It looks like health-care reform, as we know it, might be dead.
In President Obama's State of the Union speech last night, health care was buried in the middle, taking a back seat to jobs and even the cost of college tuition. Remember, this is a president who dedicated an entire speech to Congress on how to reform health care.
Sure he called on Congress to pass reform. But given the placement and time dedicated to the topic, the plea seemed half-hearted at best. The president clearly understands that it's an uphill battle now that Democrats have lost their filibuster-proof majority in the Senate.
New name, same enemy
The mention was brief, so you're excused if you missed it, but here's what Obama said yesterday: "And it is precisely to relieve the burden on middle-class families that we still need health insurance reform."
Did you catch that? It's no longer health-care reform; now it's health insurance reform. Insurers like UnitedHealth Group
Health insurers have always been the bad guy in the debate, but the president appears to be rallying the troops against health insurers: "I took on health care because of the stories I've heard from Americans with preexisting conditions whose lives depend on getting coverage; patients who've been denied coverage; families -- even those with insurance -- who are just one illness away from financial ruin."
It's almost as if the fight for uninsured Americans doesn't matter, and the president is pressing for a slimmed-down bill that just changes the way health insurance works in this country.
How's that going to result in lower costs?
There's a problem with just instituting health insurance reform without any other changes to the system: Every additional requirement results in an increased cost that has to be passed along through higher premiums. Insurers don't deny coverage to people with pre-existing conditions and put caps on payouts to be mean -- they do it because, if they didn't, they'd have to charge extra for the added benefits, or end up losing money.
Health insurers could absorb some of the added cost, but their net margins aren't outlandish by any means. The only way I see to increase insurers' requirements and keep costs down is to get healthy individuals to pay into the insurance pool through a mandate. But then the government will need to supplement the payments for many low-income Americans. To pay for that, we'll need Medicare reform. And suddenly we're back to a bloated bill that currently seems dead in the water.
That's the problem with breaking up the bill
Legislators have also been mulling around the idea of breaking up the health-reform bill into bite-size pieces, but I don't see how that's really possible; the cost savings and added benefits are completely intertwined.
For instance, look at the pledge of pharmaceutical companies like Merck
What's an investor to do?
It seems that we're back in the same place we were last summer. It's nearly impossible to know what the future holds when it's decided at the whim of politicians. The president is interested in compromising, even suggesting that legislators come up with ideas that are better than his. But a stalemate that keeps the status quo seems like a good possibility right now.
That would be a fine solution for health-care companies -- at least in the short term. In the long term, escalating health-care costs can't go on forever. For now though, the death of health-care reform should give the companies a little boost.
What do you think? Is health-care reform dead? Is that a good or bad thing for your portfolio and/or your pocketbook? Let us know in the comment box below.
