Health Care Changes Expected

In addition to current market conditions, investors in health care are increasingly focusing on the growing political rhetoric surrounding broad-based health care reform emanating from Washington.

In a recent address to the Senate Committee on Health, Education, Labor and Pensions, Health and Human Services nominee Tom Daschle cited key lessons learned from previous attempts to overhaul healthcare by the Clinton administration back in 1993. These included timeliness of action, lack of transparency and complexity of process.

In an effort to address these previous stumbling blocks, the Obama transition team has been actively seeking grassroots feedback from ordinary Americans across the country in community-held meetings during the month of December on problems with the current health care model.

Daschle identified high administrative costs in U.S. health care as a major issue and referred to the "complexity, marketing costs and insurance overhead that result from our market-oriented healthcare system," which would suggest an increased involvement by government going forward. One such option might involve allowing Medicare and Medicaid the ability to negotiate drug prices directly with pharmaceutical companies.

On January 8th, in a speech to Congress regarding his proposed American Recovery and Reinvestment Plan, President-elect Barack Obama outlined a two-year, $800 billion economic stimulus package that included additional federal funds for state Medicaid programs and other funds for health care programs. The package includes a provision that would seek to computerize all medical records, reflecting an earlier pledge to expand access to care and commit $50 billion within five years to advance healthcare IT adoption.

In an indirect reference to managed care organizations, statements in recent days by President-elect Barack Obama citing inefficiencies of Medicare Advantage plans suggest changes to Medicare and Medicaid will be high on the to-do-list once in office.

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