FORT WORTH-The results from the recent GlobeSt.com poll concerning the Patient Protection and Affordable Care Act of 2010 (better known as "Obamacare") were grim, with the majority of the 632 respondents (52%) believing that "I see job losses and out-of-business signs." Despite this response, others believe that Obama care might mean good news for some aspects of commercial real estate.
But let's first examine the poll, which posed the question: "What will Obamacare do to your company?" With 52% believing the worst-case scenario, 16% of those who responded were honest in stating that "we'll eliminate coverage and pay the penalty," while 32% pointed out that it'll "make it better – it's a great plan."
The poll came about in response to the U.S. Supreme Court's late June decision upholding the constitutionality of requiring all individuals to have health insurance. This places responsibility for health insurance on businesses, which face penalties if they refuse to comply. It's true that this mandate will increase the cost of doing business.
On the other hand, it could actually benefit some types of commercial real estate – such as REITs, though even in this case, the response is a mixed bag. A July article on Seeking Alpha, the stock market website, pointed out that healthcare REITs might benefit from Obamacare, as it could improve cash flow. It could also provide added business, as more people with health insurance are likely to seek care.
An early July article posted on CNBC.com also supported this assertion. The article quoted Jim Sullivan of Green Street Advisors, who said that, in the area of senior housing, Obamacare shouldn't have any effect. But skilled nursing could take a hit. Medical office buildings, on the other hand, offer a mixed bag, Sullivan continued. While more insured people in the system means more demand, it also means doctors are making less (due to Medicare costs), meaning less rent available to MOB owners.
A recent blog by GlobeSt.com's Ian Ritter discussed Obamacare's impact on retail as well. On the one hand, the National Retail Federation believes that the law will penalize employers and the private sector. On the other hand, retailers such as CVS and Target are adding health clinics to their stores in anticipation of the suddenly insured population and demand for health care facilities.
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