One of the complaints we often hear is that the private insurance companies are gouging customers, second guessing doctors, and cutting corners at every turn to increase profit margins. A great deal of this is true and I would not debate that this dilutes the quality of health care in the United States.
Is the corollary that the government intends to run a health care program that does not make a profit?
That is a very probable outcome. If that is the case then how is it possible that the government will be able to fund something that is a money loser from the get go?
If the government intends to make a profit but just limit it to some margin, what will that margin be and shouldn't it be prescribed in the new legislation?
Another question I have is how we can reduce health care cost nationally from what is double that of any other western nation by starting off with a new program that could add a trillion dollars to the deficit? To me that is a trillion dollars more than we are spending now. How does that save anything at all? In some way, are we not gouging the taxpayer once again in a big way?
When Obama was running for president he often mentioned that the United States had 45 million people that were uninsured or under-insured. That is about 15% of the nation. How many of those people are under 30 years old and choose not to pay for insurance? How many of those people are between jobs and will be insured when they find new employment? How many of those people are receiving free care at hospitals and clinics through donations and local government support? Perhaps the real number of people going without is half that, or 7.5% of the population.
As any business person, statistician, engineer, or scientist will tell you, paying for that last few percent is the most expensive portion to cover. The other issue is that we might be able to cover the cost by examining where current funding is going and do that more efficiently rather than start huge new government programs.
Two final thoughts for discussion. First, who, if anyone, is volunteering to reduce their coverage to pay for someone elses? Second, would there be anything wrong with our nation finding the money for a new program before it spent money that we do not have, mortgaging our children's future even further?
As the debate continues, the stock market is down today so investors should have their watch-list at the ready. The following four stocks, that I have covered before, should do well no matter where the health care debate leads.
- Abbott Laboratories (NYSE: ABT)
- Johnson & Johnson (NYSE: JNJ)
- Novartis AG ADS (NYSE: NVS)
- Teva Pharmaceutical Industries ADR (NASDAQ: TEVA)
All of these companies are known for their strong management, broad product lines, and they all pay dividends. As an added bonus these companies give you exposure to international growth as JNJ and ABT do half their business outside the US as does NVS headquartered in Switzerland and Teva headquartered in Israel. Another bonus, Teva and Novartis are the No.1 and 2 generic drug manufacturers in the world.
These stocks are at the low end of their trading range and rather than speculate how low you might be able to buy them, I would recommend dollar cost averaging to establish a long term problem.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture and planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of JNJ.
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Reader Comments (Page 1 of 1)
8-17-2009 @ 8:55PM
R. C. Jackman said...
Is it even possible to construct a program that will satisfy all our health care needs? Might the attempt be like flying into a black hole? Will not all of our resources be consumed? Perhaps we should simplify, and let our lives be governed by the natural laws of supply and demand. In time our technology may progress to the point where we can sustain a comprehensive plan. But for now, let's simplify.
8-17-2009 @ 10:28PM
william lindblad said...
As always, you make some good points. There is certainly a percent that has the ability to pay, and chooses, otherwise. Those between jobs, a fact, a fact that probably not counted, and all this amounts to more confusion.
Things worth consideration are the "public option" and "single payer". Basically we have the single payer system in medicare with various add on options that are government controlled. It is not a horrible solution, it is just very costly and certainly a deficit based program. As such, it is terminal and requires the infusion of capital to keep it up and running. Please keep in mind that this is a government program. So would be the public option. The idea that the government could run a cost competitive entity alongside established insurance companies is ludicrous. This country has been around since the 18th century and the only agency that really makes a profit is the mint. (It does not cost them a quarter to make a quarter). Of course, they are ones that say it is worth a quarter.
Health care is mind boggling dilemma that is the result of innovations in medicine itself. We want to to live better and longer and technology and drug research have accomplished this in part. Comparing ourselves to other nations that are frequently the size of some of our States in comparison to cost and medical effectiveness is nothing more than a Michael Moore film fantasy. It is something that most fail to consider. The MRI machines cost aplenty, an so do many other life saving devices. If all of our population lived in say, California, than that State would have the best of everything with plenty to go around. California and Denmark are about the same size.
Denmark and Sweden's populations are all in the same place. So is the U.K., about the size of New England. They don't have South Dakota, and the size of both of the Dakota's is bigger than the U.K. (approx.) Size and demographics matter and certainly add to cost and the best of care.
I agree that this is a problem, a problem with no simple answer. I don't have one either.
9-25-2009 @ 8:37AM
ROBERT W SMITH said...
HAS ANYONE 'REALLY' PUT THE MEMBERS OF THE HOUSE AND SENATE FEET TO THE FIRE RE PUTTING THEMSELVES ON WHATEVER FINAL MEDICAL PROGRAM IS ENACTED?
I'M TALKING ABOUT THE PUNDITS, THE TALK SHOW HOSTS, THE BROADCAST MEDIA, ANYONE??, THE POLITICIANS THEMSELVES? I HAVEN'T.
IF MEMORY SERVES, I SEEM TO RECALL THAT CONGRESS ITSELF HAS USED SSI CONTRIBUTIONS OVER THE PAST MANY YEARS TO FUND NORMAL GOVERNMENT DEFICITS TO AVOID HAVING TO ASK THE TAXPAYERS FOR INCREASED TAXES TO PAY FOR MANY OF PROGRAMS MOST LIKELY THAT WERE WASTEFUL, UNPRODUCTIVE AND UNNECESSARY.
I WOULD WELCOME COMMENTS ON EITHER OR BOTH.