How Obama victory could affect areas of US economy

The Associated Press Published:


America's decision to re-elect President Barack Obama over Mitt Romney will affect all that and other elements of the U.S. economy and financial system -- from the health care law to the overhaul of financial rules.


Here's how Obama's re-election could affect key sectors:






"There will be a lot of brinksmanship, and that will hurt the economy and likely upset the financial markets," Mark Zandi, chief economist at Moody's Analytics, said Wednesday.

Still, the urgency of the crisis could "generate the political will necessary to get the deal done," Zandi said. And that could mean "much, much stronger growth" by 2014.


"Obama's re-election does not change the bigger economic or fiscal picture," Paul Ashworth, an economist at Capital Economics, said in a research note. "Over the next couple of years, the U.S. economy will remain saddled with an uncomfortably high unemployment rate and will struggle to grow by more than 2 percent a year."

















Obama's victory preserves his health care overhaul, which aims to cover millions of uninsured Americans. The law requires everyone, with certain exceptions, to have insurance or pay a penalty. It calls for the expansion of Medicaid. And it requires online exchanges where people can shop for coverage.

Health insurers, which have struggled to increase enrollment in a tough economy, will gain new customers. But the industry pays for that growth. Insurers will have to cover fees totaling $8 billion in 2014 and topping $14 billion by 2018. Those fees will go to the government to help cover the cost of expanded care.

The law also limits how much insurers can vary pricing based on age and health.

"In the past, it was relatively easy to just absorb increases in health care costs and pass them through to customers via higher premiums," said Matthew Coffina, a Morningstar analyst who covers health insurers. "That equation is sort of breaking down now, which is forcing them to be more careful on the cost side, to try to contain costs in whatever way they can."

Drugmakers and hospitals may get a boost. Hospitals typically provide charity care to uninsured people and are reimbursed for only part of it. Now, they'll be paid through insurance for more people. And drugmakers will benefit from the law because starting in 2014, millions more will gain prescription coverage.


Obama's re-election also likely means medical device makers will start paying a 2.3 percent tax. They vowed to continue lobbying Congress to try to head off the tax.

"There may be an opportunity to address the tax before it goes into effect on Jan. 1," said J.C. Scott, chief lobbyist for AdvaMed, the industry's main trade group.



One example is an oversight plan for derivatives -- complex investments that speculators use to make bets and companies use to hedge against risk. Financial companies have fought for looser rules and exceptions for derivatives used by farmers who want to lock in prices before a harvest.










Contributing to this report were Associated Press writers Linda A. Johnson in Trenton, N.J., Tom Murphy in Indianapolis, Dee-Ann Durbin in Detroit, Jon Fahey and Peter Svensson in New York, Michael Liedtke in San Francisco and Daniel Wagner, Martin Crutsinger, Stephen Ohlemacher, Matthew Perrone and Christopher S. Rugaber in Washington.