How to Profit If This New Lawsuit Destroys Obamacare

U.S. Supreme Court. Photo: Kjetil Ree. via Wikimedia Commons. 

In case you haven't heard, there's a little-known lawsuit that could destroy Obamacare, making its way to the Supreme Court. Specifically, Sissel v. United States Department of Health and Human Services asserts that the individual mandate in Obamacare is unconstitutional because it violates the "Origination Clause."  

While it may seem unlikely that the Supreme Court will rule in favor of the plaintiff, stranger things have happened. More importantly, if the individual mandate is deemed unconstitutional, there are a number of ways you can profit. Here's what you should watch for.

The lawsuit
As I previously wrote, the House in 2009 unanimously passed H.R. 3590, the "Service Members Home Ownership Tax Act of 2009." Further, the purpose of the bill was to offer a housing tax break to service members. However, when H.R. 3590 reached the Senate, Harry Reid (D-Nev.) removed all but the first sentence of the original bill, and renamed it the "Patient Protection and Affordable Care Act," which then passed in the Senate and continued on through the legislative process.  

Consequently, the Pacific Legal Foundation argues that while H.R. 3590 originated in the House, because of how it was remade in the Senate, it violates the intent of the Article 1, Section 7 of the U.S. Constitution, a.k.a. the "Origination Clause," which states, "All bills for raising revenue shall originate in the House of Representatives."  

How this could affect stocks
What the Senate did with H.R. 3590 isn't uncommon -- the Troubled Asset Relief Program, or TARP, act of 2008 was passed in the same way. However, this lawsuit is gaining momentum, which means Obamacare may once again face the Supreme Court. And if the Supreme Court rules that the individual mandate violates the Origination Clause, that could completely undermine the law. While that could have a negative impact on some companies, other companies stand to benefit -- specifically medical device companies such as Steris (NYSE: STE  ) , CareFusion (NYSE: CFN  ) , and Hospira (NYSE: HSP  ) . Here's why.

Da Vinci Robot. Photo: Wikimedia Commons.

One of the big problems medical device companies face with Obamacare is the 2.3% excise tax on medical devices sold in the United States. Consequently, as Forbes points out, this tax could obliterate a third of medical devices companies' profits. That, of course, would affect stock prices. In fact, Forbes set up a thematically weighted basket of stocks, which shows that, by and large, medical device companies are underperforming the health-care sector and the S&P 500 by a "wide margin."

The individual mandate is one of the central components of Obamacare. Without it, fewer healthy people would buy health insurance, which would cause premiums to skyrocket. That would have an overall ripple effect throughout the health-care industry, which could cause Obamacare to collapse under its own weight. That, in turn, could also terminate the excise tax, which would boost medical device companies' profits.

What to watch
There's no way to know for sure what will happen with Sissel. However, if the court rules in favor of the plaintiff, that could undermine Obamacare, causing it to unravel. If that happens, medical device stocks could see a positive impact from the termination of the excise tax. Consequently, this is something investors should continue to monitor.

How to benefit from Obamacare
Obamacare seems complex, but it doesn't have to be. In only minutes, you can learn the critical facts you need to know in a special free report called "Everything You Need to Know About Obamacare." This free guide contains the key information and money-making advice that every American must know. Please click here to access your free copy.


Read/Post Comments (16) | Recommend This Article (7)

Comments from our Foolish Readers

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  • Report this Comment On January 18, 2014, at 2:08 PM, gundagai wrote:

    Good luck finding a judge willing to go down in history as the one whose ruling killed Obamacare. Even Chief Justice Roberts unexpectedly kept it alive by saying the fine was a tax.

  • Report this Comment On January 18, 2014, at 2:28 PM, Noshirt wrote:

    Ignorant fools (motley and otherwise) never cease to amaze me. The Supreme Court has ruled, several times, and over a century ago, that it will not go behind the process by which a bill was passed. If Congress says it originated in the House, then it did. The corporate income tax was challenged in that manner back in 1909, and the claim was rejected.

