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What is Obamacare? Part VI: Winners and Losers

By  +Follow October 24, 2013 6:15AM
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As the technical issues with Healthcare.gov continue to pile up, questions about the laws efficacy are inevitably following. Some of these criticisms are primarily ideological, others are baseless, and some seem to stem from Obamacare’s namesake. However, at the end of the day, Obamacare is definitely good for some and definitely bad for others. In any law this big, there’s trade-offs, and the Affordable Care Act is no different. The law clearly includes policy that trades the financial comfort of some for others.

But who’s who in this debate? Who’s going to end up ahead and who’s losing out? Here’s a quick recap of our “What is Obamacare?” series and a look at who stands to benefit the most from the law as well as those who may be out of luck. Obviously, this is purely speculative. The law of unintended consequences is in effect, and no one can be completely sure how things will actually play out. But one can still make some basic projections based on the way the law was written.

Part I: Individuals

Winners: People with preexisting conditions, the middle-aged, people with high medial costs

If anyone’s going to benefit, it’s those members of the population who were previously uninsurable. In fact, one could argue that the law was specifically intended to allow the 30 million or so uninsured people in the United States to get the coverage they need. Basically, all of the people insurance companies used to find too expensive to insure are now guaranteed access to coverage. So people with preexisting coverage, or those people old enough to have high medical costs but not old enough to qualify for Medicare, are going to have access to plans that desperately need.

Losers: Young invincibles

President Obama may have ridden a massive turnout from the youth vote to his two victories, but his signature legislative accomplishment could really stick it to them. Essentially, someone has to pay for all of these pricey, losing bets the insurance company is taking on in the form of the winners listed above. And while part of that someone will be all of us in the form of federal subsidies, another someone will be young, healthy people. The new age bands limit the difference between premiums for the youngest and oldest people, and insurance companies are probably going to be forced to hike up premiums for their youngest customers as a result. What’s more, while it may have made some financial sense to risk not having insurance in the past (depending on your perspective), new tax penalties mean that even the healthiest people will have to either pay for insurance or take a hit on their taxes. And finally, new rules about how much coverage a plan must have will eliminate the option for plans with rock-bottom premiums and sky-high deductibles that previously made a lot of sense for the youngest, healthiest people seeking health insurance.

In the end, those young people who aren’t on their parents plan anymore are probably going to see fairly substantial increases in their premiums.

MAJOR Losers: People falling into the Medicaid gap

One consequence of the Supreme Court ruling that the Federal Government couldn’t force states to accept the Medicaid expansion was the creation of a rather critical gap some of the citizens of the 26 states that are refusing to participate. While the law extends subsidies down to anyone earning the poverty level in those states (in those states participating in the expansion, people earnings 133 percent of the federal poverty or lower will be Medicaid eligible), they aren’t available to anyone earning less than the federal poverty. Medicaid eligibility varies from state to state, but in many places some adults making less than the federal poverty level (about $12,000 a year) will not be able to get subsidies to get coverage, won’t be eligible for Medicaid, and will still owe a tax penalty for failing to get insurance. Ouch.

Part II: Large Business

Losers: Large businesses that didn’t offer health coverage to full-time employees

This is actually a really small portion of companies, 95 percent of those that would trigger the employer mandate already offer their full-time employees coverage. However, for those companies that don’t, it’s decision time. They could opt to pay the penalty (though that’s probably too expensive for most), potentially shift hours to reduce the number of full-time workers to 30 or less, or fire enough people that they don’t trigger the mandate anymore. However, the options that the authors of the law are hoping/expecting most companies to take is to break down and shell out for a plan for their full-time employees.

Again, while it’s a relatively small group of companies that will be affected by this, it is very significant for some. In particular, a lot of chain restaurants that have previously depended on low labor costs in the form of low-wage wait staff and cooks may see a big difference in the way they do business. That’s part of why so many of the most public critics have been from the restaurant and food industry, like Papa John’s (PZZA) CEO John H. Schnatter.

Winners: Large Businesses with many part-time employees

The employer mandate doesn’t penalize large businesses for failing to offer coverage to part-time employees. So, for those companies with many, like Wal-Mart (WMT) , part-time employees will now have access to health plans and subsidies through the exchanges. This should, hypothetically, translate to a healthier workforce and eased pressure to insure these workers at no extra cost to the employer.

Part III: Small Business

Winners: Small businesses with fewer than 50 full-time employees

For firms that don’t qualify for the employer mandate, the law only provides more options. For starters, the opening of the small business exchanges in late 2014 (the SHOP exchanges) will make selecting plans easier. And by creating larger risk pools, firms can now offer employee-choice style plans that include multiple carriers that previously weren’t an option. Small businesses will also have more flexibility to not offer coverage as well. With employees having more options on their own due to the exchanges and subsidies, the decision by a small firm not to offer coverage won’t necessarily leave its workers high and dry anymore. Finally, very small businesses with low wages could qualify for a tax credit to help pay for coverage.

