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Obamacare Faces a Supreme Challenge

Many businesses, people have a stake in 'individual mandate'


Pharmaceutical Companies

Large drug companies could suffer from the repeal of the individual mandate. Obamacare levies quite a few new taxes on various industries, including pharmaceuticals. These taxes take effect in the short term but supposedly will be offset by the coming deluge of newly insured customers that will need drugs and have coverage for them. If we no longer are mandated to buy health insurance, the number of new drug customers will not grow as expected under current law.

Businesses With Large Numbers of Hourly Employees

Under current law, business owners with more than 50 employees will be required to provide health insurance to their full-time employees — even if they are hourly — by 2014 or face a fine.  (Technically this is a “shared responsibility fee.”) Supposedly the tax credits and state exchanges will mitigate some of that cost, but it seems unlikely that profits will not suffer at all from the added fees.

Fast-food franchisees and their corporate parents in particular have resisted health care reform. Many of these business models rely on armies of hourly employees that do not currently receive health benefits. McDonald’s already has gone to great lengths to get exemptions from the law. None other than Herman Cain, the GOP’s rising star, first brought the agenda of the fast-food industry to bear on the conversation by challenging Bill Clinton on reform 16 years ago.

If the individual mandate is struck down and premiums rise (see health insurance explanation above), these business owners, both large and small, will be hit by a double whammy of spiraling premiums and extra fees.

People Who Make More Than $250,000 Per Year

Obamacare levies a 3.8% tax on investment income starting in 2013 and a 0.09% increase in Medicare tax for these high earners. These high earners obviously have a lot to gain from full repeal of the law but a lot to lose if only the individual mandate is struck down but not the new taxes that come along with it.

Young Adults

Under current law, parents are allowed to keep adult children on their own health care plan until age 26. Indeed, this requirement has contributed to a significant increase in coverage for these young Americans. In the current job market, young people are experiencing the highest rates of unemployment among all age groups. The ability to stay on their family’s policy is particularly important. If Obamacare is fully repealed, these young Americans likely will lose coverage. If only the individual mandate is struck down, they might continue to have access to their parents’ insurance plans, but at a much higher cost.

Article printed from InvestorPlace Media,

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