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By Michael Sterling
Obamacare has gotten a lot of investors panicking about how it will affect their assets. Though there are unsettling facts about the legislation, there are just as many benefits – if you open your eyes. 2013 has been a year of ups and downs, and because 2014 is unforeseeable, many are giving up hope. The truth is there’s always potential. Here are just a few:
#1) Taxes Will Make Big Waves
According to the new tax law, we’re going to see some changes whenever we file for the 2013 tax year come next April. High earners face an additional 3.8% tax on investment income. To put it specifically, it’s the lesser of net investment income or the amount by which adjusted gross income exceeds $200K (or $250 for a married couple filing jointly, $125K for a married person filing separately).
One opinion among financial experts is that this new change in the tax law will cause the biggest behavioral changes among investors. Remember that most, if not all, of the stock market is built on the strength of the U.S. economy. Even though tax rates aren’t the highest they’ve been, it’s a dramatic increase percentage wise.
Because our economy is at a pretty fragile state, chances are we’re to see some pretty drastic changes with in the market one way or the other. The new tax also specifically affects income such as real estate income or other passive investment activities. Come the new year, it’s crucial to increase your math skills or hire an experienced accountant for your assets. Otherwise you’ll be lost in the numbers.
#2) Certain Stocks May Profit
Whether you agree with Obamacare or not, one thing’s for sure. You can either complain about it or capitalize on it by focusing on owning stakes in the companies most likely to profit. Obviously the majority of them are in the medical-technology and medical-data arena. Here are just a few:
- HMS Holdings (HMSY) – There is much more opportunities than meets the eye here. Once Obamacare gets into full swing, they will likely play a bigger role in billing management. The bulk of its revenue already comes from the percentage of billing mistakes it catches, and guess who’s there biggest customers? Medicare. According to the Department of Health & Human Services, nearly $65 billion worth of improper Medicare and Medicaid payments were made. Both programs are now going to be more complicated, which will likely create even more mistakes.
- Cerner (CERN) – A lot of investors are looking here. Not only is it one of the biggest with a market cap of $16.65 billion, but its revenue and earnings growth have nearly always been reliable. Outwardly, most investors won’t think it has potential, but its size alone means it has potential to squeeze its way into new markets.
- Accretive Health (AH) – They are the country’s biggest debt collector and tough many people hate the idea of profiting on people’s debts, I say, don’t be! As the healthcare industry expands, so will the need for their service. Not to mention the company’s computer system will, in theory, keep patients out of the ER anyway since it can detect those who likely need preventive care, rather than waiting for something to happen. Because it also handles medical billing and record-keep, it’s a one-stop shop. The potential is endless.
#3) More Spending May Drive Revenue
It’s clear that healthcare stocks are outperforming this year, and some experts believe the industry still has room to run on Obamacare alone, as well as other fundamentals. It’s here for the long haul and it will likely drive up revenue as well as the infrastructure of healthcare companies because spending is going up.
The more money that is spent on healthcare, the more money companies will make. It’s true that for many households, either they don’t qualify or they will be spending much more money than expected – which may cut back on their savings. But here’s the rub. More spending means brings a flourishing economy, and to an investor, that’s always a good thing.