Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
The various perspectives on this whole subject are fascinating. I had absolutely no intention of provoking either an ethical or a political issue. My question was simply an economic one: If we want health care at a minimal cost, how is that consistent with lots of profit for investors who are, in the final analysis, raking in profits from the top of whatever system is in practice?
While I certainly share Scott's very dim view of our present government, this particular topic seems to be so complex, with so many interested players from so many disparate areas that it's no wonder no one can agree on anything. In that light, Scott's observation that some politician said "We have to pass it so that you can find out what is in it" should perhaps be given some rhetorical slack.
Consider the ever-evolving universe of the internet, another area of incredible complexity and financial upset and interaction. What if the internet had not been allowed to come into being until after all interested parties had reached agreement on what exactly it was going to look like after ten or fifteen years? Does anyone really think that there would be an internet today if forced to get over that hurdle? Would the print media, for example, have signed off on their own demise?
With respect to the proposals of Obamacare, I submit that the situation is quite similar: again we have an incredibly complex situation which is certainly going to affect many players with financial interests in the game. How will this play out in the end? I don't believe for a minute that anyone out there really knows what the ultimate result is going to look like. Already there seem to be cracks showing in the implementation.
The point is simply this: either we want a medical-care system that is in no way different than buying a new car... "no money, no health... too bad... that's life" or we acknowledge that this entire subject has ethical overtones. If the latter is to be the choice, and we also believe that the present system is seriously flawed, then experimentation as we try to find a new paradigm is simply unavoidable. Not easy, not fun, but that's life if we want to continue to evolve.
Anyone who blathers that they know exactly how this is going to play out is either a moron or a charlatan.
Reply to @Old_Joe: Thanks, I have been called worse things. Your comment is a good one.
Whatever system is adopted, humans will adapt to it and that system will change to meet the adaptations. I am fortunate to be able to provide for my own healthcare and also for the needs of some others that cannot provide for themselves. It is charity on my part and I am glad to have participated. Forced charity is not charity.
I guess we can add healthcare to religion and politics as subjects that should not be discussed at the dinner table for those who actually eat together at a dinner table anymore. I keep dating myself.
Reply to @JohnChisum: Sorry- didn't mean you, for sure. Was thinking about the talking heads out there, of which there is certainly no supply shortage.
Reply to @PRESSmUP: This is the key point and needs to be repeated ad nauseum.
What does the ACA do? It mandates an individual have health care; banishes some insurance practices like preexisting condition bans/premium hikes; sets up marketplaces where individuals can freely shop for private insurance; subsidizes some individuals to buy said insurance; employs some people to guide consumers through that process; and increases Medicare enrollment. There will surely be unforeseen and unintended consequences, like all legislation, but no one knows what those are yet by definition.
The ACA creates no changes at the point of service. None. You'll still see your same doctor(s). He/she won't be a government worker. It won't create waiting lists. There will be no death panels. I'm willing to bet that once the marketplaces are up and running, people won't even know its "Obamacare." Though if someone does want a single-payer system, by all means, keep fighting until the ACA is dead.
And, theoretically, shouldn't bringing more people into the system increase healthcare profits, especially for providers, pharmaceuticals and manufacturers?
Reply to @Old_Joe: OJ...you don't need to be "political" to be able to profit from political decisions. You simply need to separate partisan political opinion from political facts.
As a specific example...more folks will have health insurance coverage. This is purely a fact, so let's put partisan views of this aside.
These folks will be able to get scripts for medications...and these drugs are simply covered by the exchange plans as they are right now by a normal insurance carrier such as a United Healthcare. As an example, there is no negotiating or governmental pricing controls on statins for the millions of folks who now are seeing a doc for the first time in years...who need a statin and now can get them.
Reply to @Old_Joe: Howdy, Joe. I'm at a loss. You said: "The various perspectives on this whole subject are fascinating. I had absolutely no intention of provoking either an ethical or a political issue. My question was simply an economic one: If we want health care at a minimal cost, how is that consistent with lots of profit for investors who are, in the final analysis, raking in profits from the top of whatever system is in practice?"
How can the economic question not be an ethical one? We're talking money and profits here. (Or another prospect: taking the profit OUT of health care.) Either way, to the extent that money is essential to get anything and everything done, how can it EVER not be an ethical issue? Whatever happens between people and societies involves money. It is indispensable. How can ethical considerations be divorced from any conversation about money and its purposes? I'm making a point, not pointing a finger. .....But I see you're all but saying the same thing, no?