Losers: Small businesses just under or just over 50 full-time employees

Growing businesses need to plan ahead, and flexibility can be key. Unfortunately, the creation of the employer mandate draws a pretty clear line in the sand that could make things difficult for those businesses that are right on the line. The need for adequate legal and tax advice could create new costs, and decisions about hiring could include pretty dramatic changes to health care costs that didn’t previously exist. On the whole, companies that are well over or well under this threshold will most likely have pretty simple choices to make, but those right near the line may struggle to find the right approach.

Part IV: Health Insurance Offerings

Winners: Consumers shopping for plans?

Losers: Consumers shopping for plans?

One major effect of the law is most likely going to be a narrowing of offerings from health insurance companies. With limits to how much cost-sharing can be included and services that are required to be covered, insurance companies will have a lot less latitude in writing plans.

But is that good or bad for consumers? It’s not entirely clear, at this point. On the one hand, consumers can be confident that any plan they buy will cover a raft of basic medical care. Every plan will have a clear limit to their annual out-of-pocket costs, and they won’t see the same sky-high deductibles that used to be out there. On the whole, every plan they’ll be able to look at will be of higher quality. And, what’s more, the metal tiers will make shopping for plans more uniform and easier to understand.

However, along with this comes fewer options. Opting to accept the risk of high out-of-pocket costs in exchange for lower premiums is off the table, for the most part. As is grabbing a cut-rate plan. And one result of the new limits on what they can do with their plans is leading to some insurance companies to limit the size of provider networks. In the end, the changes to the way plans are structured have both positive and negative effects for the consumers buying them.

Part V: Insurance Companies

Winners: Insurance companies

When the debate over the law eliminated a single-payer system and the public option, it was a clear endorsement, on some level, of the health insurers. Federal and state governments have spent millions setting up massive shopping exchanges where citizens are directed to their products, billions of dollars in subsidies will be flowing from the federal government to these companies, and a tax penalty is incurred by anyone who chooses not to purchase their product. Insurance companies have basically been handed 20 million new customers and have help from the federal government to recruit and pay for them.

Losers: Insurance companies

However, for all the new benefits, there’s plenty of issues that the new law creates. The limits to the way companies can structure their plans are detailed above, and guaranteed issue essentially means that insurers will be forced to take on customers they know they’ll lose money on. What’s more, there’s several new taxes levied against insurers to help pay for the subsidies and other portions of the law. And finally, their profit margins are limited by law. They must spend 80 percent of individual and small business premiums, and 85 percent of large group premiums, on medical costs or issue refunds to customers that make up the difference.

However, the big unanswered question remains: who will sign up? The entire plan rests on the creation of a massive risk pool that will attract enough young, healthy people to balance out the inevitable flow of the older, sick people. Should the exchanges fail to attract enough young invicibles, the entire plan will result in sky-rocketing premiums on the individual markets that would be unsustainable, what some refer to as a “death spiral.” In this case, the insurance companies are likely to suffer through most of the negative consequences of the law without seeing many of its benefits.

That is Obamacare?

