Does This Data Overwhelmingly Prove That We Need Obamacare?

Regardless of whether you're entirely for the Patient Protection and Affordable Care Act, vehemently against it, or fall somewhere in between, it's set to become the law of the land on an individual basis in less than five months.

Public opinion on the highly controversial law, known also as Obamacare, has been swinging decisively toward pessimism in recent months, with the Kaiser Family Foundation's most recent poll demonstrating that there are twice as many people who have a "very unfavorable" view of the law as opposed to those who have a "very favorable" view (30% versus 15%). Add on the almost incalculable human and technological effort that's going to be needed to meld the cloud-based technology and educational aspects of this bill and you have countless reasons for uncertainty from citizens.

The spark Obamacare needs
However, data from a recently released Gallup poll may provide some of the spark needed to fuel the fire for Obamacare. The Gallup poll in question examined the correlation between the Gallup-Healthways Well-Being Index -- a measure of health that includes factors such as access to health care, emotional and physical health, a person's work environment, and their physical behaviors -- and the incidence of heart attacks. The findings confirmed that metros in the bottom 10% of the Well-Being Index had a two time greater risk of having had a heart attack at some point in their lives than the top 10% of the Well-Being Index -- 5.5% versus 2.8%.

To some of you, this might be a bit of "Duh!" moment -- and you're partly right... it is! If the overall Well-Being Index for a metro is lower because of unhealthy personal habits and a tough socioeconomic environment, it probably isn't surprising to see heart attack rates track higher in these regions as well. But, out of the multiple factors that go into calculating the Well-Being Index, only two have dropped since 2008: work environment and health care access! 

Where Obamacare could play a big role
The big one that I would focus on here is access to health care, which can be difficult to get for lower income individuals who sometimes desperately need that care. Lower-income individuals naturally have fewer food choices at their disposal, which leads to numerous unhealthy eating habits. Similarly, depression rates tend to be higher among lower income individuals which can also encourage poor health habits.

Obamacare intends to fix this by expanding government-sponsored Medicaid to some 16 million people that currently don't qualify for it. In addition, individuals that make up to four times the national poverty level could be eligible for up to some form of subsidy with regard to their health insurance premium. By drastically improving access to health care for these millions of Americans, it's expected that overall well-being will rise.

Another factor to keep in mind here is that most Americans get quite a bit of their health advice from their doctor. Another recent Gallup poll released last week looked at how often respondents said their doctor discussed with them the benefits of exercising regularly or eating a healthy diet. The poll results showed that 71% of physicians discussed exercise with patients and another 66% discussed the benefits of a proper diet. There's no doubt in my mind that doctors are one of the greatest health influences out there, so if we can get more people to go to the doctor, they are more liable to follow the advice of their physicians and try to exercise more and eat healthier. 

Which stocks might benefit?
Looking at this from an investment perspective, there are a lot (and I really do mean a lot) of potential winners under the proposed Medicaid expansion. As long as the U.S. government is able to effectively spread awareness of health care access to the public that qualifies for it, the result should be expanded doctor visits and a probable boost in business for everything from insurers to certain types of restaurants.

The obvious beneficiary here would be hospitals in general and insurers that rely heavily on Medicaid-based members. The insurer I've turned to on multiple occasions that's very eager to see the individual mandate go into law is WellPoint (NYSE: WLP  ) , which purchased Amerigroup last year to become the nation's largest Medicaid-based health-benefits provider. Even with a medical loss ratio cap of 80% and the fact that Medicaid-based members may come with lower margins than members who pay for their own deductible, the sheer number of new members that should be introduced into its Blue Cross Blue Shield plans should provide a big bump to its bottom line profits.

Drugmakers could also see a sizable move to the upside as preventative and reactionary medicine takes off in lower-income metros. Because of poor health habits and food choices in many areas ranked among the lowest in the Well-Being Index, drugs that counter obesity or treat the most common obesity-caused disease -- type 2 diabetes -- could be in for a sizable jump in orders.

The market for weight-control management drugs is a hotly contested race between two drugs currently approved by the Food and Drug Administration: Belviq by Arena Pharmaceuticals (NASDAQ: ARNA  ) and Qsymia by VIVUS. Each drug possesses its own unique advantages with Qsymia delivering a higher percentage of weight loss in clinical trials, while Belviq presented the more favorable safety profile. If I had to choose, I'd bet on physicians preferring the safety profile on Belviq above all else, but there's also enough room here for both drugs to succeed.

Let's not forget about Johnson & Johnson's (NYSE: JNJ  ) Invokana, either, which could become the new staple in treating type 2 diabetes. Approved earlier this year, Invokana is an SGLT-2 inhibitor that works out of the kidneys as opposed to the liver or pancreas for most other diabetes medications. In addition to providing for better glycemic balance, Invokana also has this incredible side effect of inducing weight loss and lowering blood pressure in patients, which is a welcome reversal of the weight gain most often witnessed with many types of diabetes medications.

The not-so-obvious beneficiaries
But, there are more beneficiaries than meets the eye if you dig a bit deeper.

I certainly wouldn't fault you for associating Xerox (NYSE: XRX  ) with copy machines and other print services, but the company has moved the majority of its revenue into information technology and services. Specifically, Xerox has become a gigantic processor of Medicaid claims in the state of California... which also happens to be WellPoint's biggest market opportunity to pick up new Medicaid-based members. In California alone, 1.4 million new people (nearly 10% of the expected 16 million) are expected to be included under its expanded Medicaid program. With Xerox being the exclusive processor of Medicaid payments in the state, it could be in line for a huge pick-up in business.