Hey there Max- First of all, I'm not at all certain that a decent (or at least improved) health care system needs to be non-profit. Nor am I suggesting that Obamacare or any other possible approach is the ultimate answer... in fact, I think that if there is an answer it will neither be monolithic nor ultimate, but evolutionary as long as we believe that a) there is an ethical dimension to the issue and b) whatever we're doing now totally sucks.
Mind you, I'm not saying that for-profit health provision is the same as unrestrained profits and price gouging. I believe that profit is a necessary motivator for continued research and development of new medical technology, and to create a desire on the part of highly intelligent individuals to enter the health system. Where I have serious reservations is with those who are gaming the system: big pharma, insurance providers, medical practitioners who generate unnecessary procedures and/or submit fraudulent billings... I'm sure that you could name a few more.
Leaving the ethical question strictly aside: how do you simultaneously generate huge profits while providing a universal service and bring down costs at the same time? If, as Ted notes, the average health care fund is up 36% YTD, then evidently it is expected that their profits are going to increase fairly dramatically. How does that square with lowering the costs of providing that health care?
Reply to @Old_Joe: I also wonder if now might be the time to take profits in healthcare and look for other opportunities? Those past results just may be a thing of the past. I see less investment overall. Particular healthcare stocks may prove to be okay if they have products that increase efficiency. One such stock could be CAH who has a big success in Pyxis automation for hospital systems.
Reply to John- Well, as rono used to say, "my crystal ball is in the shop right now for maintenance". I don't think that I'd abandon the field completely, but like anything else that's had a big run-up, it might not hurt to grab some of the money and run. On the other hand (and there seems always to be that other hand) while there might be a general market decline that would take the sector down quickly (along with everything else) I really don't see that there's a bubble in the specific area... if it starts to gradually lose favor as things evolve there should be time to get out without major loss.
Reply to @Ted: "Better living through chemistry." Was it Dow that used that slogan? Yes, new treatments, discoveries are things I can be grateful for, too. Otherwise I might not be here, either. My beef is with the scumbag gigantic and hugely profitable corporate filth who fight to keep real flesh and blood people from getting what they need at a more reasonable price, from Canada. I remember once, crossing back over the border from Tijuana. The last thing the USA guy with the badge asked me was, "Are you bringing any drugs back with you?" I giggled and said, "no," with a smile. I thought he meant illegal stuff like weed or cocaine. Then I remembered the antibiotics I'd bought... so that the next time I get a respiratory infection, I don't have to pay a doctor to tell me that I need an antibiotic, which I'd have to pay more for here in the USA, too.
First. The people running the health funds have more time and access to insider information than we do to invest. The funds will probably do fairly well; there is a lot of business to be done. Second. The law is less than ideal because it was not bipartisan. Maybe it would not have been better, but both parties would have needed to support it in that situation. So many bargains were struck to get it passed that the result was predictably unsatisfactory.
Third. The relatively poor cost-benefit return on US medical costs should encourage us to change the system. That will be politically impossible in our foreseeable future. The best system guarantees a basal level of care which is cost-effective and promotes affordable interventions - treat blood pressure, screen for cancer, provide good prenatal care, tax "bad" foods.
Fourth. Accept the British approach - let those who can afford it buy extra coverage. Some insurance companies will survive. Medicare is not as inefficient as some suggest. There is a lot of fraud perpetuated by companies trying to abuse benefits (got your electric wheelchair or your back brace, special heating pad, "diabetic shoes" [there are reasonable restrictions on their prescription, unmentioned in the ads] yet?) Stripping private insurance companies of the multiple levels of screeners (to deny studies and services, some of which should be denied, but could be addressed more economically) and bureaucrats will increase unemployment and reduce medical costs.
If you live past 80 (which most of us will), the odds are that you are benefiting from government (younger taxpayers) charity when you receive your Medicare benefits, your Social Security check, various public services. Currently, I suppose you are relying on the faith of Chinese investors that your descendants will honor your debts. Those of you who are up to date on your payments, please just enjoy your warm glow. This nation has given me much and I hope I never gripe about the cost.
Saying that health care is an unsolvable mess, resolves nothing. Let those with a better plan pass it in both houses; then they can dismantle the current offering.
Replies to various posts ... OJ: EMTALA and ACA have some interesting interactions. Found this law article (still browsing through it) from 2011 discussing conflicts between EMTALA and ACA. Look at pp. 257-259 (pdf pp. 3-5; sounds like a lot, but only three paragraphs not counting footnotes). http://www3.law.columbia.edu/hrlr/hrlr_journal/43.1/Diamond.pdf
It points out that ERs have been funded by the federal government to cover the mandate to provide service. But under ACA, that funding is being cut severely (theory being that more people will be covered). But the math doesn't seem to add up (at least according to the paper).
