Medicare has added its two cents to the national conversation on the U.S.'s obesity problem, and its new policy has potentially important implications for many companies.
The federal agency announced last week that it is reversing its long-standing position that obesity is not an illness and that treatment for the condition is therefore not generally covered by Medicare. In redefining its stance, Medicare may eventually cover a new range of treatments, including surgery and diet supplements. What's more, Medicare is usually a bellwether for what private insurers such as Aetna (NYSE:AET) will cover.
Already players in the diet field are anxious to take advantage of the opening. Atkins Nutritionals, which has helped spawn a craze in low-carbohydrate products, is hoping to become a "therapeutic option" reimbursable by insurance, according to a recent article in The New York Times. In addition, Weight Watchers (NYSE:WTW) and even Hershey Foods (NYSE:HSY), which is developing a bar in collaboration with the creator of the Zone Diet, could get in on the action.
Unfortunately, the path to coverage is not likely to be easy. In order to qualify, supplements and diet plans will have to be investigated exhaustively to determine their effectiveness and potential side effects. Even before this lengthy process, though, experts will have to actually define efficacy. This should stir up plenty of controversy, especially since diet outfits already work to undermine each other's claims -- struggling Weight Watchers, for example, has joined a coalition dedicated to criticizing low-carbohydrate diets.
In the end, the firms best positioned to take advantage of Medicare's policy change could be certain pharmaceutical outfits. Abbott Laboratories' (NYSE:ABT), Johnson & Johnson's (NYSE:JNJ), and Novartis' (NYSE:NVS) prescription drugs may not yet be covered by Medicare, but these companies all dabble in the nutritional business. Further, with their research and regulatory know-how, they may have a significant advantage over non-pharmaceutical competitors in proving their products' worth. Ultimately, though, the biggest winner may be the consumer, who may soon have better data on effective dieting and weight loss.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
