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  • sampelliam sampelliam • Jun 28, 2012 11:47 AM Flag

    Obamacare and the Medical Device sector

    Ridiculous! Why would that affect stock prices - give me a good reason.

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    • ma45342312 ma45342312 • Jun 28, 2012 12:14 PM Flag

      Sam

      Since Obamacare just got upheld by the Supreme Court. It means BSX just got a tax which Obamacare imposes exclusively on the medical device sector. Companies that produce medical devices have to pay a 2.3 percent tax on gross revenue. Meaning BSX will pay 2.3 percent tax on 7.56 billion (current gross revenue) in the next few years. It will be an annual tax. If that tax was in affect today it would be $173,880. A tax BSX currently does not pay. Since BSX currently does not pay that tax that money is shown as a profit. That tax will come right out of the profit of the corporation.

      The only good point of this scenario is device usage will increase slightly as all people will now be insured. The amount of increase will most likely not be enough to offset this huge coming tax.

      • 2 Replies to ma45342312
      • jellviet jellviet • Jun 28, 2012 11:45 PM Flag

        You forgot 3 zeros at the end, the current tax BSX would have to pay today would be $ 173,880,000

      • ma45342312 ma45342312 • Jun 28, 2012 1:06 PM Flag

        Sam

        I am now thinking I did not answer your question fully. Read my previous posts and keep in mind Wall Street already understood this tax coming to the medical device sector so therefore it was already figured into the current stock price. So if Supreme Court had declared the law unconstitutional then the Medical device tax designed by Obamacare to help pay for the currently uninsured Americans would have been thrown out. Then the stocks in the medical device sector would have risen as the tax would most likely designed to pay for the uninsured would also have been thrown out.

        Hence it was not thrown out so the tax stands. The stock will not rise on this news maybe even fall a little as a few investors were speculating that the law would be thrown out.

        Good luck to ya

 
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