Max, Catch, and possibly others: One can develop technology without a profit motive; educational institutions do that. (Admittedly, we've been moving more and more toward a profit-based, commercial/educational partnership model.) There's also the public service model as exemplified by the old Bell System/Bell Telephone Laboratories. AT&T was guaranteed a reasonable profit in exchange for sharing its research with the world, and for making phone service universally available. That model had decidedly bad side effects (e.g. AT&T had cell phone technology in the 70s - Advanced Mobile Phone Service), but could not market it because of regulations at the time. Nothing is perfect, I simply offer these up as food for thought - other economic models that could be applied.
Reply to @Old_Joe: The Politics of ObamaCare are complex and confusing and partisan. The investing thesis — and results — have been anything but. Own a Health Care Fund Regards, Ted
Reply to @Ted: Thanks. Inclined to agree, at least for the present. Life is what it is, and it ain't perfection. Speaking of perfection, I notice that you're having lots of fun since you (ahem!) "fixed" your computer. Satisfied that things are working well for you.
They seem to echo what most are saying here: increased volume will result in modest profit increases in some subsectors. But they warn against current valuations.
Comments
While I certainly share Scott's very dim view of our present government, this particular topic seems to be so complex, with so many interested players from so many disparate areas that it's no wonder no one can agree on anything. In that light, Scott's observation that some politician said "We have to pass it so that you can find out what is in it" should perhaps be given some rhetorical slack.
Consider the ever-evolving universe of the internet, another area of incredible complexity and financial upset and interaction. What if the internet had not been allowed to come into being until after all interested parties had reached agreement on what exactly it was going to look like after ten or fifteen years? Does anyone really think that there would be an internet today if forced to get over that hurdle? Would the print media, for example, have signed off on their own demise?
With respect to the proposals of Obamacare, I submit that the situation is quite similar: again we have an incredibly complex situation which is certainly going to affect many players with financial interests in the game. How will this play out in the end? I don't believe for a minute that anyone out there really knows what the ultimate result is going to look like. Already there seem to be cracks showing in the implementation.
The point is simply this: either we want a medical-care system that is in no way different than buying a new car... "no money, no health... too bad... that's life" or we acknowledge that this entire subject has ethical overtones. If the latter is to be the choice, and we also believe that the present system is seriously flawed, then experimentation as we try to find a new paradigm is simply unavoidable. Not easy, not fun, but that's life if we want to continue to evolve.
Anyone who blathers that they know exactly how this is going to play out is either a moron or a charlatan.
Whatever system is adopted, humans will adapt to it and that system will change to meet the adaptations. I am fortunate to be able to provide for my own healthcare and also for the needs of some others that cannot provide for themselves. It is charity on my part and I am glad to have participated. Forced charity is not charity.
I guess we can add healthcare to religion and politics as subjects that should not be discussed at the dinner table for those who actually eat together at a dinner table anymore. I keep dating myself.
What does the ACA do? It mandates an individual have health care; banishes some insurance practices like preexisting condition bans/premium hikes; sets up marketplaces where individuals can freely shop for private insurance; subsidizes some individuals to buy said insurance; employs some people to guide consumers through that process; and increases Medicare enrollment. There will surely be unforeseen and unintended consequences, like all legislation, but no one knows what those are yet by definition.
The ACA creates no changes at the point of service. None. You'll still see your same doctor(s). He/she won't be a government worker. It won't create waiting lists. There will be no death panels. I'm willing to bet that once the marketplaces are up and running, people won't even know its "Obamacare." Though if someone does want a single-payer system, by all means, keep fighting until the ACA is dead.
And, theoretically, shouldn't bringing more people into the system increase healthcare profits, especially for providers, pharmaceuticals and manufacturers?
As a specific example...more folks will have health insurance coverage. This is purely a fact, so let's put partisan views of this aside.
These folks will be able to get scripts for medications...and these drugs are simply covered by the exchange plans as they are right now by a normal insurance carrier such as a United Healthcare. As an example, there is no negotiating or governmental pricing controls on statins for the millions of folks who now are seeing a doc for the first time in years...who need a statin and now can get them.
Bingo! Yahtzee!
Here is another great idea whose time has come. Doctor consultations via web video. $35 http://www.bizjournals.com/seattle/blog/health-care-inc/2013/09/the-doctor-is-in-my-smartphone.html
How can the economic question not be an ethical one? We're talking money and profits here. (Or another prospect: taking the profit OUT of health care.) Either way, to the extent that money is essential to get anything and everything done, how can it EVER not be an ethical issue? Whatever happens between people and societies involves money. It is indispensable. How can ethical considerations be divorced from any conversation about money and its purposes? I'm making a point, not pointing a finger. .....But I see you're all but saying the same thing, no?