Also, don't discount the idea that Medicaid-expansion patients won't go to their doctor and take their physicians' advice to heart. This doesn't exactly mean that organic grocers like Whole Foods Market will necessarily see a bump in sales because their doctor says to eat healthier, but it could mean a rise in traffic for fresh-Mex casual diner Chipotle Mexican Grill (NYSE: CMG  ) . Chipotle's "Food With Integrity" promise ensures the use of meat that's been free of antibiotics and hormones. Chipotle also uses local organic produce at many of its locations. Although organic food may not always be price-practical for lower-income households, Chipotle's prices are currently very comparable to many less-healthier fast food restaurants, and it has locations in many of the states where Medicaid-expansion will see the biggest rise in new members.

Still in the dark about how Obamacare might affect you and your portfolio? Don't worry -- you're not alone. To help prepare investors for the massive changes coming to the American health care system, The Motley Fool created a special free report that makes this complex topic easily understandable. Download "Everything You Need to Know About Obamacare" and discover how the law may impact your taxes, health insurance, and investments. Click here for your free copy today.


Read/Post Comments (12) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 05, 2013, at 7:47 PM, BayAreaBill1 wrote:

    Hey Motley Dumb F's! You clearly never took any English Comp classes. "Data" is plural. Your headline should read "Do These Data ---". If you can't write, how can we possibly expect you to think? BTW, I've noticed that most of your articles are quite spotty and all want me to fork out precious money for mediocre analyses.

  • Report this Comment On August 05, 2013, at 8:28 PM, jaimajenna1 wrote:

    I am really having a hard time lining up with the people against the ACA. Providing Health Care to millions of Americans seems like a really good idea. Considering that our Health Care System is in the control of CORPORATE AMERICA, I find it hard to go against the ACA. Is the ACA plerfect? Probably not. So rather than attack and try to repeal it why not amend it to make it better for all Americans. If the GOP has an alternative, then step to the plate and let's hear the alternative.

  • Report this Comment On August 05, 2013, at 8:51 PM, fairguy wrote:

    Jaima You make the point Thanks,

  • Report this Comment On August 05, 2013, at 9:43 PM, slanciano wrote:

    Jaima,

    What's really in store for you involving Obozocare ?

    Bring up this Youtube portal page and type in the following search criteria:

    Know the TRUTH about the Government Health Care Bill

    Click search - then click on one video icons on the left margin

    This is video reading of the law word for word. No propaganda just the facts.

    This ends today's lesson.

  • Report this Comment On August 05, 2013, at 9:54 PM, irwinchusid wrote:

    Government health care is like being offered a ride by the guy who stole your car.

  • Report this Comment On August 05, 2013, at 10:13 PM, mike28584 wrote:

    The Gallup poll has always been made to show what ever the the poller wants it too. Are health care program is doing well, the poor get free health care, the most of the working people had health insurance through their work place, and the rich payed their own. And congress and the rest of Washingtons finest get everything they need. I believe if they thought of it they would put it in there that they would get overtime pay while in the hospital.

  • Report this Comment On August 05, 2013, at 10:15 PM, VRSEFgold wrote:

    OvomitCare? Puke! Puke!

  • Report this Comment On August 05, 2013, at 10:26 PM, KUBLOTNIK wrote:

    among many things in this life ,i am a nurse. i have a license in texas and utah. the problem with "health care" in america is this. we,the people. we have lived ,in spite of the info.available, the most self-destructive lifestyle we could live. then because we,like 15 year olds, don't want to be accountable for our lives, we vote for lying politicians who tell us that if we will vote for them, they will make it ( thru various laws) so that we don't have to suffer for our ignorance , stupidity and self-destruction .and that they will do this FOR FREE. or that we will make the evil drug companies or hospitals or clinics or rich doctors to pay. what we have done is insane.--- as for texas ,we have a county hospital in each county that is subsidized by the property taxpayer so that ANYONE who cannot pay can receive medical care at any of the clinics run at that hospital. there is NO SUCH THING AS "NO ACCESS TO HEALTH CARE". that is a lie.!!! this 2,500 page ACA monstrosity will not work.

  • Report this Comment On August 05, 2013, at 10:32 PM, screwthegov wrote:

    Obamacare will be so expensive that you cannot afford it then at the end of year you pay a fine for not having it.

    All that fine money go's to the poor so they can afford stuff that we working people cannot.

    When I see a welfare person with a nicer car than me, the newest IPhone, a place to live etc. all supplied by the gov, it really, really disturbs me! Now the politicians want to give them more!

  • Report this Comment On August 06, 2013, at 6:14 AM, proman111 wrote:

    "Do these Data" are you kidding me? There is nothing wrong in saying "Does This Data". This headline is written correctly.

  • Report this Comment On August 06, 2013, at 7:05 AM, True411 wrote:

    This poll convolves conditions that ObamaCare will not affect, like work conditions and "emotional health", with access to health care. For this poll to be meaningful, the poll needs to address ONLY health care issues.

    Sorry Fool, but this is a totally phony argument and article. You should be ashamed.

  • Report this Comment On August 06, 2013, at 5:39 PM, rr383 wrote:

    The poll quoted is quite bogus. The majority of people in this country want it stopped. I just got notice from my HMO that they are dumping me into the exchanges. What happened to if you like your insurance you can keep your insurance. Why are there only three levels of coverage. The whole thing is a sick joke on the American people,and more and more are fed up with it.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2579510, ~/Articles/ArticleHandler.aspx, 11/23/2014 1:09:09 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement