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Profiting from Obamacare

August 2012

Sidney M. Wolfe, M.D.

“Buying hospital stocks is the best way to profit on the long side from Obama care.”

This quote is from a Forbes website article that appeared just after the U.S. Supreme Court decision upholding the constitutionality of the Affordable Care Act (ACA). The author is referring to the increased profit-making potential of investing in for-profit hospital chains that will now be faced with fewer poor, uninsured people showing up at their emergency rooms needing treatment but unable to pay.

In the absence of any significant controls on prices of drugs and medical care in the ACA, another parallel reason to buy hospital stocks might be that with more people insured, there will be generally more revenue and the prices might get even higher.

This macabre Forbes quote about the best way to profit from Obamacare reminds me of a comment made 30 years ago by a brilliant, public-spirited health journalist from The Washington Post: Victor Cohn, now deceased. We were both speaking at a health care symposium at a Washington, D.C., hotel when he said that the main problem with our health care system is that there are too many people making too much money from it.

He included the pharmaceutical industry, hospitals, for-profit health insurance companies and those doctors who pick up “extra change” by investing in labs (X-ray facilities to which they too often refer their patients). Even doctors who are not invested in such companies can make extra money by ordering unnecessary tests and engaging in other unethical practices. (Conversely, salaried doctors are less likely to have these financially rewarding temptations.)

A government-financed single-payer insurance entity — an improved Medicare-for-all system — empowered with the ability to control prices, would be a wonderful start toward the demise of Victor Cohn’s main problem with the health care system.

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