Mind you, I'm not saying that for-profit health provision is the same as unrestrained profits and price gouging. I believe that profit is a necessary motivator for continued research and development of new medical technology, and to create a desire on the part of highly intelligent individuals to enter the health system. Where I have serious reservations is with those who are gaming the system: big pharma, insurance providers, medical practitioners who generate unnecessary procedures and/or submit fraudulent billings... I'm sure that you could name a few more.
Leaving the ethical question strictly aside: how do you simultaneously generate huge profits while providing a universal service and bring down costs at the same time? If, as Ted notes, the average health care fund is up 36% YTD, then evidently it is expected that their profits are going to increase fairly dramatically. How does that square with lowering the costs of providing that health care?
Second. The law is less than ideal because it was not bipartisan. Maybe it would not have been better, but both parties would have needed to support it in that situation. So many bargains were struck to get it passed that the result was predictably unsatisfactory.
Third. The relatively poor cost-benefit return on US medical costs should encourage us to change the system. That will be politically impossible in our foreseeable future. The best system guarantees a basal level of care which is cost-effective and promotes affordable interventions - treat blood pressure, screen for cancer, provide good prenatal care, tax "bad" foods.
Fourth. Accept the British approach - let those who can afford it buy extra coverage. Some insurance companies will survive. Medicare is not as inefficient as some suggest. There is a lot of fraud perpetuated by companies trying to abuse benefits (got your electric wheelchair or your back brace, special heating pad, "diabetic shoes" [there are reasonable restrictions on their prescription, unmentioned in the ads] yet?) Stripping private insurance companies of the multiple levels of screeners (to deny studies and services, some of which should be denied, but could be addressed more economically) and bureaucrats will increase unemployment and reduce medical costs.
If you live past 80 (which most of us will), the odds are that you are benefiting from government (younger taxpayers) charity when you receive your Medicare benefits, your Social Security check, various public services. Currently, I suppose you are relying on the faith of Chinese investors that your descendants will honor your debts. Those of you who are up to date on your payments, please just enjoy your warm glow. This nation has given me much and I hope I never gripe about the cost.
Saying that health care is an unsolvable mess, resolves nothing. Let those with a better plan pass it in both houses; then they can dismantle the current offering.
OJ: EMTALA and ACA have some interesting interactions. Found this law article (still browsing through it) from 2011 discussing conflicts between EMTALA and ACA. Look at pp. 257-259 (pdf pp. 3-5; sounds like a lot, but only three paragraphs not counting footnotes).
http://www3.law.columbia.edu/hrlr/hrlr_journal/43.1/Diamond.pdf
It points out that ERs have been funded by the federal government to cover the mandate to provide service. But under ACA, that funding is being cut severely (theory being that more people will be covered). But the math doesn't seem to add up (at least according to the paper).
The funding cuts are real: see, e.g. http://www.uofmhealth.org/news/archive/201302/ethics-access-u-m-doctors-compare-two-federal-health-care
Charge less but make more money? As others have said, take in less per sale but make it up in volume.
Scott: your comment about doing without an asthma inhaler because of cost caught my attention. Saw a good article (in what is normally a rag) about what many New Yorkers do to survive medical costs (including going without and possibly ending up in the ER, which brings us back to OJ, I guess).
http://www.amny.com/urbanite-1.812039/some-nyers-skimp-go-abroad-trade-meds-more-to-cut-health-care-costs-1.6133816
As a side note: there are eight million stories in the naked city, and apparently 40% of them (3.2M) are poor enough to be in Medicaid, according to the article. A shocking figure.
Max, Catch, and possibly others: One can develop technology without a profit motive; educational institutions do that. (Admittedly, we've been moving more and more toward a profit-based, commercial/educational partnership model.) There's also the public service model as exemplified by the old Bell System/Bell Telephone Laboratories. AT&T was guaranteed a reasonable profit in exchange for sharing its research with the world, and for making phone service universally available. That model had decidedly bad side effects (e.g. AT&T had cell phone technology in the 70s - Advanced Mobile Phone Service), but could not market it because of regulations at the time. Nothing is perfect, I simply offer these up as food for thought - other economic models that could be applied.
Regards to all-
OJ
Regards,
Ted
Regards-
OJ
They seem to echo what most are saying here: increased volume will result in modest profit increases in some subsectors. But they warn against current valuations.