Don't Expect The Health Care Law To Be Repealed

by: Adam Alvarez

When Mitt Romney won the GOP nomination, one of his first steps was to assure voters of his own party that he would repeal Obamacare if elected. Even though he was well known for passing a similar measure while governor of Massachusetts, he needed to confirm that he was with the bulk of the party when it came to this important matter. However, even if Romney wins, don't expect the bill to be quickly overturned.

Now as a result of the questions surrounding the future of the health care overhaul, the biggest winners and losers of the bill have succumbed to choppy trade this year. After all, this election appears to be the final say in regards to the bill's ultimate direction. With the Supreme Court now out of the way, a win by Obama will allow the majority of the legislation to take full effect unopposed and make a repeal even that much more complicated.

Sure, there are many things about the healthcare legislation that are soon to hit consumers and businesses the wrong way. Average health care premiums, for instance, are expected to rise 6.3% in 2013. These numbers thus prove a sobering statistic for a bill that was praised as a fix to rising and unfair costs.

Still, even with polls showing a majority disapproving of the bill and a sizable portion of the upcoming spending cuts and tax increases designed to cover this particular legislation, the bill has something that can not easily be stripped. That being the president's signature. It was why Republicans stood in unison against the bill and why even some Democrats voted against the landmark overhaul. Repealing the law was a last resort for all who opposed its passage because it remains such a difficult task to accomplish.

Now Romney has argued that on the first day of his administration he would grant a waiver from Obamacare to all 50 states. However, the part of the bill that allows for the implementation of waivers doesn't kick in until 2017 meaning courts would likely take action and step in to block such a maneuver.

All of this showing that Romney will more than likely need full party control of the House of Representatives and the Senate to do much of anything to repeal the law. With Republicans currently holding only 47 seats in the Senate, that would take a big election day victory for the party to be granted such power. Overall, the likelihood of such a takeover remains dim, especially as questions continue to swirl about whether the party will be able to keep their own control in the House of Representatives.

As for traders, it's important to remember that hospital stocks such as HCA Holdings (NYSE:HCA), Universal Health Services (NYSE:UHS) and Health Management (NYSE:HMA) gained after the Supreme Court upheld the health care bill in June while insurers such as Aetna (NYSE:AET), UnitedHealth (NYSE:UNH) and WellPoint (WLP) fell. Although such movement may temporarily reverse depending on the election results, expect the underlying trend to continue in the long run even if Romney does win the presidency.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.