Polls show that most Americans believe that everyone should have access to health care, and that people with chronic conditions should not be shunned by medical providers or bankrupted.
Yet the question of who should pay for those unfortunate people — who could be any one of us or our family at some point in our life — is the big, open question. Most healthy young people who are not sick believe they should not be forced to buy insurance, and yet if they were to become sick later and were given a cold shoulder by the system, they would be quick to complain.
Given this paradox, the debate has become very similar, strangely, to the issues of sovereign debts facing countries in the eurozone: At what point is it fair to “mutualize” the heaviest obligations of a society in the interest of fairness and cooperation?
In Europe, the people of Spain, Portugal and Greece believe the entire eurozone benefits from their presence as both a labor market and consumers, and that their partners should support them at a time of need. And likewise in the United States, people in need of health care on the periphery of the system believe they should not be abandoned by their partners in society.
Of course, one big reason that health care in the United States is so expensive is that we currently allow young people not covered by corporate employers, who are the healthiest, not to pay until they are needful. So Congress essentially decided that everyone should be forced to pay something, or face a tax that pays for them.
This makes sense because, after all, people who have expensive health care needs uncovered by insurance do end up in emergency rooms or hospitals, and the public pays for them anyway via both higher insurance premiums and federal subsidies to hospitals.
So, just as Europe is on a path to mutualize its sovereign debts, the United States is on a path to fully mutualize health care in a single-payer system in which the government supersedes certain roles currently played by insurers.
This should be good for hospitals and drug makers because they will have greater assurance of payment for their services and products. But it might be bad for insurance companies, which could find their margins squeezed by the government big-footing their industry. Businesses, after all, will have a big incentive to shunt their employees into public plans or drop coverage (and pay a small penalty), and if that results in lower costs and lower premiums for the public plans, even people who can afford independent plans might find it sensible to join the public plan.
The bottom line is that insurance companies like UnitedHealth Group (NYSE:UNH) and WellPoint (NYSE:WLP) might suffer a structural impediment for awhile, or at least until their lobbyists find a way to squirm out of this tight spot. And drug makers such as Merck (NYSE:MRK) and Abbott Laboratories (NYSE:ABT), and hospital groups like HCA Holdings (NYSE:HCA) should find that they have a larger pool of paying customers.
In time, we might discover that the ACA will move the United States much closer to a single-payer system, which would continue to favor drug makers and low-cost hospital providers over insurers for investors focused on the health care industry.
Jon Markman operates the investment firm Markman Capital Insights. He also writes a daily trading newsletter, Trader’s Advantage, and a long-term investment service, Strategic Advantage. Check out his Top Stock for 2012 here.
The opinions contained in this column are solely those of the writer.
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