Obama’s Health Care Reform
James | Mar 03, 2009 | Comments 0
Health Care an industry where your stocks will either receive a healthy boost from Obama or flu-like symptoms. Obama plans to cut costs government spending on drugs and their retail value which will not be pretty for the Drug Companies if it can get through Congress. Currently the Federal Government plans to negotiate down Medicare drug prices. Estimates show that this will cut revenue by $10-$30 billion which would be a problem for companies like Pfizer (PFE) and Merck (MRK) and would become a disaster if the private insurers tried to follow the same suit. Other plans to lower drug prices is to encourage the use of generic drugs. The plan is to wait for patents to expire and challenge them in a generic free market. The difference in the copayments alone will be enough to switch companies from branded to generic drugs. This could help Bio-Tech companies like Amgen (AMGN) and Genetech as they will enjoy a market free of direct competitors. Companies which should benefit from the change will be foreign countries. Look at Europe and India for companies like Teva Pharmaceuticals (TEVA) and Novartis (NVS) which are already selling drugs and will likely be the first to market in the U.S. Obama also has plans to cut costs in the efficiency of health care. His plan calls for investing $50 billion over the next five years in information technology to make health care more efficient. This funding could help health-care software systems providers like Quality Systems (QSII). Pharmacy Benefit Managers like Medco Health Solutions and Express Scripts. Obama’s other big push is to get health insurance for the estimated 45 million uninsured Americans. The Clinton Administration tried to deliver Universal Health Care but it proved to be a tough sell. As a result, companies like UnitedHealth Group (UNH) and Aetna are safe. Obama’s plan is currently vague but he wants to but the uninsured in a government-regulated National Health Insurance Exchange. Currently no need to panic and sell your drug stocks but watch Washington carefully. With a trillion dollar stimulus plan looming on tax payers mind it will be a hard sell to congress and might be idealistic views for President Obama.
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