Trading ObamaCare

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Published on Friday, 29 June 2012 08:00

Written by Jared A. Levy, Editor, Option Strategies Weekly

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It's a done deal.

No matter what side you are on, we have to contend with the decision and move forward in the best way possible. Even if Romney gets elected in November, it seems like the Affordable Care Act is here to stay.

I would be remiss if I didn't express my disappointment with the decision. I can't actually say if I am a Republican or Democrat (having had disappointments over the years with both sides); I simply believe in the simplicity and strength of the Constitution and the freedom and rights of all men and women across the world.

The Affordable Care Act was a sneaky way for the president to tax the wealthy using the guise of better healthcare for all. Even Chief Justice John Roberts agrees. He noted, "It is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without insurance. Such legislation is within Congress' power to tax."

So the question is, now how to play the markets in response to the decision?

Who Gets Hurt?

My main concern is that we may severely damage what is good about our medical system while trying to fix what is broken. Many healthcare providers who save lives and provide exceptional care will be forced to take dramatic cuts in pay and change the way they do business. This is why hospitals are spiking on today's news.

Savvy medical professionals near retirement may choose to leave the system. As pay and work conditions for MDs deteriorate, fewer smart people may be motivated to pursue medicine.

In essence, the quality of medical care is in question and already there is talk of many top physicians getting out of the insurance network and going à la carte. This leaves those of us in the middle class paying for insurance or paying Obama's penalty and paying full price to see a quality care provider.

In sum, the act will take money out of the pockets of providers of healthcare (doctors) as well as medical technology companies like Medtronic (MDT:NYSE) and certain drug companies like Vertex Pharmaceuticals (VRTX:NASDAQ).

Who Wins?

There was no doubt changes needed to be made and certain costs needed to be controlled. The insurance companies are reaping rewards no matter what and by many accounts this is the reason why our system is broken and expensive. Even under the plan they will make out like bandits! The insurance companies pay your doctor less than you would without coverage for the same service in most cases!

At the end of the day, the winners seem to be the insurance companies themselves. United Healthcare (UNH:NYE), Humana (HUM:NYSE) and others stand to gain another 32 million customers and even though premiums may be reduced under the new rules, the insurers will see costs for care go down dramatically over the next two to four years.

I have learned that getting angry is no way to make money in the markets; we must try our best to look at both sides of an argument -- and when a winner is declared, find a way to capitalize on it!

Editor's Note: It's Your Turn to Screw Wall Street

I'm living proof that you don't need Wall Street to make a lot of money in the stock market.

In fact, last year, I screwed Wall Street week after week, beating the so-called "smart money" 85% of the time.

Now it's your turn to do the same. Screw Wall Street... and start profiting.