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POLITICS: Election winners and losers

I wrote most of this yesterday, but Blogger was giving a lot of trouble, hence I only got to publish my cynical “help wanted” ad.

But given that we have Bush in for four more years and at least two of a very strongly Republican house and Senate, what does this mean for the health care system? We will obviously not be discussing how an obstructionist Congress shot down Kerry’s health care plan. I don’t think that we are going to see any serious expansion of Medicaid to cover the working poor, and the defeat of Prop 72 in California augurs poorly for any expansion of employment based insurance. Overall this means that uninsurance will continue to rise–although public programs will continue to grow somewhat (as they have over the past three years). So we can expect a continued growth in uninsurance and presumably a continued (but probably moderating) rise in costs. There might be some consensus around Frist’s proposal to aid in reinsurance for companies and create AHPs, but these both strike me as tinkering around the edges.

Meanwhile there are some big winners from this election. The gamble taken by big pharma to carry out a scorched earth policy towards the Democrats has paid off–although I suspect the midday exit polls had some in the executive suites choking on their three martini lunches. Plan B–the need to deal with price controls and re-working of the Medicare Modernization Act–will not be needed, although reimportation still has some supporters on the Republican side of the aisle. As my, politically poles-apart but pharma-savvy, contributors The Veteran and Atlas have agreed, the pharma companies need to use some of this breathing room to cut back on their marketing spend, and make their sales machines more cost-effective. But the lack of a strong pipeline for many companies in the industry, and the not-so-minor-for-some issue of lawsuits over drug safety, are still the most important challenges for this industry.

The stock market reacted correctly to the election for the health plans and PBMs, which will continue to consolidate on the gains they have in the built-in increases they’ll see in payments to get them to recruit seniors into managed care plans and the new drug benefit respectively. Pacificare’s stock rally is being matched by Caremark.

Again in the longer term, these gains cannot last forever. The underwriting cycle will eventually come back to bite health insurers, and at some point the government/taxpayer will be unwilling to continue to expend scarce resources on the somwhat dubious ideology of paying more to make Medicare private. But for now the direction is clear and the sailing bright.

And although in my mind I got there first, that bunch of impersonators at the New York Times also reports on the topic in this article called Insurers and Drug Makers See Gain in Bush Victory.

Hospitals and doctors will keep the gains they made in the MMA, but it’s hard to see many more extraordinary gains. The only arena in which there may be a substantive change is in the reintroduction of malpractice legislation. However, given that the White House has to get funding for Iraq, an energy bill and some type of Social Security reform, not to mention the odd Supreme Court justice nomination, through the Senate, it doesn’t seem likely that malpractice is an issue that they’ll go to the mat on if the Democrats object.

And a peripheral issue to most health care players, but an important national one is that the Supreme Court will likely take a severe slant rightwards in the next few years. Sandra Day O’Connor is the swing voter keeping Roe v Wade on the books, and she’s likely to retire, as is Rehnquist. So the abortion situation is likely to change, and if one of the two most liberal justices (82 year old Stevens or 69 year old Ginsburg) were to die in the next few years, then we might be looking at a 6-3 conservative majority for years to come. Perhaps abortion clinics on the Canadian border are the new business opportunity.

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