CNBC Guest Blog
- Busch: Markets Smell a Country Rat
- Schork Oil Outlook: Mission Impossible For The Bears?
- Losey: Asset Allocation At Retirement
- Farrell: Obama Hectored, Ignored and Restricted?
- Don't Dwell on Investment Mistakes; Move on, Like Buffett
- Hirschhorn: Greed...or Fear
- Schork Oil Outlook: Some New Hope For Nat Gas Bulls
- Insights for Growing the Economy: the State of Entrepreneurship
- Tamminen: California Is At It Again
- Dorn: Trading Secrets and Serendipity
MOST SHARED
- The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed
- Why Amazon Rules Retail
- Wave of Debt Payments Facing US Government
- China Eastern to Complete Shanghai Air Buy by End '09
- Gold Will Collapse Like Oil Did in 2008: Charts
- Paul: Audit the Fed
- JAL Slides to Record Low on Bankruptcy Jitters
- Nielsen Ratings Coming to Video Games
- Weak Dollar Is Golden for Mining Companies
- Trading Block
- 5 Stocks That Benefit from Health Care Legislation: Analysts
- Can Murdoch Help Bing Challenge Google and Shift the Content Equation?
- HP's Mark Hurd
- HP Comes in As Expected; Is It Time to Buy?
- 9 Stocks That Play Rising Water Costs: Strategists
- Weis' Deal Likely Won't Change Big Money Contracts
- Gold Prices Can Double in 3 Years: Portfolio Manager
- Nov. 23: Unusual Volume Leaders
- Help Wanted—Please Run $4 Billion University
- Strong Banks, Weak Credit: Treasury Rethinks TARP
- Weak Dollar Is Golden for Mining Companies
- How Many US Consumers Will Shop this Weekend?
- Tuesday's Heavy Dose of Data to Dictate 'Risk' Behavior
- GE Capital Losses May See Dramatic Fall: JP Morgan
- Galleon's Rajaratnam Denies Inside Trading Charges
- Hormel Profit Jumps Despite Declining Sales
- Heinz Profit Falls, Raises Full-Year View
- Playboy to Outsource Most Magazine Operations: Report
RSS FEED
Text Size 
Michael Yoshikami
President & Chief Investment Strategist
YCMNET Advisors
There is no doubt that something has to be done about the rising cost of health care in the United States. The status quo is a recipe for disaster and, considering the gigantic federal deficit, the last thing the United States needs is an even larger anchor on fiscal health.
The Obama administration has decided it's time to pursue a goal often talked about but never implemented; universal mandated healthcare for all citizens. This concept is controversial as some see it as another step towards socialism. Others herald this goal as a major step forward for healthcare parity regardless of economic standing.
The debate rages on and will heat up over the next several months. Regardless of your perspective, the resulting investment consequences will be huge and the time to consider the potential investment impact from healthcare reform is now. Not being proactive as an investor could be a very costly mistake.
While the impact on investors will depend on the extent of the changes implemented, there is no doubt that reform will alter the investing landscape. And frankly, there are few silver linings for private healthcare companies and will likely cause a massive reset of private company profit margins.
Major risks for healthcare investors include price controls and government programs subsidized to compete with private companies. Insurance company providers like Blue Cross could find their profit margins undercut if the government subsidizes a less expensive health plan alternative.
Big pharmaceutical companies like Merck [MRK
Loading...
()
] could face price controls if the government attempts to reign in drug-related costs. Hospitals like HCA could face more pressure on their bottom line if they are required to take less daily payments for health care services. Even biotech companies like Amgen [AMGN
Loading...
()
] could face challenges if profit potential is limited by the government.
Will there be winners in the healthcare sector? Perhaps. With more people covered, the total demand for services will be greater and that could increase revenue significantly; economy of scale is a good thing.
Companies with the strongest balance sheets will likely have an advantage over less capitalized, leveraged rivals. Companies that specialize in information processing like Allscripts-Misys Healthcare Solutions [MDRX
Loading...
()
] could reap a huge windfall (yes.....more paperwork!). Generic drug makers like Mylan [MYL
Loading...
()
] could see larger demand as branded drugs lose favor.
Being nimble as an investor and adjusting as conditions dictate is a necessary and important strategy. And with healthcare reform coming, nimble is what you will need to be.
As is always the case, the details will tell the full story. Until then, we can only speculate on what the world might look like for healthcare investors going forward. Suffice it to say, the landscape is about to change and, with a new era of government intervention upon us, the result could gigantic.
___________________
Michael A. Yoshikami, Ph.D., CFP®, is Founder, President, and Chief Investment Strategist of YCMNET Advisors, Inc., a registered investment advisory firm (www.ycmnet.com). Michael oversees all investment and research activities of YCMNET. He is a respected lecturer speaking frequently on market issues, tactical asset allocation, and investment strategy. He appears regularly on CNBC and CNBC Asia and can be reached directly at .
Data is a real-time snapshot *Data is delayed at least 15 minutes