Monday, April 12, 2010

qotd: Mutual fund managers are relieved

The New York Times
April 9, 2010
Health Care Overhaul May Help a Fund Sector
By Geraldine Fabrikant

Now that President Obama has finally gotten his sweeping health overhaul passed, mutual fund managers can breathe a sign of relief. Finally, there is some certainty about the changes, and most of them appear to be beneficial for health care stocks.

"There does not seem to be any onerous cost control," said Les Funtleyder, a heath care analyst at Miller Tabak, an insititutional brokerage firm and asset manager.

In the wake of the new bill, the only negative he sees is a potential problem for insurance companies, like WellPoint, the UnitedHealthGroup and Aetna, because at some point they will have to cover all potential clients. "Then the question is, will they price these things so that they can avoid losing money?" he asked.

Comment:  For those of us who continue to express concerns about the failure of the reform legislation to adequately control the excess growth in health care spending, this news is no surprise. Mutual fund managers are relieved that there are no onerous cost controls, allowing them to continue to include health care stocks as an important part of their portfolios. The only concern they've expressed is that health insurers now are going to have pay for health care for high-cost patients that they've been successful in excluding from their plans.

Expanding our expensive dysfunctional health care financing system works well for Wall Street, but it doesn't work for the rest of us. It is absolutely inevitable that we will have to adopt a program of social insurance, preferably an improved Medicare for all.  The sooner, the better.

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