So, thus concludes our What is Obamacare? series. While anything but comprehensive, it should provide a fairly broad overview of the different segments affected by the new law and what they can expect moving forward.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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Results for PZZA
Stock_Tracker
26 Apr 15 10:33:08
Papa John's International (PZZA) 65.21 $PZZA Final Glance: Restaurant companies AP - Fri Apr 24, 7:08PM CDT NE http://t.co/XhiUkVPiSZ
PolgarStocks
26 Apr 15 09:31:39
$MICT stock Current Price Click Here: http://t.co/MoWizlHEQo Also See: $ABGB $RVP $PZZA $PRGO #stockmarket #tradeideas ~
ProVesting
26 Apr 15 04:45:04
$PZZA: Papa John's Int'l CEO Sells $2821762.97 in Stock (PZZA): http://t.co/PiY1k1EF9b
Michael Lamothe
25 Apr 15 19:53:03
Here is an excerpt from this week's Ready List: http://t.co/D5wZ3TklUp $ea $FB $MNST $PZZA
Capital Market Labs
25 Apr 15 19:40:59
$PZZA Assets are Increasing. #CML_PZZA #CML_Assets http://t.co/6kUZSTiFeC http://t.co/pMYd5oC6RF
ProTradersNews
25 Apr 15 12:37:02
$PZZA: John Schnatter, CEO & President of Papa John's Int'l, Inc ...: http://t.co/Nc9RRFDEZz
ProTradersNews
25 Apr 15 05:04:04
$PZZA: Insider Selling: John H. Schnatter Sells 43823 Shares of Papa ...: http://t.co/9Xwc6zF5d8
Langan Stocks
25 Apr 15 02:35:43
Stocks Trending Now: http://t.co/TkLSaybzCt $LXU $SIVB $MAIN $QCRH $ADTN $GNRC $PZZA $MON $LLTC $AWH $TSRO $SKM ~
Langan Stocks
25 Apr 15 01:40:18
Stocks Trending Now: http://t.co/TkLSaybzCt $AAON $CONN $ISIS $VRA $SLB $ITW $PZZA $INTL $CAPN $IRG $WCC $NEM ~
Stock_Tracker
25 Apr 15 01:29:13
Stocks Trending Now: http://t.co/3L8CEFZgfA $OII $ACRX $CBMG $PCAR $PZZA $HBIO $CYBR $SYRX $DRC $FLTX $CRM $TREX ~
leahanne
24 Apr 15 23:58:48
interested in $NOK Click Here: http://t.co/WoYqAlKyYW Also See: $PZZA $ZNH $FMD $TRTC ~
IH NASDAQ OMX
24 Apr 15 23:26:18
Stocks Trending Now: http://t.co/3o3t4rZTAS $PZZA $MACK $MON $UAPC $GEVA $UFI $AXP $SBLK $TX $TNH $LPNT $CLF ~
Chasing Stars
24 Apr 15 22:19:20
$ATHN Summary Click Here: http://t.co/wPwOZjCONc Also See: $LGND $PZZA $LBTYK $CNCO #stockmarket #invest #stocks ~
Breaking News
24 Apr 15 20:21:01
$PZZA: Insider Selling: Papa John's Int'l CEO John H. Schnatter Sells 43823 ...: http://t.co/X1W50Q1qMH
Sleek Money
24 Apr 15 20:20:12
Insider Selling: Papa John's Int'l CEO John H. Schnatter Sells 43,823 Shares of Stock $PZZA http://t.co/tWOYf1Gxbt
IH News Desk
24 Apr 15 20:17:43
Stocks Trending Now: http://t.co/Ly6bZh9FE6 $IFON $TCP $PZZA $LLY $CP $ASC $GBSN $UAPC $GSK $GS $KMI $PHM ~
TriggerOfTheDay.com
24 Apr 15 19:44:04
$PZZA Papa Johns International went up +1.09% after making our top #stockpicks yesterday. No risk #Giveaway at http://t.co/8kq14v1HVx
The Legacy News
24 Apr 15 19:42:17
Papa John's Int'l CEO John H. Schnatter Sells 43,823 Shares $PZZA http://t.co/5IIJXCTxee
Ticker Report
24 Apr 15 19:27:38
Papa John's Int'l CEO John H. Schnatter Sells 43,823 Shares $PZZA http://t.co/t4gtnfoQxa
IH NASDAQ OMX
24 Apr 15 17:53:04
Stocks Trending Now: http://t.co/3o3t4shuZs $CHTR $PZZA $RVSB $NXPI $NNA $SSH $NTWK $GOLD $HYGS $ATHI $YHOO $PTSI ~
dailystockplays.com
24 Apr 15 16:12:52
Aroon Positive http://t.co/ZbtKrWyKtE $JKD $IVW $VGT $CCI $ETR $TEG $PZZA $QUAL $AEP $RAX $XRAY $EXCU $SHYG $NUE $AZZ $ZTS $XLU $CST
Langan Stocks
24 Apr 15 15:25:36
$MRVL Prev Close Click Here: http://t.co/m7UPG1aZpR Also See: $UNXL $PZZA $GS $EMC #stockmarket #invest #stocks ~
Syed Waqas Nabi
24 Apr 15 14:00:26