  • Report this Comment On January 18, 2014, at 8:16 PM, Dayo2 wrote:

    Profit, Profit, Profit. Get on the internet and type in Doctors suicide and you will find out that 1.8% of the female Doctors and 1.2% of the men commit suicide. Also get on 60 minutes and YouTube and you will see why they are committing suicide due to the profiteer hospitals in charge of them. The one percent, the stock market , Obama, and the 535 persons working for them directly and indirectly are doing many things to destroy America. Such as killing approximately 400,000 persons a year and messing up other 5 out of ten. It is no doubt technology is here, but the profiteers have control over technology and overseas Pharmaceutical companies are teaching our Doctors for profit only. We in America are taking 90% of the worlds pills that are killing and causing ALZ, Dementia, Cancer with the overwhelming test, and on and on. When Nurses and Doctors realize what is happening in America and not in other country for profit, then the good doctors realize what is going on and go into depression and commit suicide mostly. If you watch 60 minutes you will realize that the profiteers have control over the doctors and the doctors even though around 65% should not be going into the emergency room or taking unnecessary tests, the ,profiteers fire and disarrange the doctors if they do not proceed with the medical profiteering rather than medical needs and technology. Those 535 persons running this country are working for the one percent directly or indirectly and the worst is the brainwashed American citizens who do not get together and proceed to with documentaries from DOCUMENTARIES ON NETFLEX , YOUTUBE, and many other, FROM NOVA, PUBLIC TV, NATIONAL GEOGRAPHICS, FOX News, CBS News, AND 1000’S OF OTHERS

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  • Report this Comment On January 18, 2014, at 8:27 PM, piasabird wrote:

    Unequal application under the law. By delaying implrmentation of the business side of the mandate, the ACA has been violated for political reasons. If they want to change the law get it passed in the House!

  • Report this Comment On January 19, 2014, at 3:29 AM, TerryFlowers wrote:

    When will we wake up and realize that we are paying far too much for far too little when it comes to our healthcare in the wonderful nation of ours? In the U.S.A. we pay 2.5 times per capita for our healthcare than any other developed nation. We also compare quite unfavorably when it comes to outcomes. We are the only developed nation that does not have some form of government financing for healthcare for everyone.

    HR 676 would reduce our per capita cost of healthcare and provide healthcare financing for every man, woman and child in the nation. No more copays, no more insurance premiums, no more deductibles, no more out of pocket medical expenses. The additional tax that would be required to pay for this would be less than the cost that would be eliminated. The vast majority of Americans would be dollars ahead and everyone would be ahead in regard to their access to healthcare.

    Don't take my word for it. Visit the web sites of Healthcare-Now, Physicians for a National Health Plan, and others. We can do better ... much better!

  • Report this Comment On January 19, 2014, at 7:43 AM, SSBN620 wrote:

    Obamacare shall not stand. The vast majority of the American people hate it with a passion. One way or another, this totalitarian Progressive Socialist enactment MUST GO.

  • Report this Comment On January 19, 2014, at 8:42 AM, JePonce wrote:

    Gundagai is right! 85% of lawyers and Judges are Leftists. According to their PAC, the American Association for Justice, they have since 1989, contributed $35,904,254 to Democrats and $2,956,821 to Republicans. See the Federal Election Commission campaign finance reports.

    Commies now run our Executive branch, the Senate Legislative branch, and our Judiciary. That is why Obama has free will to violate our constitutional rights.

    If, by a quirk of fait, Obamacare is repealed no one need do anything to make money. Just not having to pay the Obamacare tax will save each of us a good bundle.

  • Report this Comment On January 19, 2014, at 9:47 AM, JackTroy wrote:

    The Supreme Court can always surprise. The individual mandate decision in 2012 was a shocker to many when Roberts ruled it to be a "tax" instead of a penalty. Obamacare is now unarguably a TAX thanks to the SC and this writer could have spent a bit more shrift on the importance of that ruling.

    When Obama claimed all along that the individual mandate was a "penalty" not a tax then one could argue that it was not a revenue raiser but rather a regulation for the "common good." But a TAX is nothing but a revenue raiser and as such it MUST originate in the House not the Senate. The original veteran's bill 3590 from the House was not a tax. When it left the Senate floor it was a whopper of a tax...one the the largest in the history of the world.

    Was anybody surprised when the SC in the same 2012 ruling said 7-2 ! that states can't be forced to take Medicaid? I was. Hold onto your hats this one could be another shocker like the Roberts decision.

