HEALTHY, WEALTHY & WISE
We’re getting a healthcare bill one way or another. The key will be if we can get wealthy by being wise even if we don’t get healthy.
By Neil George
You would think that as a nation that spends up to 20 percent of its GDP on healthcare that we’d be one of the healthiest in the world.
Putting that into perspective – other nations such as our neighbor to the north Canada only spend about 10 percent – or about half as much as a percentage of its GDP. And then there are others that spend much less – including Britain and New Zealand that keep their spending down around 8 percent or so of what they produce.
Meanwhile – on the list of nations with the longest average life expectancy – guess what? The US is only number 45 on that list with other nations that spend a whole lot less in percentage of GDP as well as per capita ranking far and above the US.
So, we spend gobs more money – but are we really getting what we pay for? And then there’re the millions that aren’t spending because they’re out of the mainstream healthcare market.
The result is one of the really big political hot potatoes that the House and Senate are currently trying to rush through before the next campaign season begins to formulate as we head into the later part of this year.
Like so many government initiatives over the past several years – the healthcare legislation is being rushed through in very short order and we as taxpayers, investors let alone patients are going to be stuck with the outcome.
Everybody has a skin in this game. And with trillions of dollars at stake – the lobbyists are working overtime.
Everything from liability and lawsuits for lawyers and then on to the doctors, hospitals, insurers, pharmacies, pharmacy benefits managers, drug companies, medical device companies, medical real estate investment trust companies as well as plenty of other direct and ancillary businesses and industries have big money to be made or lost.
And then on the user side – there are plenty groups that want everything for their beneficiaries while not wanting to sacrifice or pay for anything.
It does beg the question – why don’t we just begin to nibble on troubles and the challenges – rather than creating a huge government plan all at once?
Why don’t we take some of the real issues and begin to fix them one by one?
Let’s start with a speech that the president gave to the American Medical Association (AMA) on the 15th of this month? One of the biggest cost factors in medical care involves the cost of lawsuits and insurance and procedures to defend against them.
The president gave a speech that called for cutting malpractice lawsuits as a major cost savings. I would agree and the AMA and all the doctors and affiliates have been dying for this – stating that it would save billions which would reduce the cost of healthcare.
But another group – the American Trial Lawyers (ATL) is steadfast against this as this would take those billions out of their pockets. So, the president stated that while we need to cut malpractice suits – we can’t limit damage awards. Why not? We do in plenty of other industries – including the financial and banking industries?
Just this step alone would be a big saver. And as I’ve written for years and years – we could couple it with a tracking of medical errors and publish the records of doctors and hospitals so that we as patients and insurers would move to avoid the troubled providers while seeking to reward the better quality providers. A win-win for all sides?
Well, the AMA doesn’t like tracking of errors like we do for brokers in the financial industry. And of course as noted about – the ATL doesn’t like cutting back on how they can sue – so we’re stuck.
As for the millions of uninsured – did you happen to see the George Will column on the 21st of this week?
He made a pretty good case for what I’ve been agreeing with again for years. If you take the number of the uninsured it’s a lot more manageable than what is being blown up by too many lobby groups.
The core of his message is that the uninsured can be broken down into a few key groups starting with the temporary uninsured. These are the folks that lose their employer-provided coverage moving from one job to another. And for the vast majority this group get solved within 6 months or less.
The next group tends to be eligible for Medicare and/or Medicaid – but fail to or don’t even try to apply.
Then there are the millions of non-US persons that really are outside of the government’s concern for healthcare as that’s another hot button political issue.
The remaining group is the really uninsured – including the uninsurable which is a fraction of the 40-50 million number that gets thrown around in speeches around the nation.
And the fix is a whole lot smaller than remaking the entire market for all of us. Why not just issue tax credits or as Will suggests – just issue designated debit cards with cash and arrange for private insurers. Or if this is unpalatable – set up an extension of Medicare for this group.
But trying to address the core smaller issues doesn’t get as great press as a huge government program does. And when the smaller issues are brought up to the public – that’s were we tend to get bogged down by the lobby and political interest groups that stop any small changes.
What We’ll Get
So, we might end up with nothing done by this Congress – or if we do get the big huge government program – I continue to think that it’s going to end up looking just like I’ve been writing about for a while now.
And it’s the same spiel that the president and other politicos have been doing their stump speeches about for years now.
How many times have you heard and read about that the nation should be entitled to get the same healthcare plan as members of Congress and the US government?
Well then – that’s pretty much what’s running through the Senate right now.
The deal might well end up following the model of the Federal Health Benefits Plan (FEHBP). This is the system of health insurance coverage for Uncle Sam Incorporated’s employees.
This looks much like the cafeteria benefit plans of many private sector employers. There are a collection of insurers that have plans that vary in flexibility and benefits that are priced at different levels on user/consumer expenditures.
To get there – we’re going to get a legal mandate to participate and pay or be taxed and then forced to enroll.
And employers will be mandated to provide coverage or pay fees to have the government provide the coverage.
And lastly, we’re all going to be taxed one way or another – much like we’re already taxed for Social Security (FICA).
Now the good news. While this won’t fix costs, service issues or even quality – it will feel good for the politicos. And for us investors – we can cash in as this all unfolds by buying into the companies that already have the inside track as they’re already the leaders operating inside the government’s existing FEHBP plans.
One of the leaders in this market segment continues to be UnitedHealth (NYSE: UNH) which should be inline to get a bigger chunk of public and private cashflows as this whole big plan goes through.
And if it doesn’t – well then it keeps collecting all of its current premium flows from Uncle Sam as well as the myriad of private sector companies and individuals. And of course it has some pretty good lobbyists to make it work for it one way or the other.
Finally, a man that made it his life’s work to tell us what we all were really thinking about issues ranging from the healthcare debate to every other issue – died at 81 years.
Alec Gallup was the scion of the founder of Gallop polls George Gallup. George started it up back in 1935 – when he began to ask about how well the government’s plans to get huge were sitting with the American voters. Alec continued the tradition running the Gallup organization for many years.
Neil George is editor of By George and Stocks That Pay You as well as the pending investment journal – The Pay Me Strategy.
The above is only opinion and does not represent and/or offer to buy or sell any security and/or any financial advice. The opinions contained may not be suitable for all investors who should consult their own financial adviser before making any investment or other decisions. I may own some of these same securities noted in accounts under my control or for my benefit.
Errors/Omissions: I always welcome being called on facts, figures and commentary from readers and look forward to your feedback. I can be reached by email at firstname.lastname@example.org or email@example.com or at 01-314-616-3325.