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4 Ways Obamacare Will Affect Stocks

The Affordable Care Act is becoming a reality, and these stocks are going to be the first to notice its effects (if they haven't already)

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Today’s the day all U.S. residents are supposed to be covered by health insurance, per President Obama’s Affordable Care Act (also widely referred to as “Obamacare.”

Well, it was supposed to be, anyway.

Due to yet another last-minute enrollment extension, however, the new deadline is now mid-April. Still, it’s not too soon to start dissecting how the actual advent of Obamacare will affect stocks.

And what exactly will the impact of the ACA be on the market? Here are the biggest changes to expect:

#1: Staffing Agencies Will Thrive Under Obamacare

Hiring permanent employees is seen as risky enough in a wobbly economic environment, but when the added financial burden of providing health benefits for employees is thrown into the mix — against the backdrop of a complicated law, no less — some employers might reach the point of exasperation.

Their best solution is outsourcing the HR functions to a staffing agency, aka a “temp agency,” whose workers are rarely as temporary as the moniker would suggest. Staffing agencies have the resources and willingness to become experts on Obamacare, freeing up their client companies to focus on their business.

While all the major staffing firms should benefit, the best-positioned players are Robert Half (RHI) and Kelly Services (KELYA).

Kelly Services is a go-to resource for longer-term temps who would otherwise be subject to Obamacare’s mandates. Perhaps more importantly, it has the size and scale to effectively be the Obamacare go-between….. it’s the nation’s second-biggest employer, and can leverage that dominance in securing new contracts as employers get more and more fed up with the ACA.

As for Robert Half, it’s specialty is professional-level staffing, particularly finance and accounting professionals, and some law-related workers… people who are also more apt to be placed in long-term, full-time roles and also due for ACA-mandated insurance. It also has done a great job at positioning itself as a solutions provider for the era of Obamacare with its “Patient Protection and Afforddable Care Act” guide for employers being one example.

#2: Generic Drugmakers Will Go From Good to Great

Not that they were struggling to begin with, but now that healthcare costs are poised to rise not just for individuals, but for caregivers and insurers, all the stops are going to be pulled out in an effort to contain care costs as much as possible.

An even-stronger demand for cheaper, generic drugs is apt to materialize as a result.

The irony is that demand for generic drugs has already grown to the point where prices for some key generics have already soared, in some cases to nearly the same price as the original, non-generic version. The price of cholesterol-reducing Pravastatin, for instance, jumped roughly 1,000% in 2013 as earlier phases of Obamacare took hold.

While generic drug prices will likely stabilize somewhere below prices of non-generic versions, the proverbial cat is out of the bag — generic drug companies like Mylan (MYL) and Teva Pharmaceutical (TEVA) are perfectly positioned.

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Article printed from InvestorPlace Media,

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