    (As a side note, Obombacare is such a bomb the SC could be doing the Democrats a favor by declaring it void rather than let the disaster play out in 2014.)

  • Report this Comment On January 19, 2014, at 10:09 AM, spintreebob wrote:

    Yes, the SC declaring ACA void would benefit the Democrats greatly by taking that issue out of the elections.

  • Report this Comment On January 19, 2014, at 11:08 AM, sabebrush6 wrote:

    Harry Reid again at the root of the problems. Democrat.

    Election time coming up folks.

    Take names and keep a list for election voting.

  • Report this Comment On January 19, 2014, at 11:11 AM, BraveHeart wrote:

    Richard Zdeb: Commentary: October 2, 2013

    Understanding the economic impact of the ACA and why it was so important to shut down the Government by the Republican Pac. This is what you should understand about economics 101! The Republican controlled States do not want the Federally PAID ONE BILLION DOLLAR ACA Subsidy & "economic stimulus" that would reduce insurance premiums of millions of people down to $50.00-$100.00 per month because:

    1.) People and families would have an additional $1000 to $4000 to spend every year!

    2.) Consumer spending increases the GDP of the country!

    3.)Adding and recirculating money in the service and construction industry to re-build and remodel homes and build out commercial property increases demand in every industry in the US to supply the new faucet, toilet, siding, flooring, cabinets, hardware, light fixtures, paint and everything you see in your home, business or office including the chair you're sitting on now.

    4.)All people who have additional money because the subsidy of the ACA lowered their premium, will spend the money on things they need for their family, home, office and ANYTHING THEY WANT!

    This INCREASES JOBS IN THE US!! The restaurant down the street will have to hire another waitress and line cook because you have extra money to go out to dinner! [Remodel your kitchen or bath and the contractor can take his family to dinner and a movie!]

    More money will be spent on pizza & beer! Healthy food for children will be affordable. New shoes, clothes for the kids. PlayStations.etc.

    US corporations and small businesses alike will have increased profits and pay more taxes

    And hire more people who in turn pay more into Social Security and Medicaid.

    All of this is full circulation of money back into our economy for the benefit of the people.

    [ The republican party is very much aware of this], and do not want you to participate or even try to enroll because the results will have an enormous impact on creating jobs and generating real economic growth under the Obama administration. They have hacked the ACA website and doing everything they can to destroy good economic recovery.

    Please Copy & Paste this when you share it. ( Or forward this e-mail facebook notice to educate your friends and family.)

    Call, write, e-mail your state representatives and demand they accept the Federal Subsidy of the ACA for your state to lower insurance for everyone in the middleclass.[ If 2 million people save $2000.00 a year on health insurance, that is $2000.X 2 million=($4 Billion) sent back into consumer spending EVERY YEAR!!! ] What would you buy or save up for with that money coming back to you EVERY YEAR????

    Foot:

    Richard Zdeb: Everyone has a federal tax deduction for medical expenses which includes the total amount you paid for health insurance for the year. If your insurance cost is reduced by $2000.00 for the year, that is $2000.00 you cannot deduct from your income. So the subsidy is not a loss to anyone when it is actually giving you back what you would normally deduct every year. You still have your lower cost affordable insurance to deduct but now have better coverage and $2000.00 to invest back into the economy as a consumer. What would the sales tax be in your state on $4 billion? That's money to state budgets and in 2 to 4 years when the subsidy is lowered 10% to a 90% subsidy investment into your state, the state will have more than that 10% to cover everything in regards to loss in this system.

    December 4 at 6:32pm

    A false projection to cost has been instituted by basically the republican pac to discourage enrollment. They claim trillions in cost! 80% of ACA enrollments are using the tax credit only. A swap out that increases their income in 2015. A small price to pay for good & better coverage.

    RichardComment Guidelinesyour avatarChange

    99Post Richard Zdeb:� Commentary:������ October 2, 2013

    Understanding the economic impact of the ACA and why it was so important to shut down the Government by the Republican Pac. This is what you should understand about economics 101! The Republican controlled States do not want the Federally PAID ONE BILLION DOLLAR ACA Subsidy & "economic stimulus" that would reduce insurance premiums of millions of people down to $50.00-$100.00 per month because:

    1.) People and families would have an additional $1000 to $4000 to spend every year!

