sent his top attorneys to the supreme court to fight for it's passing as a tax. they agreed and now we find out there are 20 tax increases in the bill. Obama said there are zero. but there are 20. he said you would be able to keep your insurance and your doctor if you are happy with them... another lie. Obama lied about the deficit, about op fast and furious, about being transparent, about Benghazi, about irs and ap scandals. he lied about sequester. he said during relection that the evil top 2% rich need to pay more and everyone else will see a tax decrease. he wins and approves the payroll tax increase on over 70% of America. he said no more earmarks in bills if he is president. he wins in 08 and his stimulus has 100's of them! and you believe that obamacare is a good thing for the people... do you really think he is thinking about us with this bill...... ? not.. .it's all about money and politics....

  • Report this Comment On August 22, 2013, at 2:11 AM, lugnut45 wrote:

    Big problem, no state that hasn't accepted the mandate or exchange has a basis to be heard in the supreme court. The supreme court has already ruled that states don't have to accept the exchanges, mandates. So its' not like the exchanges can be forced on them under Obamacare. They can't say, we decided not to accept the exchanges and then turn around and file a suit saying they are negatively affected by it. Even if they finally accept it, they still want have a basis, because they didn't have to.

  • Report this Comment On August 22, 2013, at 2:15 AM, lugnut45 wrote:

    Has Oklahoma accepted the mandate and or exchanges? If they haven't, they really don't have a basis to file. The supreme court already ruled they don't have to accept the mandates. If they don't like it, don't accept it.

  • Report this Comment On August 22, 2013, at 4:54 AM, Acttorneyatliar wrote:

    The fact that Obamacare caused not only our insurance premiums to rise, but the value of insurance companies' shareholders' stocks as well, and exceedingly significantly so, ought to tell even the most dense of the liberals who yearn for its implementation to ponder and then cringe.

  • Report this Comment On August 22, 2013, at 6:08 AM, justducky610 wrote:

    To Dadw5boys,

    I have a low income and do not have health insurance because I cannot afford it. I neither drink nor do drugs, do not have cable or satellite tv, don't go to movies. I spend my money after paying bills wisely. if I get sick, I grin and bear it, I do not expect someone else to pay my way. Maybe before you make blanket comments you should think about those who do not waste their money but do not have surplus income- we are out here too. Thank you

  • Report this Comment On August 22, 2013, at 8:08 AM, csymonds wrote:

    I was reading were Obamacare will cost 15,000 UPS spouses to lose insurance coverage. Not a very good thing it's not. Big companies are going part-time , temporary help , or contract workers so they don't have to pay insurance benifits. DON'T look at the cost of the premium ask yourself if you can afford the deductible. Obamacare also is very expensive for senior citizens average premium $763.00 and has a $1,500 deductible. 80% of most senior citizens will not be able to afford it. Thus they will have no coverage and no medical service and hospitals and doctors don't have to provide them service under Obamacare. In other words die seniors so we don't have to pay SS.

  • Report this Comment On August 22, 2013, at 8:18 AM, ShrikeTheFoolish wrote:


    The spouses are losing coverage because they are able to obtain coverage under their own employer's plan. This was normal before you ever heard of the name Obama.

    If the spouse does not have healthcare through their employer, or do not work, then they can stay on under the UPS plan.

  • Report this Comment On August 22, 2013, at 8:20 AM, ShrikeTheFoolish wrote:


    You need to calm down. With every word, you seem less intelligent. The vitriol you're spewing isn't appreciated on an investment forum.

  • Report this Comment On August 22, 2013, at 8:22 AM, ShrikeTheFoolish wrote:


    Funny, my insurance went down. Insurance for Californians went down by 40%. In New York, 45%. Please do more reading of unbiased reports before posting.

  • Report this Comment On August 22, 2013, at 9:37 AM, True411 wrote:

    Democrats in Congress really botched this one bad.

    The sad thing is many Democrats have resorted to lying to support this train-wreck. Shrike is an example.

    Insurance in California DID NOT go down 40%, that's a flat lie. Listen up here, California's Marketplace, "Covered California" isn't even open yet. The rates to be paid vary by location, age, and the level of coverage selected. Most people haven't even made a selection. Many current health care providers in California dropped out. Some Californians will pay much more than they now pay, some less.

    What Democrats like Shrike don't want to tell you is that health care costs will go way up in many states and in every state costs will increase for many businesses. Businesses will pass those costs on to the consumer in the form of higher prices for food, goods, and services. Taxes will go up.

    Here's something very simple - you don't cover more people, sick people, poor people, indigent drug addicts, 26 year olds living at home, AND pay to support a massive new bureaucracy without it costing more. Anyone who claims otherwise is simply exposing themselves as a brain-dead liberal.

  • Report this Comment On August 22, 2013, at 9:47 AM, ShrikeTheFoolish wrote:


    "Democrats like Shrike..."

    A little secret for you, I'm not a Democrat. I don't blindly vote the party line. I take in information from multiple sources, seek out opposing arguments to initial views I may have, then compare and contrast them.

    After that I vote for the best candidate. I have never voted for Obama.

    Please calm your personal attacks.

  • Report this Comment On August 22, 2013, at 10:46 AM, moirraine wrote:

    O-Care just killed insurance for spouses at several companies INCLUDING UPS!!!

    How DARE this country think that their Congress is doing its JOB.

  • Report this Comment On August 22, 2013, at 10:47 AM, moirraine wrote:

    Some of you out there believed that this would grant access to doctors for the millions who have no health care, well now WE get to JOIN THEM, not the OTHER WAY AROUND.

    NO ACCESS for us! THANKS!!!


    Medicine isn't RUN by MEDICINE, that is PATENTLY WRONG.

  • Report this Comment On August 22, 2013, at 10:48 AM, moirraine wrote: has the worst commenting software ever.

    This "no reply" or "likes" on any comment is just TERRIBLE and ANCIENT!!!!!


  • Report this Comment On October 06, 2013, at 11:06 AM, fodonut wrote:

    1. for anyone who is a veteran... go and sign up for benefits at the VA. you will be exempt from Obama care. you don't have to be retired, just honorably discharged.

    2. if you can't get insurance for less than 8% of your income, you don't have the pay the fine for not having it.

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