Wednesday, March 10, 2010
Earlier today I received the following deck from Deutsche Bank, which surveyed institutional investors -- the professional portfolio managers who invest money in health care stocks for mutual funds, pension funds, and hedge funds -- to assess their expectations for the enactment of health care "reform" and its impact on various sectors of the industry. It is more or less self-explanatory, but two or three items bear mentioning. First, 78% of respondents believe that some version of "reform" will pass. Those are better odds than are now being given by pundits, particularly those on the right. Second, according to these pros hospitals will be big beneficiaries if "reform" passes, and other players (such as medical devices, my own company's sector) if it does not. Third, the slide with the "write-in" comments would be hilarious if it were not so tragic.
You previously mentioned civil disobedience WRT the census. Here is another one to consider.
Consider the following from a rational consumer decision standpoint.
Under the new proposed healthcare rules, one significant change is that I will be able to obtain coverage for pre-existing conditions.
In the current system, the penalty for no coverage can be big trouble and financial ruin in the case of serious illness. In the new system the penalty for no coverage will be a 2.5% tax on income. Since my health care plan costs me significantly north of 2.5%, would it be rational (if not a personal act of civil protest) for me to drop my healthcare coverage and pay the tax. If catastrophe hits, I immediately start up a premium plan?
Im not sure this gang thinks these things trough.
Thank you for that. What a great blog.
I have a couple of responses to the survey points:
1) while 78% think reform will pass the group is evenly divided on what reform plan will pass, and how.
Only 32.% think the current bill will pass on the Reconciliation pathway. Another 35% are highly confident this isn't the bill or the right pathway. The middle group, 32.5%, isn't defined in the slide so we don't really know what they think (maybe "not sure"?).
2) Unstated, because it's outside of the purview of the survey, but the biggest losers in the proposed reform is owner-operated businesses and their employees. In my company we are estimating that our costs will more than double for healthcare, since our employees currently pay half of the premium and we have a high deductible plan, a plan whose terms change every year. These are all no-no's under the Senate plan. So, we expect our plan will end and our company will be forced into the government plan or a BCBS look-alike. Sadly, people will necessarily lose their jobs to partially cover our higher costs.
3) the benficiaries will be the large companies who provide care and manage insurance plans, along with the biggest winners, Federal employees. It'll be a short-lived and Pyrric victory for them, though, since in my opinion the country can't afford this and the massive unemployment it will create will eventually cause a massive backlash.