    2.) Consumer spending increases the GDP of the country!

    3.)Adding and recirculating money in the service and construction industry to re-build and remodel homes and build out commercial property increases demand in every industry in the US to supply the new faucet, toilet, siding, flooring, cabinets, hardware, light fixtures, paint and everything you see in your home, business or office including the chair you're sitting on now.

    4.)All people who have additional money because the subsidy of the ACA lowered their premium, will spend the money on things they need for their family, home, office and ANYTHING THEY WANT!

    This INCREASES JOBS IN THE US!! The restaurant down the street will have to hire another waitress and line cook because you have extra money to go out to dinner! [Remodel your kitchen or bath and the contractor can take his family to dinner and a movie!]

    More money will be spent on pizza & beer! Healthy food for children will be affordable. New shoes, clothes for the kids. PlayStations.etc.

    US corporations and small businesses alike will have increased profits and pay more taxes

    And hire more people who in turn pay more into Social Security and Medicaid.

    All of this is full circulation of money back into our economy for the benefit of the people.

    [ The republican party is very much aware of this], and do not want you to participate or even try to enroll because the results will have an enormous impact on creating jobs and generating real economic growth under the Obama administration. They have hacked the ACA website and doing everything they can to destroy good economic recovery.

    Please Copy & Paste this when you share it. ( Or forward this e-mail facebook notice to educate your friends and family.)

    Call, write, e-mail your state representatives and demand they accept the Federal Subsidy of the ACA for your state to lower insurance for everyone in the middleclass.[ If 2 million people save $2000.00 a year on health insurance, that is $2000.X 2 million=($4 Billion) sent back into consumer spending EVERY YEAR!!! ] What would you buy or save up for with that money coming back to you EVERY YEAR????

    Foot:

    Richard Zdeb:� Everyone has a federal tax deduction for medical expenses which includes the total amount you paid for health insurance for the year. If your insurance cost is reduced by $2000.00 for the year, that is $2000.00 you cannot deduct from your income. So the subsidy is not a loss to anyone when it is actually giving you back what you would normally deduct every year. You still have your lower cost affordable insurance to deduct but now have better coverage and $2000.00 to invest back into the economy as a consumer. What would the sales tax be in your state on $4 billion? That's money to state budgets and in 2 to 4 years when the subsidy is lowered 10% to a 90% subsidy investment into your state, the state will have more than that 10% to cover everything in regards to loss in this system.

    December 4 at 6:32pm

    A false projection to cost has been instituted by basically the republican pac to discourage enrollment. They claim trillions in cost! 80% of ACA enrollments are using the tax credit only. A swap out that increases their income in 2015. A small price to pay for good & better coverage.

  • Report this Comment On January 19, 2014, at 12:30 PM, ehartke wrote:

    Did Rupert Murdock buy The Motley Fool?

  • Report this Comment On January 19, 2014, at 3:51 PM, ObamaStinks wrote:

    When will the socialists learn that their anti-business legislation like the ACA is destroying business and jobs, destroying investment, and reducing the Federal and State tax revenues that pay 100% of the salaries and pensions for government workers and that also pay for 100% of the welfare of our countries citizens.

  • Report this Comment On January 19, 2014, at 7:56 PM, RFTECH3000 wrote:

    Any judge to strike down obamacare would be hailed as a hero !

    56-60% of americans hate this law and its not going to change

  • Report this Comment On January 19, 2014, at 8:06 PM, RFTECH3000 wrote:

    When the mandate came up the first time john Roberts made a decision that was purely political calculation !

    The ACA was not in effect and striking down the mandate would have given democrats political ammo to blame any failure of the law on the SCOTUS decision and the GOP !

    Things have changed since then , the ACA is falling apart and has become a major liability for the Democrats and some Dems silently might even hope for the ACA to get knocked out now to save their rears !

  • Report this Comment On January 20, 2014, at 1:29 AM, RickLV wrote:

    The same thing happened with income tax; lots of Supreme Court challenges, including Pollack v. Farmer's Loan & Trust 1895, that ruled direct income tax UNCONSTITUTIONAL. Then, in 1913, Democrats IGNORED the Supreme Court and gave us our current income tax system (THANKS A LOT!). I guess the only things guaranteed in life NOW, are death, taxes, and Obamacare.

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