Medicare for All: Profiting on Volatility
As someone who’s spent a lot of time outside the country, I’ve seen a variety of health care systems. Many countries have a quality of health care that’s just as good as the U.S. — but it’s cheaper, and outcomes are better. In these countries, insurance is designed around the health care system. Here, health care practices are shaped by the profit-based insurance industry.
Health Care in the U.S.
The first time I saw a U.S. medical bill was in early 2008. Shocked to see a charge of over $1,000 for a routine test, I called the human resources department at my employer. It was then that I was informed — the price patients eventually pay is only a fraction of what’s invoiced.
This — along with many other bizarre practices — is a common occurrence in the U.S. health care system. And if there’s one thing that everyone agrees on, it’s that something needs to be done about it. Some are pushing for a “Medicare for All” program … which calls for some strategic investing.
Medicare for All
Anyone invested in health-related stocks needs to think about adjusting to new realities.
Medicare for All — a more government-focused approach to health care — is more radical than Obamacare. While some will tell you that it’s going to blow over, I disagree. With American health care in worse shape than most people realize, I see it as a definite possibility.
The program would create some big losers … but some big winners, too.
The Pros and Cons
The question remains: What would happen if the U.S. government adopted a Medicare for All policy?
On the downside … Private health insurance companies would be wiped out, private hospital groups would lose inflated profit margins, and pharmaceutical and medical equipment producers would lose.
However, there would be benefits. Operators of medical clinics and urgent care centers could get a big boost, home health care providers would benefit and some pharmaceuticals would do well.
Over the next few weeks and months, you’ll hear lots of conflicting advice about health care investments.
Don’t believe that Medicare for All is going to disappear. While nobody knows what the final policy is going to look like … something’s got to give.
Don’t listen to those who tell you to buy the dip on the health care stocks that have taken a recent beating. Stocks of insurance and hospital group companies are going to be more volatile moving forward. Unless you’re a short-term technical trader, volatility will lead to losses.
My advice is that you pay attention to the unfolding debate on health care policy. I’m convinced that there are going to be winners. It’s all a matter of profiting off of them.
Editor, The Bauman Letter
An economist by training, I grew up in the U.S. but emigrated to South Africa in the mid-1980s where I became deeply involved in the development and implementation of post-apartheid economic and urbanization policy. During the 90s and 2000s, I was a consultant to a variety of entities, including African and European governments and the United Nations.