Will Congress Defund Obamacare?

Written By Brian Hicks

Posted September 18, 2013

Is it really possible that the U.S. government will defund Obamacare right before the law goes into effect?

Congress is scrambling to find a way to pay America’s bills. The Republicans want one thing and Democrats want another, and no one is willing to meet in the middle right now.

congress capitol hillThe hottest topic on the table is whether Obamacare should be defunded to free money up so the United States can continue paying its bills in full and on time.

There’s no doubt that defunding Obamacare would provide a big chunk of change, but it isn’t clear that this would be the best route for the good of the economy.

According to Obama, defunding Obamacare isn’t going to happen. He can’t believe Republicans would want to make this move, and he recommends that Congress pass a budget to avoid government shutdown and leave Obamacare alone.

Of course Obama doesn’t want them to touch his Affordable Care Act (ACA). It’s part of his legacy, and if Congress defunds it – even temporarily – it won’t look good on him.

Obama made it clear he would veto any legislation that delays or defunds his precious ACA.

This isn’t keeping many Republicans from continuing defunding efforts though. If they were able to get the majority of the votes, it would solve the government’s problems of not having enough money to pay debt. Still, what might pass in the House will have a much tougher time getting through the Senate.

But while Obama and many others believe defunding Obamacare will end up hurting the recovering economy, many Republicans think Obamacare will end up hurting the U.S. over time.

Republican Steve Southerland of Florida told Reuters:

We want to protect the American people from a bad law and we want to make sure that the government is funded to provide services that the American people deserve and expect. It’s the Republican party that’s trying to figure out as hard as we can to do both of those things.

What’s going on in Congress right now is much like a tennis match. Each party goes back and forth, firing the pluses and minuses of defunding Obamacare, and it may be just a lot of wasted time because it’s pretty certain that it’s never going to happen.

Congress might as well just go along with Obama’s recommendation to devise a budget to be passed.

What Investors Can Do

As soon as the Republican party admits defeat and backs off Obamacare, all the companies setting their eyes on how they will cash in on Obamacare can breathe a sigh of relief. You can too, as you start setting up your plan for investing in the new ACA.

You’re going to see a lot of money being thrown around when everyone starts picking up health insurance and changing policies. This means health insurance providers will start to see a lot more activity, which could send their shares up. They aren’t the biggest winners in Obamacare though, surprisingly enough. What you really want to invest in is drug companies and the back-end billing of Obamacare.

Let’s tackle the drug companies first. People are going to want to save money not only on their health care but on their medications too. Since medications are used regularly, the money being poured into pharmaceuticals will be extraordinary.

Now, it’s not the brand names that will get all of the attention, and it’s not even the type of generics you’re used to. There’s a new player in the field of pharmaceuticals called biosimilars. Biosimilars are much like generic in that they are replicas of brand name drugs, but they are manufactured differently, so they are better than the generics.

These generics are going to be what will be making a huge mark on Obamacare. One company to research is Teva Pharmaceutical (NYSE: TEVA). Teva is the world’s largest generic drug manufacturer, and it is going to be making biosimilars.

Moving on from the pharmaceutical industry, another space to research is medical technology – Cerner (NASDAQ: CERN), in particular. It’s a huge medical technology company that has a market cap of $16.65 billion, and it’s sure to rise with Obamacare as more people get health insurance and use it.

The government is going to pay attention to who’s getting health insurance, who isn’t getting it, and who isn’t paying. HMS Holdings (NASDAQ: HMSY) will be cashing in on the billing management side of Obamacare by making money off the mistakes the company catches. Its biggest customers right now are Medicaid and Medicare.

Finally, Accretive Health (NYSE: AH) will be part of the collections needed to keep Americans covered by health insurance. Whenever people don’t pay their premiums, they’ll be shoved off to Accretive Health, and when people realize they really need to keep the health insurance active, the company will make a ton of money.

There’s money to made with Obamacare for investors. Once the defunding efforts blow over, these companies will be back in action.


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