If nothing else, the healthcare reform bill has been fantastic at sparking debate. Pundits, industry insiders and consumers have weighed in, often vociferously, with their opinions on who will be helped or hurt by the bill. Earlier this week, Forbes.com added its voice to the cacophony with an article titled Looking Hard for Healthcare Reform Winners. In the article, writer Jim Oberweis speculates on who will lose and who will benefit from the healthcare reform bill. The affluent, health insurers, and tanning salons were deemed the losers. But who wins?
According to Oberweis, pharmaceutical companies may benefit from the new bill. Although drug makers will have to spend $80 billion in savings and rebates over the next 10 years, the cost will be offset by the addition of 32 million potential customers. The bill also grants pharmaceutical companies 12 years of brand name exclusivity, which may hurt generic drug makers such as Actavis, Perrigo (PRGO), AmeriSourceBergen (ABC) and Zentiva (ZTVAF.PK). However, the generics market is likely to benefit from the larger patient pool and the growing number of consumers looking to cut healthcare costs. Also, the patents on a number of popular drugs are expiring within the next two years. Drug makers will be able to manufacture generic versions of Crestor, Lipitor, Plavix, Lexapro and Singulair, among others.
Less certain is the outlook for the medical device industry. The industry will be subject to a 2.3 percent excise tax starting in 2013. The tax is expected to raise $20 billion over 10 years. It is causing particularly strong consternation in states like Minnesota, which has the highest per capita med tech employment of any state. Companies like Boston Scientific (BSX), St. Jude Medical (STJ) and Medtronic (MDT) are located in Minnesota, along with a large number of smaller device makers. However, the tax is smaller than the originally proposed $40 billion, and it will be deductible from corporate taxes.
Companies that help coordinate and reduce costs of Medicare and Medicaid may fare well. One such company is Advanced Patient Advocacy, which helps hospitals match uninsured patients with state, local, and federal healthcare programs. Forbes mentions HMS Holdings (HMSY), which specializes in Medicare benefits coordination and fraud finding. The company seeks to reduce costs and erroneous payments related to government-funded healthcare. Another company mentioned in the article is healthcare services administrator Centene Corporation (CNC). Centene develops health plan solutions for Medicare/Medicaid and uninsured patients nationwide.
Hospitals will have to accept lower government reimbursement payments for Medicare and Medicaid, but like pharmaceutical companies, the cost will be offset by an expected increase in patients.