I thought this was a short paragraph out of an article that I just read that sums up what tomorrow might bring for the medical device sector if the entire law is thrown out.
Health reform was largely viewed as a negative for medical device makers such Medtronic (MDT), St. Jude Medical (STJ), Edwards Lifesciences (EW), and Boston Scientific (BSX) as they incurred new government fees aimed at helping pay for covering the uninsured. What’s more, there was little benefit from the law for these companies. If the law is vacated by the court, these stocks should rise.
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.