What does Obamacare mean for the health-care industry as a whole? stocks, etc

Let me (Ryan) share an example with you that should help you understand Obamacare a little better:

Imagine you sold lemonade for $2 at a stand in your front yard.

Let’s say 100 people walk by your stand each day. And of those people, 50 choose to buy… 25 people don’t… and 25 people would be interested but could only afford a cup for $1.

Then, one day, the government passes a law that requires everyone to buy lemonade. For your 50 existing customers, they’d continue to pay you the $2 a cup they’ve always paid. In addition, though, you’d capture $2 a cup from the 25 people who didn’t want lemonade but now have to buy it. And for the 25 who couldn’t afford it, the government would pay you to offer lemonade at $1.

In other words, the government would be giving you more customers and paying you at the same time. A pretty attractive deal when you consider that your business would’ve grown its revenues 100% practically overnight. And that a simple piece of legislation would’ve made you — and your investors — a heap of cash.

Now to be fair, Obamacare doesn’t really work like this. For one thing, the government has high hopes that the program will lead to lower costs for health insurance — to carry the lemonade analogy further, the law would set limits on your ability to charge more than your actual expenses plus a reasonable profit rather than letting you keep selling at $2. Moreover, while Obamacare’s individual mandate calls for everyone to have insurance, people still have the alternative of not getting coverage and paying penalties instead.

Still, the likelihood is that many more people will buy insurance than before, and that could lead to big gains both for the companies that provide that insurance and the hospitals and other medical providers who serve newly insured patients.

All that explains why we’ve already seen numerous health-care stocks return as much as 71.0%, 124.3%, and even 130.0% since the bill passed. Not only are they likely to benefit from huge numbers of new customers; they’re also going to reap profits from government subsidies as well — and that means a never-before-seen profit opportunity for investors like you and me…

These landmark changes don’t happen often. But when they do, you need to be ready (and well informed!) if you want a piece of the profits. So stick with us and pay close attention to what Dan has to say about Obamacare’s provisions… Then later, I’ll be back to give you the inside track on Obamacare’s winning investment formula.


U.S. healthcare stat by David Heitz

Bloomberg news’s recent Best (and Worst) Lists include a run-down of U.S. healthcare information that may not be common knowledge for American workers and patients.

The Good

1. The U.S. ranks a respectable seventh among the best countries for workers. Countries in which workers did not have to spend a lot of money on healthcare ranked higher on the list.

The list included the 34 countries with membership in the Organization for Economic Cooperation and Development (OECD). Ireland, France, and Iceland led the list. The Czech Republic, Hungary, and Mexico rounded it out.

2. Two industries related to healthcare are among the most likely to hire new employees, including biotechnology and pharmaceuticals (No. 7) and healthcare facilities and services (No. 9).

“Over the past 20 years, most of the wage increases that might have gone to average workers have not because they have been absorbed by additional healthcare costs,” said Dr. Mark Smith, president and CEO of California HeathCare Foundation. “But some of that additional health care cost goes into more and more jobs.”

Hardware technology, technology services, and software led the list.

3. Healthcare companies dominate the list of the 25 most innovative U.S. companies. Cyberonics, Inc., a medical technology company specializing in neuromodulation, led the list. Other companies included Allergan, Celgene, Roper Industries, Medidata, Thoratec, Danaher, and Covidien.

Bloomberg used several data to score companies, including the amount they spend on research and development.

Tom Hubbard, vice president for policy research at the New England Healthcare Institute, said much of the innovation goes into developing drugs. “There have been drugs for every sort of category, but where there has been intense innovation and a lot of the cost is on drugs for very serious illness,” he said.

11 Ways to Save Money on Healthcare

The Bad

4. Among U.S. companies with the highest profits, two pharmaceutical giants make the list: Pfizer (No. 11) and Johnson & Johnson (No. 15). Tobacco giant Philip Morris is No. 20.
5. Three heathcare related companies make the list for the biggest increase in spending on lobbying in the past year, including Merck, Johnson & Johnson, and Proctor & Gamble.

To add a twist, the No. 2 big spender is Phillip Morris. The cigarette manufacturer spent $9.8 million on lobbying efforts in 2012, about half the expenditure of the list leader, Google.

This comes as no surprise given the intense national conversation about health, Smith said.

Healthcare: Where Does All the Money Go?

The Ugly

6. The U.S. ranks 46th out of 48 countries for health care efficiency, behind Libya, Malaysia, Cuba, Saudi Arabia, Greece, Romania, and Iran. Hong Kong topped the list.

Bloomberg ranked the countries based on life expectancy and the per capita cost of healthcare.

But Smith says Bloomberg’s methodology is flawed. “Life expectancy is a really important number, but if you’re trying to judge efficiency of a healthcare system and you’re rating life expectancy, that’s where I get off the bus,” he told Healthline.

He said cultural factors, such as diet and smoking prevalence, are also important. “I don’t think you’d want to be in the clutches of the Romanian healthcare system,” Smith added.
7. The U.S. ranks last in the world for paid time off. In this country, there is no guarantee of any paid time off whatsoever. Austria and Portugal led the list, with 35 paid days off per year for each worker.
8. The United States is (almost) the fattest country in the world. Bloomberg has the U.S. topping their list, but more recent data show Mexico now holds the title.

“I think it is clear that it’s hard to run an ‘efficient’ healthcare system and contain costs given the prevalence of obesity,” said Randy Seeley, Ph.D., director of the Cincinnati Diabetes and Obesity Center. “Even worse, the onset of obesity is getting younger, and the percentage of individuals at the heaviest BMIs [body mass indexes]—and therefore the most severe and expensive complications—is growing the fastest.”

Smith said the Bloomberg lists point to an essential conflict in American policy. “There is a story to be had in the struggle and tension between our national priority on reducing healthcare costs and the fact that healthcare has been one of the few sectors that is growing,” he said.


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