A bullish Big MAC (Bullish) has occurred at 3:45 PM Apr 24 at $65.09 on Papa John's International Inc (PZZA) $PZZA
$Stocknewsalerts
24 Apr 15 13:31:48
$PZZA New SEC Document(s) for Papa John's International, Inc. From our Stock News Alerts App
NASDAQ
24 Apr 15 13:19:09
$PZZA - Statement of Changes in Beneficial Ownership (4) http://t.co/TtaREeac5i
InsiderTradingWire
24 Apr 15 13:18:47
JOHN SCHNATTER H CEO & Pres Sells $2,821,662 Worth of $PZZA Papa John'S International, Inc. - #Form4 ... - http://t.co/eGw7JoRHWH
Insider Filings
24 Apr 15 13:14:08
$PZZA: SCHNATTER JOHN H sold a net $2,821,662 in PAPA JOHNS INTERNATIONAL INC. http://t.co/Cj4a7Ii7lB
Insider Alerts
24 Apr 15 13:13:05
NEW insider transaction on $PZZA reported a moment ago: http://t.co/89l8OPwck4
Breaking News
24 Apr 15 10:03:43
$PZZA Papa John's Introduces: "Knot" Just Another Pizza Deal http://t.co/zJLHYt5v7a
$Stocknewsalerts
24 Apr 15 10:00:56
$PZZA Papa John's Introduces: "Knot" Just Another Pizza Deal From our Stock News Alerts App
Rosner Stocks
24 Apr 15 08:58:49
$IDTI Bid Size Click Here: http://t.co/B8zsqUIS2i Also See: $SFY $OFLX $PZZA $DTSI ~
lookn4wins
24 Apr 15 06:51:29
$PZZA Last Price Click Here: http://t.co/SXdtE6InVw Also See: $HBM $RCPT $SPLS $LGND ~
Michael Lamothe
24 Apr 15 04:59:47
Analysis of some of yesterday's strongest Gainers on Volume: http://t.co/G79RtmzpRa -ORLY -PZZA / $skx $orly $pzza
leahanne
24 Apr 15 04:36:42
$MAC Open Click Here: http://t.co/KQUreDhAdD Also See: $PZZA $RGEN $SYA $LLTC ~
TradificTrading
24 Apr 15 03:38:38
b/o of triangle in $PZZA supported by strong $DPZ earnings report pizza delivery 2.6bn MCap http://t.co/rozuNKpevs
lookn4wins
24 Apr 15 02:10:09
$TCK Bid Click Here: http://t.co/QyGzWBw0EN Also See: $MSA $GMAN $PZZA $DAL ~
iHangout
24 Apr 15 01:39:33
$USB Change Click Here: http://t.co/BCXuqIcT3J Also See: $PZZA $CADT $SEMI $QRVO ~
Langan Stocks
23 Apr 15 22:58:25
$CBRL Last Price Click Here: http://t.co/2ydoKKt8Di Also See: $PZZA $JMEI $CBPO $PE ~
IH News Desk
23 Apr 15 22:37:37
$CAPR Filings Click Here: http://t.co/hqqnhD53vy Also See: $PZZA $IMPR $LGCY $NVDA ~
iHangout
23 Apr 15 22:15:09
$VLP Market Cap Click Here: http://t.co/AnQSrOfb0H Also See: $PZZA $ABX $BBT $CFRX ~
IH News Desk
23 Apr 15 22:02:39
$GSK Day High Click Here: http://t.co/jLVsdHflze Also See: $PZZA $SMCI $BLDV $INOV ~
Brent Summers
23 Apr 15 19:32:42
RT @GotSanctuary: After Hours $GOOG +3.16% $MSFT +3.35% $AMZN +6.80% $SBUX +4.19% $PZZA +5.16%
GotSanctuary
23 Apr 15 19:18:47
After Hours $GOOG +3.16% $MSFT +3.35% $AMZN +6.80% $SBUX +4.19% $PZZA +5.16%
Omaha Happy Hours
23 Apr 15 17:34:27
@jimcramer prefer $PZZA or $PNRA to get into before earnings?
Ophir Gottlieb
23 Apr 15 15:33:46
RT @CML_VisualFeed: $PZZA Revenue is Growing. #CML_PZZA #CML_Revenue http://t.co/L1fGih3AXa http://t.co/gi3w1SKVHJ
Capital Market Labs
23 Apr 15 15:31:44
$PZZA Revenue is Growing. #CML_PZZA #CML_Revenue http://t.co/L1fGih3AXa http://t.co/gi3w1SKVHJ
 Jeffrey Leath
23 Apr 15 13:29:12
@cvpayne bullish on you favorite eatery starting delivery? $CMG watch out $PZZA and $DPZ
lookn4wins
23 Apr 15 12:53:36
Stocks Trending Now: http://t.co/3At6WKRXBL $AGIO $ANFI $DVN $PZZA $DE $TWTR $TUP $XLNX $DST $GBSN $TBI $FNB ~
Stock Forums
23 Apr 15 12:52:03
$WX EOD Data Click Here: http://t.co/5rNyH7f6Kr Also See: $TRGP $CNAT $PZZA $ARWR ~
equities.com
23 Apr 15 12:32:03
Consumers Still Love Pizza and Doughnuts $PZZA $DNKN $DPZ $MCD $CMG $DRI $PNRA $yum $sbux $WEN http://t.co/KfXybpKTyJ
				
				
By  +Follow October 24, 2013 6:15AM
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